North Carolina Law Enforcement Retirement: A Complete Guide to TSERS

The North Carolina Law Enforcement Officers’ Retirement System (TSERS) is a defined benefit plan sponsored by the State of North Carolina and managed by the Department of the State Treasurer. Under this program, retirement benefits are guaranteed through a formula that considers your age, years of creditable service, and your average final compensation (the average of your highest four consecutive years of salary).

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Unlike defined contribution plans, your retirement income is not dependent on investment returns or the exact amount of contributions made during your career. Instead, the TSERS formula provides predictable and stable benefits to ensure financial security after retirement.

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Membership and Eligibility

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All permanent full-time employees working 30 or more hours per week are automatically enrolled in TSERS. To qualify for benefits, you must complete five years of creditable service with the state.

As soon as you are hired, you become a member of TSERS. The North Carolina Retirement System will notify you of your automatic enrollment and provide instructions for selecting a beneficiary. If you do not designate a beneficiary, your estate will automatically be listed as the default.

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EHRA permanent full-time employees (faculty or non-faculty) may choose between TSERS or the Optional Retirement Program (ORP). This decision must be made within 60 days of employment. If no election is made, you will be automatically enrolled in TSERS, and this choice cannot be reversed later.

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Contributions and Funding

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The TSERS program is funded jointly by employee and employer contributions.

• Employee contribution: 6% of salary on a pre-tax basis.
  
  
• Employer contribution (as of July 1, 2018, total 23.44% of salary):
  
  
  
  • 11.87% → Pension accumulation fund
    
    
  • 6.27% → Retiree health care
    
    
  • 0.14% → Disability income plan
    
    
  • 0.14% → Death benefit
    
    
  • 5% → University contribution to the State 401(k) plan
    
    

In addition, law enforcement officers are automatically enrolled in the Supplemental Retirement Income Plan (401k). The University contributes an additional 5% of salary into this account, while employees may make further contributions on a tax-deferred basis.

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Vesting

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Retirement benefits under the North Carolina law enforcement retirement system become fully vested after five years of membership service.

If you leave state service before completing five years, you have two options:

1. Request a refund of your contributions (subject to taxes and early withdrawal penalties unless transferred directly to another qualified retirement plan), or
   
   
2. Leave your contributions in the system if you anticipate returning to state service in the future.
   
   

Please note: Once you receive a refund of your contributions, you forfeit any right to employer contributions or additional TSERS benefits.

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Death, Survivor, and Additional Benefits

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TSERS provides important protections for law enforcement officers and their families.

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Death Benefit

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If you pass away while actively employed and have completed at least one year of contributing service, your beneficiary will receive a lump sum equal to the highest 12 consecutive months of salary earned during the last 24 months. The minimum benefit is $25,000, and the maximum is $50,000. This benefit is also payable if death occurs within 180 days after your last salary payment.

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Survivor Benefits

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If you die while actively employed, your beneficiary may qualify for survivor benefits if you meet one of the following conditions:

• 20 or more years of creditable service (regardless of age),
  
  
• Age 50 with at least 15 years of service as an officer, or
  
  
• Age 55 with at least 5 years of service as an officer.
  
  

Additional Benefits for Law Enforcement Officers

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• Automatic membership in the Supplemental Retirement Income Plan (401k), funded with 5% of salary contributions from the University.
  
  
• Access to temporary disability and death benefits through the Separate Insurance Benefits Plan.
  
  
• Participation in the Disability Income Plan of North Carolina.
  
  Potential eligibility for a Special Separation Allowance if retiring under a service retirement provision.

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Retirement Benefits

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TSERS is a defined benefit plan, which means your pension is calculated using a fixed formula:

Average Final Compensation (highest 4 consecutive years of salary)
× Retirement Factor (1.82%)
× Years of Creditable Service

This formula ensures that benefits are based on your service and earnings history, not investment outcomes.

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Unreduced and Reduced Benefits

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Full (Unreduced) Retirement Benefits

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You qualify for full retirement if you meet one of the following:

• Age 55 with at least 5 years of service as a law enforcement officer, or
  
  
• 30 years of creditable service at any age.
  
  

Reduced Retirement Benefits

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You qualify for a reduced pension if:

• You reach age 50 and have at least 15 years of creditable service as an officer.
  
  

Application: Retirement applications can be submitted 120 days before your planned retirement date. All required paperwork must be filed no earlier than 120 days and no later than one day before your intended retirement date.

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Retiree Health Insurance

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When you begin receiving retirement benefits from TSERS, you may also qualify for enrollment in the State Health Plan. Eligibility and cost coverage depend on your hire date and years of service:

• Hired before October 1, 2006: With at least 5 years of service, the State pays all or most of the cost for individual PPO coverage.
  
  
• Hired on or after October 1, 2006:
  
  
  • 20+ years of creditable service → State pays full cost for individual coverage.
    
    
  • 10–19 years of service → State pays 50% of cost.
    
    
  • 5–9 years of service → Retiree pays full cost.
    
    Dependent coverage costs are always the responsibility of the retiree.

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Re-Employment After Retirement

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To protect the integrity of the retirement system, TSERS requires a six-month break from state service after retirement.

If you return to work earlier than six months, your retirement benefits will be revoked retroactively, and all payments received must be repaid.

If you return on a part-time, interim, or contractual basis, your retirement may continue; however, your earnings are limited to the higher of:

• $28,860, or
  
  
• 50% of your pre-retirement compensation (excluding termination payments).
  
  These earnings limits are reviewed and adjusted annually.

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Taxes on Retirement Benefits

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Federal Taxes

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When you begin drawing benefits, contributions made on a pre-tax basis and the associated investment earnings are taxed as ordinary income. Contributions made after-tax are not taxed again when distributed.

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State Taxes

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In North Carolina, retirement benefits are generally subject to state income tax. However, there are important exceptions:

• If you were vested in TSERS on or before August 12, 1989, your retirement benefits are fully exempt from state income tax.
  
  Otherwise, you may be able to claim exclusions of up to $4,000 annually depending on your benefit structure.

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Plan Your Financial Future Beyond TSERS with Expert Federal Retirement Planning

Understanding the details of your North Carolina Law Enforcement Officers’ Retirement System (TSERS) benefits is essential, but it’s only one part of building a secure and comfortable retirement. For law enforcement officers looking to maximize their retirement readiness, personalized retirement planning that spans beyond your defined benefits can make all the difference.

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At Federal Pension Advisors, we specialize in helping public servants like you navigate the complexities of federal retirement benefits, including TSERS, social security, supplemental retirement accounts, and other savings options.

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Spaces for personalized consultations are limited and filling quickly! Schedule your free, no-obligation consultation today before this opportunity slips away and take the first step toward a retirement that rewards your dedication.

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Conclusion

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The North Carolina law enforcement retirement program (TSERS) provides more than just a pension it offers financial stability, health coverage, survivor benefits, and additional retirement savings opportunities. By understanding eligibility, contribution rules, benefit formulas, and tax implications, officers can make well-informed decisions about their financial future.

Whether you are just starting your career or nearing retirement, having a clear picture of your TSERS benefits will help you plan confidently for the years ahead.

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Reference taken from - myncretirement.gov