Law Enforcement Officers Retirement System (LEORS)
This program is sponsored by the State of North Carolina and governed by the Department of the State Treasurer.
TSERS for Law Enforcement Officers’ is as a defined benefit plan and the benefit you receive at retirement is based on a formula. This formula considers your years and months of creditable service, your age, and your “average final compensation,” which is the average of your salary during your four highest paid consecutive years. Neither the investment experience of the plan assets nor the amount contributed by you and the University, on your behalf, directly determines the amount of the guaranteed benefit you will receive at retirement.
All permanent full-time employees who work 30 or more hours per week will be enrolled in TSERS. You must have five years of creditable service with the State in order to receive benefits at retirement.
You are required to contribute 6 percent of your salary on a pre-tax basis (before State and Federal taxes). The plan is also funded by University contributions. Effective July 1, 2018, the University contribution is 23.44 percent of your salary broken down as follows: 11.87% to the pension accumulation fund, 6.27% for retiree health care, 0.14% for the disability income plan, 0.14% for the TSERS death benefit and a 5% University contribution to the State 401(k) plan.
You become a member of the system on the day you are hired as a permanent full-time employee of the University. You will receive notification of your automatic enrollment directly from the North Carolina Retirement System. This notification will include instructions for completing your beneficiary designations and returning your forms directly to the Retirement System. If you do not make a beneficiary designation, the Retirement System will default your beneficiary to your estate.
EHRA permanent full-time employees (faculty or non-faculty) have the option to choose between TSERS or the Optional Retirement Program (ORP). EHRA employees have 60 days from their date of employment to complete and return forms to Benefits Services. If an EHRA employee does not complete the necessary forms to enroll in the ORP, they will automatically be enrolled in TSERS. Enrollment in TSERS will be irrevocable.
Retirement benefits are fully vested after you complete five years of membership service. If you leave State employment before completing five years of creditable service, you may:
request a refund of only your contributions, with such amount subject to any income taxes and early withdrawal penalties, unless you request a trustee-to-trustee transfer (direct rollover) of your refund to an IRA or another qualified retirement plan that will accept your transfer, or
leave your contributions in TSERS in anticipation of a return to State service in the future.
Upon receipt of a refund of contributions, you waive any rights to the employer contributions or any other benefit from TSERS and the North Carolina Disability Income Plan.
If you die while still in active service (while being paid salary) after one year as a contributing member, your beneficiary will receive a single lump sum payment. The payment equals the highest 12 months of salary in a row during the 24 months before you die, but no less than $25,000 and no more than $50,000. This benefit is also paid if you die within 180 days of the last day for which you were paid salary. It is in addition to any other benefits to which you may be entitled.
If you die while in active service, your beneficiary will receive a refund of contributions and interest provided that you meet one of the following conditions:
You have completed 20 or more years of creditable service (not including credit for unused sick leave) regardless of age,
Reaching age 50 with 15 years of creditable service as an officer, or
Reaching age 55 with five years of creditable service as an officer
Law Enforcement Officers’ have automatic membership into the Supplemental Retirement Income Plan (401k). The University pays an amount equal to 5 percent of the employee’s salary into an account in the Plan, and the employee may elect to make additional contributions on a tax-deferred basis. Employees decide how the contributions in the account are invested and also how they want to receive the contributions when they separate from employment.
The plan also provides:
- A death benefit after one year of contributing membership service and two additional line of duty death benefits
- Certain temporary disability and death benefits to qualified active and retired participants provided by the Separate Insurance Benefits Plan
- Participation in the Disability Income Plan of North Carolina
- An employee who retires under a service retirement under this Plan may also be eligible to receive a Special Separation Allowance.
TSERS is a Defined Benefit Plan, which means retirement benefits are based on salary, years of service and a retirement factor. The formula for TSERS is:
- Average salary based on the 4 highest consecutive years of earnings
- Multiplied by a Retirement Factor of 1.82% (set by state statute)
- Multiplied by your creditable years of service
Unreduced & Reduced Benefits
You qualify for full (or unreduced) retirement benefits at:
- age 55 and complete five years of creditable service as an officer, or
- 30 years of service, at any age.
You qualify for a reduced retirement benefit at:
- age 50 and complete 15 years of creditable service as an officer.
You can complete an application for retirement up to 120 days before your planned retirement date. The application must be signed and filed with the Retirement System at least one and not more than 120 days before your planned retirement date. You should contact your Benefits Specialists to schedule an appointment to complete the required documents to start your retirement benefits prior to your 120 day window.
For a detailed discussion of retirement benefits, please refer to the State Law Enforcement Officers’ Handbook.
When you retire and begin receiving benefits from TSERS, you may also be eligible to enroll in the State Health Plan with the cost determined by when your employment started with the State.
If you were first hired prior to October 1, 2006, and retire with five or more years of State System membership service, the State will pay either all or most of the cost if you select one of the Preferred Provider Organization (PPO) plans, depending on the plan chosen.
If you were first hired on or after October 1, 2006, in order to receive individual coverage at no cost, you must retire with 20 or more years of retirement service credit; if you have 10 but less than 20 years of retirement service credit, you will have to pay 50% of the cost for your coverage, and with five but less than 10 years, you will have to pay the full cost for your coverage. In all cases, the full cost of dependent coverage, if elected, must be paid by you.
TSERS requires a six-month break in service during which no work is performed for any State agency. A return to work earlier than six months will revoke your retirement benefits retroactive to your retirement date and all benefits paid to you must be repaid to the Retirement System.
If you are reemployed on a part-time, interim, temporary or contractual basis, or are otherwise engaged to perform services on any basis that does not require membership in the Retirement System, your retirement payment will be stopped if your earnings during the 12-month period immediately following the effective date of retirement or during any calendar year exceed your earnings limitation, which is calculated as the greater of the following:
- $28,860, or
- 50% of your compensation, excluding termination payments, reported to the Retirement System during the 12 months of service preceding the effective date of your retirement.
These limits are indexed annually by TSERS.
When you begin receiving a retirement benefit, any pre-tax contributions made by you and the University, as well as any investment earnings on these contributions, are taxed as ordinary income. If any of your contributions were made on an after-tax basis, the portion of the retirement benefit attributable to these after-tax contributions will not be taxed. (Note: TSERS employee contributions made prior to July 1, 1982, and any service purchases whenever made, are after-tax contributions.)
The amount subject to State income tax is the same amount on which federal income tax must be paid, less an exclusion as large, in some cases, as $4,000. If the pre-tax portion of your annual retirement benefit is $4,000 or less, you will not owe any State income tax on your retirement benefits.[Exception: If you were vested in TSERS on or before August 12, 1989, your TSERS retirement benefits, no matter what amount, are exempt from State income tax.]