Trending Topics

⚠️ 2024 Retiree Earnings Allowance

The annual earnings allowance for 2024 is $40,980. To view your specific allowance, log in to your ORBIT account.

Some retirees of the Teachers' and State Employees' Retirement System and Local Governmental Employees' Retirement System will officially retire and later be reemployed. If the retiree returns to work for an employer in the Retirement System from which they retired, certain earnings limitations may apply.

For more information, please visit the Return-to-Work webpage.

Memorandum Regarding New Retirement Law Affecting UNC Health, Certain Parts of ECU, and Potentially Other UNC-CH and ECU Employees

Session Law 2023-134, the 2023 Appropriations Act enacted October 3, 2023, included Sections 4.10.(a)-(dd) related to retirement and other benefits for current or future employees of UNC Health Care (UNCHC) and certain parts of East Carolina University (ECU).  Session Law 2024-1, the 2023 Budget Tech/Other Corrections Act enacted May 15, 2024, contained Sections 1.7.(h)-(k), making certain amendments to the 2023 law. This document refers to Sections 4.10.(a)-(dd) of Session Law 2023-134, as amended by Sections 1.7.(h)-(k) of S.L. 2024-1, as the “New Retirement Law.”

Some parts of the New Retirement Law may, in the future, affect additional employees of ECU and UNC-Chapel Hill (UNC-CH). It appears this could occur at the direction of UNCHC or ECU, without the legislature making additional laws.

The Retirement Systems Division of the Department of State Treasurer (RSD) does not make laws, but RSD must administer the Retirement Systems in accordance with applicable State and federal laws.

RSD has found some details of the New Retirement Law difficult to understand. The guidance in this document may change if there are clarifications from the legislature. Meanwhile, RSD is providing this guidance to help our members understand the new law as much as possible.

***

RSD hopes this information will be useful to members of the Teachers’ and State Employees’ Retirement System (TSERS), especially those who work, or are considering working, at ECU, UNC-CH, or UNCHC.

***

Note regarding “Similar Plans”: The New Retirement Law anticipates that UNCHC or ECU may adopt brand-new retirement plans for their employees in the future. These are called “Similar Plans” because, if they are adopted, they must be “similar” to the UNC Optional Retirement Plan (ORP). RSD is not currently aware that UNCHC or ECU has adopted a “Similar Plan.” The information in this document is based on the current situation in May 2024, with no “Similar Plans” adopted. This document has some comments about what may happen if and when a “Similar Plan” is adopted, but they are not comprehensive.

Questions

Tab/Accordion Items

  • The New Retirement Law applies to UNC Health Care, the ECU Medical Faculty Practice Plan, and the ECU Dental School Clinical Operations. An exception is that it does not apply to Law Enforcement Officers employed by UNC Health Care.
  • Also, parts of the New Retirement Law may apply in the future to other “schools or components” of ECU and UNC-CH. It appears this could occur at the direction of UNCHC or ECU, without the legislature making additional laws.
  • If you work for ECU, UNC-CH, or UNCHC, and are unsure whether the New Retirement Law applies to your employer or position, check with your employer.
  • For purposes of this document, if and when the New Retirement Law applies to your employer, we refer to your employer as an “affected employer.”

No. If you are hired by an affected employer on or after January 1, 2024, and you are not already a member of TSERS, you will not be eligible for TSERS.

  • Similarly, if you were previously a member of TSERS but voluntarily withdrew your contributions after separating from service with the State, you will not be eligible for TSERS.
  • If you are hired in a position requiring at least 30 hours of work per week for at least nine months per year, the affected employer must place you in the UNC Optional Retirement Program (ORP) or a “Similar Plan” (not yet adopted), or give you a choice between the ORP and the “Similar Plan.”
  • Until the affected employer adopts a “Similar Plan,” they must enroll you in the ORP. Although the name of the ORP includes the word “Optional,” it is not optional in this situation.
  • TSERS is a defined benefit retirement plan administered by RSD. The ORP is a defined contribution retirement plan operated by the UNC System. Both TSERS and the ORP require employee contributions equal to 6% of your compensation. Contact your employer for more details about the ORP.
  • After working with the affected employer, if you go to work for a non-affected employer that is not a UNC System institution, in a position requiring TSERS membership, then you will join TSERS. Your time participating in the ORP will not count toward your TSERS benefits, for eligibility or calculation purposes.
  • After working with the affected employer, if you go to work for a non-affected employer that is a UNC System institution, you should contact your employer regarding the details of your situation. Depending on the situation, you may be required to remain in the ORP rather than having the option to join TSERS.

  • Yes, under the current law, but only if you remain continuously employed in positions that require contributions to TSERS.
  • If you cease employment with the affected employer on or after January 1, 2024, and you are later rehired by an affected employer without working for a different (non-affected) employer in between, you will be treated as a new employee upon hire. That means you cannot resume earning benefits under TSERS (see Q&A #2). Also, your service after being rehired will not count toward TSERS thresholds such as 5, 10, 20, 25, or 30 years. This could cause a long delay in your eligibility for retirement or retiree health care benefits, or even prevent your eligibility.
    • An exception is that any service under the ORP will continue to count for eligibility purposes only, if you were first hired as a TSERS member before January 1, 2021, and have not withdrawn your contributions associated with that service.
  • If you cease employment with the affected employer on or after January 1, 2024, and you are later rehired by an affected employer, but you work for a different (non-affected) employer in between, see Q&A #4.

If I take a job with an affected employer on or after January 1, 2024, can I remain under TSERS?

  • Yes, you will remain under TSERS, but only if you are a contributing member of TSERS "immediately prior to the date of hire" with the affected employer.
  • The term "contributing member" means that you were actively employed and contributing the required 6% of your pay to TSERS. Your new employer will need to determine whether you are a contributing member of TSERS "immediately prior to the date of hire."
  • If you are a contributing member of TSERS immediately prior to the date of hire:
    • If you previously worked for a UNC System institution and elected to participate in TSERS instead of the ORP, you will continue to participate in TSERS.
    • If you were not previously offered an election between TSERS and the ORP, then your new employer must offer you an election between continued participation in TSERS or joining in the ORP.
  • If you are not a contributing member of TSERS immediately prior to the date of hire, you will not be eligible for TSERS. The information in Q&A #2 will apply to you. 
  • Your service with the affected employer will not count toward TSERS thresholds such as 5, 10, 20, 25, or 30 years. This could cause a long delay in your eligibility for retirement or retiree health care benefits, or even prevent your eligibility.
    • An exception is that any service under the ORP will continue to count for eligibility purposes only, if you were first hired as a TSERS member before January 1, 2021, and have not withdrawn your contributions associated with that service.
       

I earned benefits under TSERS from previous employment. Can I retire under TSERS while working for the affected employer?

  • No. For a retirement to become effective under TSERS, you must completely separate from employment with State employers, with no intent or agreement, express or implied, to return to work. You must also perform no work for State employers, including part-time, temporary, substitute, or contractor work, at any time during the six months immediately following your effective retirement date.
     
  • The affected employers under the New Retirement Law are still State employers. The “six-month waiting period” applies to any work you perform for the affected employers in any capacity.
     
  • Importantly, the restriction on pre-arranged work or work performed during the six-month period includes “contractor work” you may perform for a State entity while employed by a non-State entity, such as a private nonprofit affiliated with the State entity. 
     

  • Any TSERS retiree considering returning to work for a State employer should become closely familiar with the general Return-to-Work Laws, summarized on RSD’s website at https://www.myncretirement.com/retirees/return-work-laws.
  • If your return to work is with a non-affected employer:
  • The New Retirement Law has not changed any requirements.
  • If your return to work is with an affected employer:
    • You cannot resume earning benefits under TSERS (see Q&As #2 and #3).
    • If your position requires you to participate in the ORP, payment of your TSERS retirement benefit must be suspended while you work in the position.
    • If your position does not require you to participate in the ORP, the re-employment earnings limitation will apply (see website address above).
  • If you retired from certain affected employers and your return to work is with a non-State entity “affiliated with” the affected employer:
    • According to the New Retirement Law, the re-employment earnings limit does not apply to your compensation from this employment. Prior to the New Retirement Law, the limit would not have applied unless you were performing contractual services for the State.
    • RSD has sought clarification from the legislature. Pending any clarification, to qualify for this special rule, you must retire from the affected employer with no pre-arrangement to return to work for the State (including contractual work), observe the six-month period of performing no work (including contractual work), and then become employed in a position with a non-State entity affiliated with the affected employer where you perform contractual services for the State.

I earned benefits under TSERS from previous employment. Can I withdraw my TSERS contributions while working for the affected employer?

  • While participating in the ORP, you cannot withdraw your contributions. Generally, with certain exceptions, you become eligible for a voluntary withdrawal 60 days after you have stopped working in a position requiring contributions to TSERS or the ORP.
     

  • All members actively earning benefits under TSERS or the ORP are participants in DIPNC, and are eligible for DIPNC benefits if they experience a qualifying disability and meet the other requirements. The employer pays all contributions for DIPNC benefits. Participation in DIPNC does not include people earning benefits in “Similar Plans” if those are established.

Legislation

Tab/Accordion Items

In 2023, the General Assembly made several changes that affect the Retirement Systems. Click here for a  brief explanation of some of the changes.

Retirement

Tab/Accordion Items

Your first retirement benefit payment should be made by direct deposit. Instructions must be received and acknowledged by the Retirement Systems before your effective retirement date. Otherwise, a paper check will be mailed.

Your retirement selection is locked in when the first payment becomes normally due and the first benefit payment date has occurred.

Retirement Online is the most efficient way to apply for your retirement. Located in your secure ORBIT account, Retirement Online is available 120 days from your retirement date for members of the Teachers’ and State Employees’ Retirement System (TSERS) and Local Governmental Employees’ Retirement System (LGERS). For more information about the process, click here

If you have already submitted your retirement application, you can cancel your application through your ORBIT account or by sending a signed and dated cancellation letter.  

If the first payment has already been issued and the first benefit payment date has occurred, you are not able to cancel your retirement. 

If you cancel your retirement, you will need to resubmit a retirement application when you are ready. These applications are processed in the order received.  

Resubmitting a retirement application may present a delay in the available retirement date and payment, which require processing time as we head into the busy retirement season.  

If you are considering canceling your retirement, it is important to also communicate directly with your employer to confirm the availability of your position.

State Health Plan for Eligible Retirees

Tab/Accordion Items

The North Carolina State Health Plan has a blog discussing Humana Medicare Advantage Plans for Retirees who currently use providers at WakeMed and ECU Health (including Vidant, University Health Systems of Eastern Carolina, Inc).

Read the blog here.

SHP has created a flyer for retirees to take to their provider. View the Provider Flyer here. 
 

LGERS Membership for Volunteer Fire Departments

Tab/Accordion Items

Nonprofit-incorporated fire/rescue departments are sometimes called "volunteer fire departments" (VFDs) but often have paid employees. Based on federal law and IRS guidance, VFDs cannot join the Local and Governmental Employees Retirement System (LGERS) as employing units, because they are not governments, but nonprofit incorporations. 

Certain towns in LGERS recently inquired about whether employees of a VFD serving the town's jurisdiction could participate in LGERS as employees of the town if the town agreed to be the formal employer and "lease" the employees to the VFD. 

The North Carolina Retirement Systems (RSD) asked for an analysis by our tax counsel, Groom Law Group. The document listed below contains two pages of summary guidance from RSD and a ten-page memorandum from Groom outlining the relevant issues and questions. RSD urges employers considering a "leased employee" agreement to review the Groom analysis carefully and make their own determination based on the questions raised, and understanding the risks of misclassification.

Fire/Rescue Leased Employees Memo