The North Carolina State Health Plan for Teachers and State Employees, governed by Chapter 135 of the North Carolina General Statutes, outlines specific provisions for retirement and health benefits. Article 3 of Chapter 135, specifically G.S. 135-41, addresses the administration of the retirement system and the benefits provided to eligible members. This statute details the eligibility criteria for retirement benefits, including age and service requirements, and the methods by which benefits can be calculated and paid. Furthermore, G.S. 135-45.10 establishes the framework for the State Health Plan, including eligibility for active and retired employees and the funding mechanisms. The concept of “service creditable” is central to determining retirement benefit amounts, and it encompasses periods of employment with the state, as well as other qualifying service that may be purchased or transferred. The law also specifies the procedures for beneficiaries to claim death benefits, which are typically paid in a lump sum or as an annuity, depending on the election made by the member. Understanding the interplay between these statutes is crucial for determining the correct benefit entitlements for state employees and their beneficiaries in North Carolina. The question focuses on the statutory basis for retirement and health benefits administered by the North Carolina system.

The North Carolina Teachers’ and State Employees’ Retirement System (TSERS) is governed by specific statutes and administrative rules. When a member is eligible for disability retirement and has accumulated sufficient creditable service, they may apply for benefits. The calculation of a disability retirement allowance for a TSERS member involves determining the member’s average final compensation and applying a percentage based on their creditable service. For disability retirement, the benefit is calculated as if the member continued to receive compensation and creditable service until the earliest date they could have retired under the standard service retirement provisions, or for 5 years, whichever is less. Specifically, if a member is approved for disability retirement, their benefit is calculated as their current creditable service plus any additional service granted due to the disability, applied to their average final compensation. If this calculation results in a benefit less than what they would receive if they had 20 years of service (for those who entered prior to July 1, 2014) or 25 years of service (for those who entered on or after July 1, 2014), the benefit is increased to the amount they would have received for that specified service duration, provided they have at least 5 years of creditable service. For a member with 15 years of creditable service who is approved for disability retirement, and whose disability is deemed to be permanent, the system will calculate the benefit as if they had 20 years of creditable service, assuming they met the criteria for disability retirement under North Carolina General Statute §135-4(f). This ensures a reasonable benefit level for individuals unable to continue employment due to disability. The average final compensation is determined by the highest consecutive 48-month period of compensation. The percentage for service retirement is generally 1.82% for those who became members on or after January 1, 2011. Therefore, the calculation would involve the average final compensation multiplied by the service retirement multiplier, with the disability provision ensuring a minimum benefit equivalent to 20 years of service for those with at least 5 years of service who are disabled.

The North Carolina Public Employee Deferred Compensation Plan, established under North Carolina General Statute Chapter 135, Article 4, provides a framework for state and local government employees to save for retirement on a tax-deferred basis. A key aspect of such plans, particularly concerning rollovers, involves the distinction between eligible rollover distributions and other types of distributions. An eligible rollover distribution is generally any distribution from a qualified plan, an annuity contract, or a contract treated as an annuity, to the credit of the employee, except for certain specified items. These exceptions typically include minimum required distributions (MRDs) mandated by Internal Revenue Code Section 401(a)(9), distributions made as a result of an “unforeseen emergency” as defined by the plan, and certain hardship distributions that are not otherwise eligible. Distributions that are not eligible for rollover may be subject to immediate income tax and a 10% early withdrawal penalty if taken before age 59½, unless an exception to the penalty applies. Understanding these distinctions is crucial for plan participants to make informed decisions about managing their retirement savings and avoiding adverse tax consequences. The North Carolina plan operates within the broader federal regulatory landscape governed by the Internal Revenue Code and ERISA, ensuring compliance and participant protection.

The scenario involves the North Carolina Local Governmental Employees’ Retirement System (LGERS) and the Teachers’ and State Employees’ Retirement System (TSERS). The core issue is the proper handling of a service purchase for a former employee who had a period of credited service under TSERS and subsequently returned to state employment under LGERS. The North Carolina General Statutes govern these inter-system transfers and service purchases. Specifically, G.S. 135-3(8)(f) outlines the conditions under which a member may purchase creditable service for prior service rendered in a position covered by TSERS when the member is currently in a position covered by LGERS. This statute generally requires that the member be in service in a covered position and pay the actuarial cost of the service, as determined by the Retirement System. The key is that the service must be rendered in a position covered by the respective retirement system. If the former TSERS service was indeed in a position covered by TSERS, and the employee is now in a position covered by LGERS, the purchase of this service is permissible under the statute, provided all other requirements are met, including payment of the calculated cost. The amount paid would be the actuarial cost to the system to fund that additional period of service. The question tests the understanding of the interrelationship between North Carolina’s major state retirement systems and the statutory provisions allowing for the purchase of service credit across these systems. It requires knowledge of the conditions and mechanisms for such purchases, particularly when a member transitions between systems.

The North Carolina Public Employee Deferred Compensation Plan, administered under the provisions of Chapter 135A of the North Carolina General Statutes, allows eligible public employees to defer a portion of their compensation into a retirement savings plan. The plan is designed to supplement other retirement benefits. Eligibility for participation is generally determined by employment status with a participating state or local government entity in North Carolina. The administration of the plan involves establishing rules and procedures for contributions, investment options, and distributions, all in compliance with federal tax laws, such as Internal Revenue Code Section 457. This section of the Internal Revenue Code governs deferred compensation plans of state and local governments and tax-exempt organizations. The plan administrator, often a third-party vendor selected by the state, manages the day-to-day operations, including record-keeping, investment management oversight, and participant services. The primary objective is to provide a tax-advantaged savings vehicle for public employees to build retirement security.

The scenario involves the North Carolina State Employees’ Retirement System (NCERS) and the disposition of retirement benefits upon the death of a member before retirement. The Uniform Prudent Investor Act, while relevant to fiduciary investment standards generally, does not directly dictate the beneficiary designation rules for a state pension plan. Similarly, the Uniform Simultaneous Death Act, while addressing situations where beneficiaries die at the same time, is not the primary governing law for beneficiary designations in this context. The Employee Retirement Income Security Act of 1974 (ERISA) governs private sector employee benefit plans, not state governmental plans like NCERS. The North Carolina General Statutes, specifically Chapter 135, govern the administration and benefits of the State Employees’ Retirement System. Within Chapter 135, the rules for naming beneficiaries and the distribution of benefits upon death before retirement are established. The statute dictates that the member’s designation of a beneficiary is controlling, provided it is in writing and filed with the Retirement System in accordance with its regulations. Therefore, the member’s written designation, properly filed, would be the determining factor.

North Carolina General Statute \(135-5(a)\) outlines the authority of the Teachers’ and State Employees’ Retirement System (TSERS) Board of Trustees to adopt rules and regulations for the administration of the system. Specifically, it grants them the power to establish actuarial tables, mortality tables, and rates of return on investments, which are crucial for calculating pension benefits and ensuring the system’s financial solvency. The statute also addresses the composition of the Board and its responsibilities concerning investment policies and the management of retirement funds. The determination of benefit accrual rates, eligibility criteria, and the calculation of service credit are all functions overseen by the Board, guided by statutory mandates and actuarial principles. The statute emphasizes the Board’s fiduciary duty to manage the system prudently for the benefit of its members. The specific methodology for calculating a member’s retirement allowance typically involves a formula that considers the member’s average final compensation, years of creditable service, and a retirement factor, all of which are influenced by the actuarial assumptions and investment returns managed by the Board. Therefore, the Board’s rule-making authority directly impacts the precise calculation of benefits.

The scenario involves a deferred compensation plan for a North Carolina public school teacher. The question hinges on understanding the tax treatment of such plans under Internal Revenue Code Section 457(f) as it applies to non-governmental entities, and how this differs from governmental plans. For a non-governmental deferred compensation plan, amounts deferred are includible in the employee’s gross income when there is no substantial risk of forfeiture. In this case, the teacher’s deferred compensation is subject to the condition of continued employment until retirement age. This condition constitutes a substantial risk of forfeiture. Therefore, the deferred compensation is not taxed until it is paid out, at which point it is taxed as ordinary income. The North Carolina Public Employee Deferred Compensation Plan is a governmental plan governed by Section 457(b), which allows for tax deferral as long as certain distribution requirements are met. However, the question specifies a plan that is *not* a governmental plan and falls under Section 457(f) if it is established by a non-profit organization or a state or local government entity for independent contractors or for employees of entities that are not governmental entities. The key distinction is the “substantial risk of forfeiture” clause. For a non-governmental 457(f) plan, if the deferral is contingent upon the employee providing services for a period of time or until a specific event (like reaching a certain age or date), and the employee forfeits the amount if they cease providing services before that time or event, that is a substantial risk of forfeiture. Once the forfeiture condition is met (i.e., the teacher continues employment until retirement age), the amount becomes vested. For a 457(f) plan, the taxation occurs when the amount is no longer subject to a substantial risk of forfeiture. In this specific case, the deferred compensation is contingent on continued employment until retirement age. Upon reaching retirement age while still employed, the substantial risk of forfeiture is removed. Therefore, the deferred compensation becomes taxable at that point. If the plan were a 457(b) plan, the taxation would be deferred until actual distribution. Since it is not a governmental plan and is subject to forfeiture if employment ceases before retirement age, the taxation occurs when the forfeiture condition is no longer applicable, which is upon reaching retirement age while still employed.

The North Carolina Public Employee Uniforme Retirement System (NC PERS) is governed by Chapter 135 of the North Carolina General Statutes. Specifically, the determination of whether a position is covered by the retirement system, and thus subject to employee and employer contributions, hinges on the nature of the employment and its intended duration. Permanent full-time positions, as defined by the employing entity and consistent with state regulations, are generally mandatory participants. However, temporary positions, those expected to last less than a specified period (often one year, though this can be subject to specific agency policies or legislative exceptions), or positions funded by specific grants with defined end dates, may be excluded. The critical factor is the permanency and full-time nature of the employment relationship as established by the employer and in accordance with NC PERS eligibility criteria. The question tests the understanding of these core eligibility principles for participation in the NC PERS, focusing on the distinction between permanent and temporary employment status.

The scenario describes a situation involving the North Carolina Teachers’ and State Employees’ Retirement System (TSERS). The key issue is the proper handling of a member’s service credit when they leave employment and later return. North Carolina General Statute \(135-4(e)\) addresses the crediting of service for members who are paid for accumulated vacation, sick, or other leave at the time of separation from service. If a member is paid for such leave, their creditable service is reduced by the period of leave for which they were paid. In this case, Ms. Albright separated from state service and received payment for 15 days of accumulated unused vacation leave. Therefore, her service credit must be reduced by these 15 days. To calculate the reduction in months, we convert 15 days to months by dividing by the average number of working days in a month. Assuming a standard 20 working days per month for calculation purposes in such contexts, the reduction is \(15 \text{ days} / 20 \text{ days/month} = 0.75 \text{ months}\). This reduction is applied to her total creditable service. The explanation of the statute highlights that such payments are treated as a refund of contributions for the period of leave, thus impacting the service credit calculation. This principle ensures that members do not receive credit for periods for which they were compensated upon separation.

The scenario presented involves a governmental unit in North Carolina that has established a defined benefit pension plan for its employees. The question centers on the fiduciary responsibilities related to the funding of such a plan, specifically concerning the actuarial valuation and the minimum required contribution. North Carolina General Statute §128-28 governs the Teachers’ and State Employees’ Retirement System, and while this specific statute may not detail the exact calculation for every local government plan, the principles of actuarial soundness and minimum contributions are universally applied under pension law. For a defined benefit plan, the employer’s contribution must at least meet the normal cost plus an amount to amortize any unfunded past service liability over a period not exceeding 40 years. The normal cost represents the projected benefits earned by employees for the current year of service. The unfunded past service liability is the difference between the present value of all benefits earned for service rendered prior to the valuation date and the current value of plan assets. The minimum contribution is calculated based on actuarial assumptions and is intended to ensure the long-term solvency of the pension fund. The key principle is that the employer must contribute enough to cover the benefits accrued in the current period and make progress towards funding any existing deficit. Therefore, the employer’s contribution must be sufficient to cover the normal cost and a portion of the unfunded past service liability, as determined by the plan’s actuary.

The scenario involves a municipal employee in North Carolina who participated in a defined benefit pension plan administered by the North Carolina Local Government Employees’ Retirement System (LGERS). Upon separation from service, the employee elected to receive a deferred vested retirement benefit. The critical aspect here is understanding how LGERS determines the benefit amount for deferred vested members, specifically concerning the application of the “final average salary” and the “creditable service” at the time of retirement, not separation. According to North Carolina General Statute \(§ 128-27\), the retirement allowance for a member who has separated from service with a deferred vested benefit is calculated based on the member’s creditable service and salary as of the date of retirement, not the date of separation. The benefit is typically calculated as a percentage of the final average salary multiplied by the creditable service. The final average salary is generally the average of the five highest consecutive years of compensation received by the member during their creditable service. For deferred vested members, the creditable service used in the calculation is the total creditable service accumulated up to the point they commence receiving their retirement benefits. Therefore, the benefit is not fixed at the time of separation but is calculated at the later retirement date using the creditable service and salary information available at that future time. The question tests the understanding that the LGERS benefit for a deferred vested member is not frozen at the point of separation but is calculated at the commencement of benefits using the applicable salary and service rules at that later date.

The scenario describes a situation involving the administration of a governmental retirement plan in North Carolina. Specifically, it touches upon the fiduciary responsibilities of plan administrators and the application of certain North Carolina General Statutes related to public employee retirement systems. The question probes the proper procedure for handling a situation where a participating employer fails to remit required contributions to the retirement system. North Carolina General Statute §128-28(g) outlines the consequences and administrative actions for delinquent employers, including the potential for the retirement system to offset future payments due to the employer. This statute empowers the retirement system’s board of trustees to take action to recover overdue contributions, which can include demanding payment, assessing interest and penalties, and, as a last resort, offsetting amounts owed to the employer. The principle at play is the protection of the retirement system’s assets and the assurance that all contributing entities fulfill their obligations to maintain the solvency and integrity of the pension fund for all beneficiaries. The statute aims to provide a clear framework for addressing such defaults, balancing the need for financial stability with procedural fairness.

This question pertains to the North Carolina State Retirement System and the nuances of purchasing service credit. Specifically, it addresses the conditions under which a member can purchase credit for periods of prior service that were not properly reported or paid for by an employer. According to North Carolina General Statute § 128-28(a)(3), a member of the Teachers’ and State Employees’ Retirement System (TSERS) may purchase credit for periods of service that were not reported or paid for by a former employer, provided that the member was employed in a covered position and the employer failed to make the required contributions. The purchase price is calculated based on the member’s salary at the time of purchase, the actuarial cost to the system, and interest. The statute outlines that such purchases are permissible to rectify administrative errors or omissions by the employer, ensuring that members are not penalized for system failures outside their control. The core principle is to allow members to acquire full credit for periods they were eligible for membership and employment in a covered position, even if the administrative processes of the employer were deficient. This provision is crucial for maintaining the integrity of retirement benefits and ensuring equitable treatment of all members within the North Carolina retirement system.

The North Carolina Public Employee Uniforme Retirement System (NC PERS) is governed by Chapter 135 of the North Carolina General Statutes. When a member of the NC PERS retires and elects to receive a retirement allowance, the law outlines specific provisions for the payment of benefits. Specifically, the statute addresses the timing of benefit payments and the conditions under which they are disbursed. According to G.S. 135-5(h), retirement allowances are payable monthly, with the first payment due on the first day of the calendar month next succeeding the effective date of the retirement. However, if the retirement becomes effective on a day other than the first day of a month, the retirement allowance for that month is prorated. The question focuses on a scenario where a retirement becomes effective on July 15th. Therefore, the initial payment would cover the period from July 15th to July 31st, and this prorated amount would be paid on August 1st, which is the first day of the calendar month next succeeding the effective date of retirement. Subsequent payments would then be made on the first day of each following month. The calculation of the prorated amount is not required for determining the payment date. The core principle is the first payment date following the effective date, considering any proration for the initial partial month.

The North Carolina Public Employee Deferred Compensation Plan, established under Chapter 135 of the North Carolina General Statutes, allows for the deferral of compensation for eligible public employees. A key aspect of such plans, particularly concerning distributions upon termination of employment, is the treatment of vested benefits. For a participant who has separated from service with the State of North Carolina, the plan document and applicable statutes dictate the options available for their vested account balance. Typically, upon separation from service, a participant may elect to receive their vested account balance in a lump sum payment, or they may elect to defer distribution until a later date, provided such deferral aligns with the plan’s terms and relevant federal tax law, such as Section 457(d) of the Internal Revenue Code. The plan document would specify the exact conditions and procedures for such elections. The question pertains to the lawful options for a vested participant who has left state employment, focusing on the permissible distribution methods. The core principle is that vested benefits are available for distribution upon separation from service, subject to plan provisions and legal constraints. The plan allows for distributions to be made as soon as practicable after the separation from service, or at a later date elected by the participant, provided that date is not earlier than the separation from service and adheres to other plan rules and regulatory requirements. Therefore, receiving the vested balance as soon as practicable after separation from service is a fundamental and permissible option.

The North Carolina Public Employee Deferred Compensation Plan (NC Plans) is administered by the State Treasurer’s office. The primary governing statute for the NC Plans is found within Chapter 128 of the North Carolina General Statutes, specifically Article 4. This article outlines the framework for establishing and operating deferred compensation plans for state and local government employees in North Carolina. Key provisions within this article address the creation of a board of trustees, investment options, participant eligibility, and fiduciary responsibilities. The plan operates under the Internal Revenue Code, particularly Section 457, which governs deferred compensation plans of state and local governments. The NC Plans are designed to provide retirement savings opportunities for public employees, supplementing other retirement benefits like the North Carolina Teachers’ and State Employees’ Retirement System (TSERS). The administration involves selecting investment providers, managing plan assets, and ensuring compliance with federal and state regulations. The specific authority for the State Treasurer to establish and administer these plans is derived from this statutory framework, which empowers the Treasurer to enter into agreements with financial institutions for investment management and to promulgate rules and regulations necessary for the proper administration of the plan. The NC Plans are distinct from the state’s primary defined benefit pension system, TSERS, and are intended as a voluntary supplemental savings vehicle.

The North Carolina Public Employee Deferred Compensation Plan, established under Chapter 135, Article 17 of the North Carolina General Statutes, allows for the deferral of compensation by employees of the state and its political subdivisions. This plan operates as a qualified deferred compensation plan under Section 457(b) of the Internal Revenue Code. When a participant in such a plan dies, the distribution of their vested account balance to their designated beneficiary is generally treated as taxable income to the beneficiary in the year of receipt. The specific tax treatment depends on whether the beneficiary is a spouse or a non-spouse, and whether they elect to roll over the distribution into an eligible retirement plan. However, the fundamental principle is that the deferred compensation itself, having not been taxed when earned due to the deferral, becomes taxable income upon distribution. This is consistent with the tax treatment of other deferred compensation arrangements, such as 401(k) plans, where pre-tax contributions and earnings are taxed upon withdrawal. The state of North Carolina’s law aligns with federal tax principles in this regard, ensuring that income deferred is ultimately subject to taxation.

The question concerns the fiduciary responsibilities under ERISA as they apply to the administration of a qualified retirement plan sponsored by a North Carolina-based employer. Specifically, it probes the understanding of prohibited transactions and the potential for a breach of fiduciary duty when a plan fiduciary engages in a transaction that benefits themselves or a party in interest. Under ERISA Section 406(b)(1), a fiduciary is prohibited from dealing with the assets of the plan in their own interest. Similarly, ERISA Section 406(b)(2) prohibits a fiduciary from acting in any transaction involving the plan on behalf of a party whose interests are adverse to the interests of the plan or its participants and beneficiaries. ERISA Section 409 outlines the liability for breaches of fiduciary duty, stating that a fiduciary who breaches their responsibilities is personally liable to make good to the plan any losses resulting from the breach, and to restore to the plan any profits made by the fiduciary through use of plan assets. In this scenario, the plan trustee, acting as a fiduciary, uses plan assets to purchase a parcel of land from a corporation of which they are the sole shareholder. This constitutes a direct self-dealing transaction, a clear violation of ERISA’s prohibited transaction rules, specifically Section 406(b)(1). The trustee’s actions also violate the duty of loyalty and the duty to act solely in the interest of plan participants and beneficiaries, fundamental tenets of fiduciary responsibility under ERISA. The purchase price, even if deemed fair market value, does not cure the inherent conflict of interest. The trustee is liable for any losses incurred by the plan as a result of this transaction and must disgorge any profits derived from it. The North Carolina Pension and Employee Benefits Law Exam expects a thorough understanding of these ERISA principles, as state laws often supplement or align with federal regulations in the administration of employee benefits.

The North Carolina Public Employees’ Retirement System (NC PERS) is governed by Chapter 135 of the North Carolina General Statutes. Article 135, Section 135-4 defines the eligibility for membership in the retirement system. Generally, any employee of a participating employer who is employed on a full-time basis, meaning for at least 20 hours per week, is considered a member. The law specifies that service as a temporary, intermittent, or part-time employee is not creditable service unless specific conditions are met, such as a minimum number of hours worked over a period. For a person to be considered a member and accrue creditable service, their employment must be with a participating employer and meet the definition of full-time or a specifically defined part-time engagement that allows for membership. In this scenario, Ms. Albright’s employment as a consultant on an as-needed basis, without a fixed schedule or guaranteed hours, does not meet the typical definition of full-time employment or a qualifying part-time engagement under NC PERS. Therefore, she would not be considered a member of the NC PERS, and her service would not be creditable.

The question concerns the application of North Carolina’s specific rules regarding the distribution of benefits from a deferred compensation plan upon the death of a participant, considering the impact of federal law, particularly the Uniformed Services Former Spouses’ Protection Act (USFSPA) and its interaction with state domestic relations orders. While federal law generally preempts state law in matters of military retirement pay allocation, state domestic relations orders can still govern the distribution of non-military deferred compensation benefits. In North Carolina, a Qualified Domestic Relations Order (QDRO) is the mechanism by which a participant’s retirement benefits can be divided between the participant and an alternate payee, such as a former spouse. For a domestic relations order to be considered “qualified” under federal law (specifically ERISA for private plans and similar state provisions for public plans), it must create or recognize the right of an alternate payee to receive all or a portion of the benefits payable to a participant under a plan. It must also contain specific information, including the name and last known mailing address of the participant and each alternate payee, the name of each plan to which the order applies, the amount or percentage of the benefit to be paid to each alternate payee, and the number of payments or period to which the order applies. If a domestic relations order does not meet these requirements, it is not a QDRO. The question implies a scenario where a domestic relations order exists but is not a QDRO. Without a QDRO, the plan administrator is generally bound by the terms of the plan and the participant’s beneficiary designation. If the participant designated their current spouse as the beneficiary of their deferred compensation plan benefits and no QDRO exists to alter this designation, the benefits would typically be paid to the current spouse, irrespective of a prior domestic relations order that was not qualified. Therefore, the existence of a non-qualified domestic relations order does not legally compel the plan administrator to distribute benefits to a former spouse. The administrator must follow the plan’s terms and the participant’s valid beneficiary designation.

The North Carolina Public Employee Deferred Compensation Plan, established under North Carolina General Statutes Chapter 135, Article 18A, governs the administration of deferred compensation programs for state and local government employees. This plan is designed to supplement retirement income. A key aspect of its operation involves the treatment of distributions upon termination of employment. When a participant separates from service, they are typically entitled to receive their vested account balance. The plan documents, in conjunction with relevant federal tax law, specifically Internal Revenue Code Section 401(a)(9) and Section 457(b), dictate the permissible methods for such distributions. These methods can include a lump-sum payment, installment payments over a specified period, or a rollover into another eligible retirement plan or individual retirement account. The law emphasizes the importance of participant choice within the framework of these permissible options, ensuring that distributions are managed in a manner that aligns with retirement savings goals and tax regulations. The plan administrator is responsible for providing clear information to participants regarding their distribution options and the associated tax implications.

The scenario describes a situation where a private sector employer in North Carolina sponsors a defined benefit pension plan. The question probes the employer’s responsibility regarding reporting unfunded liabilities to the state treasurer. North Carolina General Statute § 135-7(b) mandates that the retirement system, which includes plans for state employees and teachers, must report its financial condition, including any unfunded liabilities, to the State Treasurer. However, this statute specifically applies to the state’s administered retirement systems. For private sector employers sponsoring their own plans, the reporting requirements are primarily governed by federal law, specifically the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, plan administrators are required to file annual reports (Form 5500 series) with the U.S. Department of Labor, which include detailed financial information about the plan, including funding status and any unfunded vested benefits. While state laws may impose certain disclosure requirements, the primary oversight and reporting for private employer-sponsored pension plans, particularly concerning actuarial valuations and funding status, falls under federal jurisdiction. Therefore, the employer’s obligation to report unfunded liabilities to the North Carolina State Treasurer is not a direct requirement under the state’s pension laws for private plans; rather, it is an indirect consequence of federal ERISA reporting that may be reviewed or considered in broader state financial oversight contexts, but not a direct statutory mandate to report to the Treasurer for a private plan. The correct response reflects this distinction between state-administered systems and private employer plans under federal law.

The question concerns the implications of a North Carolina local government entity’s participation in a defined benefit pension plan for its employees, specifically regarding the application of the Employee Retirement Income Security Act of 1974 (ERISA). Governmental plans, as defined under ERISA Section 3(32), are explicitly excluded from ERISA’s coverage. North Carolina’s Public Employee Retirement System (NC PERS) is a state-administered retirement system that covers employees of the state and its political subdivisions, including cities and counties. Therefore, a North Carolina municipality that sponsors a defined benefit pension plan for its employees, which is part of the NC PERS, is operating a governmental plan. Since governmental plans are exempt from ERISA, the fiduciary duties, reporting requirements, disclosure obligations, and other provisions mandated by ERISA do not apply to this municipality’s pension plan. The question tests the understanding of this fundamental exclusion for governmental entities under ERISA, which is a key distinction in employee benefits law.

The North Carolina Public Employee Deferred Compensation Plan, administered under Chapter 135, Article 17 of the North Carolina General Statutes, is a retirement savings plan designed for state employees. It functions similarly to a 401(k) plan but is specific to public sector employees in North Carolina. The plan allows participants to defer a portion of their salary into investment accounts, with contributions typically being pre-tax. Earnings grow tax-deferred until withdrawal, usually during retirement. The governing statutes outline the administrative responsibilities, fiduciary duties of the State Treasurer, and the types of investments that may be offered. Importantly, this plan is distinct from the state’s primary retirement system, the Teachers’ and State Employees’ Retirement System (TSERS), which provides defined benefit pensions. Deferred compensation plans are designed to supplement, not replace, primary retirement benefits. The law specifies rules regarding eligibility, contribution limits, and distribution options, which are generally aligned with federal tax code provisions for deferred compensation plans. The administration of the plan involves selecting and monitoring third-party providers who manage the investment options and recordkeeping. The fiduciary responsibility for the plan rests with the State Treasurer, who must act prudently in selecting and overseeing service providers and ensuring the plan operates in the best interest of participants.

The North Carolina Public Employee Deferred Compensation Plan, administered under Chapter 135A of the North Carolina General Statutes, allows eligible public employees to defer a portion of their compensation into a retirement savings plan. A key aspect of such plans, governed by Internal Revenue Code Section 457(b), is the treatment of distributions upon separation from service. When a participant separates from service, they typically have several options for their deferred compensation. These options are designed to provide flexibility while adhering to federal and state regulations. The plan document itself, along with applicable IRS regulations, dictates the permissible distribution methods. Common options include receiving the account balance as a lump sum, rolling it over into another eligible retirement plan (such as an IRA or another 457(b) plan), or electing to receive installment payments over a specified period. The ability to defer taxation on these distributions until they are actually received is a primary benefit of a 457(b) plan. Therefore, the participant’s election to defer receipt of their vested account balance, effectively continuing to hold it within the plan after their separation from service, is a valid distribution option permitted by law and the plan’s governing documents, as long as it aligns with the plan’s terms and IRS rules regarding such elections. This strategy allows the funds to continue to grow tax-deferred.

The scenario describes a situation involving a governmental retirement system in North Carolina that has a defined benefit pension plan. The question asks about the legal implications of a municipality’s decision to cease future accruals for its employees. In North Carolina, public employee retirement systems are established by statute, and the General Assembly has the authority to amend these statutes. The Teachers’ and State Employees’ Retirement System (TSERS) and the Local Governmental Employees’ Retirement System (LGERS) are the primary systems for state and local government employees, respectively. Both are defined benefit plans. When a governmental entity, such as a municipality, participates in LGERS, it is subject to the terms and conditions of the LGERS statutes and the rules promulgated by the LGERS Board of Trustees. The ability of a municipality to unilaterally alter or terminate its participation in LGERS, particularly concerning accrued benefits or future accruals, is generally restricted by the governing statutes and the contractual nature of pension benefits, which are often protected from impairment. However, the General Assembly can legislate changes to the retirement systems. If a municipality were to cease future accruals, it would likely need legislative authorization or a change in the underlying LGERS statutes. The concept of “vesting” is critical; employees who have met certain service requirements have a right to a pension, even if they leave employment before retirement age. Ceasing future accruals does not typically extinguish already vested rights, but it does impact future benefit calculations for active employees. The North Carolina General Statutes, particularly those pertaining to LGERS (Chapter 128 of the General Statutes), govern the rights and obligations of participating employers and employees. Amendments to these statutes can alter benefit accrual formulas or eligibility requirements, but such changes are subject to constitutional limitations regarding impairment of contracts. The question probes the understanding of governmental authority over public pension plans and the interplay between municipal decisions and state law governing these systems.

The question pertains to the reporting requirements for deferred compensation plans under North Carolina law, specifically for entities that are not governmental entities. North Carolina General Statute \(135-5(l)\) addresses the establishment and operation of supplemental retirement income plans for employees of the state and its political subdivisions. However, when considering plans that fall outside the scope of these governmental provisions, particularly those that might be structured as non-qualified deferred compensation plans, the reporting and disclosure obligations are generally governed by federal law, primarily the Employee Retirement Income Security Act of 1974 (ERISA), if the plan is subject to ERISA. North Carolina’s own statutes are more focused on the state’s administered plans and the plans of its political subdivisions. For private sector or non-governmental plans that are not governmental plans, the state does not impose a separate, distinct annual reporting requirement similar to what might exist for state-administered plans. Instead, compliance is generally managed through federal frameworks. Therefore, if a plan is not a governmental plan as defined by federal or state law, and it is not otherwise mandated by a specific North Carolina statute to file an annual report with a state agency, then no specific annual filing with a North Carolina state agency is required under the general framework of state pension and employee benefits law for such a plan. The focus remains on federal compliance and any specific reporting tied to the nature of the entity and the plan’s structure.

The North Carolina Public Employee Deferred Compensation Plan, governed by Chapter 135, Article 12 of the North Carolina General Statutes, allows eligible public employees to defer a portion of their compensation into a retirement savings plan. This plan is designed to supplement other retirement benefits. The statute outlines the administration of the plan, including investment options and participant rights. Specifically, G.S. § 135-96(b) states that the plan shall be administered by the State Treasurer, who is responsible for selecting and contracting with providers of investment products and services. The statute also specifies that the plan is intended to comply with Section 457 of the Internal Revenue Code. This means that amounts deferred under the plan, and any earnings on those amounts, are generally not subject to federal income tax until distributed to the participant or beneficiary. The key distinction for a 457(b) plan, as administered in North Carolina, is that the assets are held in trust or custodial accounts for the exclusive benefit of participants and their beneficiaries. This ensures that plan assets are protected from the general creditors of the employer. The question probes the fundamental nature of the plan’s asset protection, which is a direct consequence of its 457(b) qualification and the statutory mandate for separate trust or custodial account holding.

The scenario involves the North Carolina Teachers’ and State Employees’ Retirement System (TSERS) and the application of the Uniformed Services Employment and Reemployment Rights Act (USERRA). When a member of TSERS takes an approved leave of absence for military service, USERRA mandates that their service be treated as continued employment for purposes of pension benefits. This means that the period of military service must be creditable service under TSERS, and the member is entitled to have contributions made on their behalf as if they had remained in covered employment. Specifically, the employer is generally required to make the employee’s and employer’s contributions for the period of military service. This ensures that the member does not suffer a loss of retirement benefits due to their military service. The question hinges on the proper crediting of service and the associated contribution obligations for a TSERS member on military leave. Under North Carolina General Statute \(135-3(8)(a)\), creditable service includes periods of service for which contributions are made. USERRA, as interpreted in the context of public retirement systems, requires the public employer to facilitate the crediting of this service by making the necessary contributions. Therefore, the period of military service counts as creditable service for the TSERS member, and the employer must ensure the appropriate contributions are remitted to TSERS.