The Department of State Treasurer, which administers the pension benefits for the Teachers' and State Employees' Retirement System (TSERS), is committed to keeping you informed about the benefits available to you as a member and a law enforcement officer (LEO).
The information on this page outlines the benefits available to you as a System LEO.
Penalty Tax Exemption for Public Safety Employees
The North Carolina Retirement Systems Division wants to make you aware of a recent change to federal law as it relates to public safety employees. On June 29, 2015, President Obama signed into law the “Defending Public Safety Employees’ Retirement Act.” This new law expands the exemption which up until now only apply to pension assets. With this change in the law North Carolina Public Safety workers are exempt from the 10% penalty tax on early distributions from 401(k) plans. This means that public safety employees, as defined by the IRS, are no longer subject to the 10% penalty upon separation of service at or after age 50, effective January 1, 2016.
This legislation primarily affects those employees who are considering retiring prior to Jan. 1, 2016 and have assets in the NC 401(k) Plan. This is important information for participants to consider because the law does not take effect until January 1, 2016. Anyone who retires and withdraws funds before the implementation of the law may still be subject to the penalty. Because of the considerable tax implications regarding the withdrawal of 401(k) funds participants have saved for retirement, the participant should consult a tax advisor. The Department of State Treasurer does not give tax advice.
Becoming a LEO Member under TSERS
You become a LEO member under TSERS on the date of your hire if you:
- are a permanent, full-time, paid employee of the state (or any of its agencies, departments, bureaus, or educational institutions); and
- you are actively serving in a position with assigned primary duties and responsibilities for the prevention and detection of crime or the general enforcement of the criminal laws of the state or serving civil processes; and
- you possess the power of arrest by virtue of an oath administered under the authority of the state.
As a law enforcement officer, when you become a member of the Retirement System, you are automatically a member of the NC 401(k) Plan.
|How to Qualify for Benefits|
You become vested in the Retirement System once you have completed a minimum of 5 years of creditable service as an officer.
This means that you are eligible to apply for lifetime monthly retirement benefits upon reaching the age requirement based on the formula shown below, provided you do not withdraw your contributions. You may also be eligible for retiree health coverage.
|Service and Early Retirement|
Service Retirement (Unreduced Benefits)
You may retire with an unreduced service retirement benefit after you:
- reach age 55 and complete 5 years of creditable service as an officer; or
- complete 30 years of creditable service at any age.
Early Retirement (Reduced Benefits)
You may retire early with a reduced retirement benefit after you reach age 50 and complete 15 years of creditable service as an officer.
Your early retirement benefit is calculated using the same formula as a service retirement benefit, multiplied by a reduction percentage based on your age and/or service at early retirement. Since your benefits may be paid over a longer period of time than if you had waited until you were eligible for service retirement, they will be reduced.
Special Separation Allowance
As a law enforcement officer, if you retire on a service retirement allowance (i.e., 30 years of creditable service at any age, or age 55 with at least 5 years of credit as a law enforcement officer), you may be eligible for monthly separation allowance payable until you reach age 62, or until you return to any employment with state government. Other conditions apply.
Contact your employer for details, since your employer is responsible for making all determinations of eligibility, and for making these benefit payments when they become payable.
Supplemental Retirement Income Plan
As a law enforcement officer, you are automatically a member of the Supplemental Retirement Income Plan [NC 401(k) Plan]. Your employer pays an amount equal to 5 percent of your salary into your account in the Plan and you may elect to make additional contributions. You decide how the contributions in your account are invested and also how you want to receive the contributions when you separate from employment.
As a law enforcement officer, you may, at retirement, elect to transfer your eligible contributions, not including any Roth after-tax contributions, from the NC 401(k) Plan to the Teachers’ and State Employees’ Retirement System and be paid an additional monthly benefit from the Retirement System based on your transferred balance.
Links to Additional Law Enforcement Officer Benefits and Application Process: