lgers handbook

LOCAL GOVERNMENTAL EMPLOYEES’RETIREMENT SYSTEM

Department of State TreasurerRaleigh, NC

Revised January 2017

YOUR RETIREMENT BENEFITS

MemberHandbook

local governmental employees’ retirement system

january 2017

1-877-627-3287 Toll-free

[email protected]

Welcome to the Local Governmental Employees’ Retirement System!

The Local Governmental Employees’ Retirement System (LGERS), as well as other state and local retirement systems and plans, is administered by the Department of State Treasurer for North Carolina public employees. Col-lectively, these plans are referred to as the North Carolina Total Retirement Plans.

As a member of LGERS, you should be fully informed about your options. We are committed to providing you with relevant information intended to help you make informed decisions about your financial future. I encourage

you to become familiar with this booklet outlining the benefits that are available to you as a member of LGERS.

Many financial experts suggest that individuals will need a monthly income in retirement equal to 80% of their pre-retirement pay. When planning for a secure retirement, I encourage you to consider not only your LGERS benefits, but also your Social Security benefits and your personal savings (including saving through the NC 401(k) and NC 457 Plans).

I also encourage you to visit our website, www.MyNCRetirement.com, for retirement resources, and to access ORBIT, your safe and secure online access to your personal retirement account information. You can also contact the North Carolina Total Retirement Plans at the number below if you have additional questions. Our customer service representatives can assist with the status of an application or answer questions about retirement, disability and death benefits.

Thank you for your service to the people of North Carolina.

Sincerely,

Dale Folwell, CPA

N.C. DEPARTMENT OF STATE TREASURER RETIREMENT SYSTEMS DIVISION

STEPHEN C. TOOLEEXECUTIVE DIRECTOR

DALE R. FOLWELL, CPASTATE TREASURER OF NORTH CAROLINA

mailto:nc.retirement%40nctreasurer.com?subject=

https://www.nctreasurer.com/Retirement-And-Savings/Managing-My-Retirement/Pages/default.aspx

https://www.nctreasurer.com/Retirement-And-Savings/Managing-My-Retirement/Pages/default.aspx

Contents Page

Section 1: About Your Retirement System . . . . . . . . .4Section 2: Membership in LGERS . . . . . . . . . . . . . . . .5Section 3: Qualifying for Benefits . . . . . . . . . . . . . . . .6 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ServiceRetirement(UnreducedBenefits) . . . . . . . . 6 EarlyRetirement(ReducedBenefits) . . . . . . . . . . . . 6 VestedDeferredBenefit . . . . . . . . . . . . . . . . . . . . . . 6 DisabilityRetirement . . . . . . . . . . . . . . . . . . . . . . . . . 7 RefundofContributions . . . . . . . . . . . . . . . . . . . . . . 7 ReciprocityBetweenRetirementSystems . . . . . . . . 8 TransferringService&Contributions BetweenSystems . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 RequiredDistributionsAfterAge701/2 . . . . . . . . . 8Section 4: How Your Benefit is Calculated . . . . . . . . .9 RetirementFormula . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ServiceRetirementCalculationExample . . . . . . . . . 9 EarlyRetirementCalculationExample . . . . . . . . . . 10 EarlyRetirementReductionPercentages . . . . . . . . 11 ExamplesofMonthlyBenefitsPaid . . . . . . . . . . . . 12 BenefitLimitations . . . . . . . . . . . . . . . . . . . . . . . . . . 12Section 5: Your Benefit Payment Options . . . . . . . . .14 ExampleofPaymentOptions . . . . . . . . . . . . . . . . . 17Section 6: Adding to Your Creditable Service . . . . . .18

Contents Page

DISCLAIMER: The availability and amount of all ben-efits you might be eligible to receive is governed by North Carolina law. The information provided in this handbook cannot alter, modify or otherwise change the controlling North Carolina law or other governing legal documents in any way, nor can any right accrue to you by reason of any information provided or omission of information provided herein. In the event of a conflict between this information and North Carolina law, North Carolina law governs.


january 2017 Your Retirement Benefits3

Table of Contents

Section 7: Death Benefits . . . . . . . . . . . . . . . . . . . 22 ActiveEmployeeDeathBenefits . . . . . . . . . . . . . 22 RetireeDeathBenefits . . . . . . . . . . . . . . . . . . . . . 23Section 8: Initiating Your Retirement Benefits . . . 25 RetirementApplicationProcess . . . . . . . . . . . . . 25 YourFirstMonthlyBenefit . . . . . . . . . . . . . . . . . . 26 OptionalSupplementalInsurance . . . . . . . . . . . . 26 Post-RetirementIncreases . . . . . . . . . . . . . . . . . . 26Section 9: NC 401(k) and NC 457 Transfer Benefit 27Section 10: Income Tax . . . . . . . . . . . . . . . . . . . . . 28 RetirementBenefits . . . . . . . . . . . . . . . . . . . . . . . 28 Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 DeathBenefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Section 11: Return to Work After Retirement . . . 31Section 12: Administration & Funding . . . . . . . . . 33Section 13: Resources and Contacts . . . . . . . . . . . 36 ORBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ContactUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Section 14: Glossary of Terms . . . . . . . . . . . . . . . . 38



TheLocalGovernmentalEmployees’RetirementSystem(LGERS)isadefinedbenefitplanqualifiedunderSection401(a)oftheInternalRevenueCode.Definedbenefitplansuseaformulatocalculatemonthlyretirementbenefitsonce eligibility requirements have been met . This handbook explainsLGERSbenefiteligibilityrequirementsandthefor-mulausedtocalculatebenefits.Termsandphrasesinbold typearedefinedinSection14–GlossaryofTerms .

You,youremployer,andtheinvestmentearningsontotalcontributionspaythecostofprovidingyourretirementbenefits.

Yourshareofthecostiscurrently6%ofyourcompensation,andisautomati-callydeductedfromyourpaycheck.Yourcompensationincludesalleligiblesalariesandwages,asdefinedbystatute,paidtoyoufrompublicfunds,earnedatyourcoveredjobwhileworkingforyouremployer.

Youremployer’sshareofthecostisbasedoncalculationspreparedbyanactuary.

BeginningJuly1,1982,ifyouremployeradoptedaresolutiontohaveyourcontributionsmadeonabefore-taxbasis,yourcontributionshavebeentax-de-ferred.Thismeansyourcontributionsaredeductedfromyourpaybeforetaxesarecalculated,andyoupaytaxesonthemwhenyoubeginreceivingmonthlyretirementbenefitsorifyouelectarefundofyourcontributions.Thus,yourcurrenttaxableincomeisloweredandtheamountofannualtaxesyoupayislessthanifyoumadecontributionsafterpayingtaxes.Seepages28-29 for moreinformationaboutyourtaxliabilityonbenefits.

ContributionstoLGERSareinvestedbytheDepartmentofStateTreasurerandthesefundsareprotectedbytheConstitutionofNorthCarolinafrombeingusedforanypurposeotherthanretirementsystembenefitsandexpenses.

ORBITisasecuresitethatallowsyoutoviewyourpersonalaccountinforma-tion,downloadretirementforms,andac-cessretirementresources24hoursaday,7daysaweek.TologintoyourpersonalORBITaccount,gotoourwebsiteatwww.MyNCRetirement.com,clickontheORBITiconandfollowthelog-ininstructions.See page 36formoreinformationaboutORBIT.

You and your employer share the cost of provid-ing your LGERS benefits.

Section 1: About Your Retirement System

View your account infor-mation and download forms in ORBIT.



YoubecomeanLGERSmemberonyourhiredate(orafterarequiredlocalunitwaitingperiod)ifyouareemployedbyaparticipatingunitinaregularpositionthatrequiresatleast1,000hoursofworkinacalendaryear.YouwillnotbeacontributingmemberofLGERSifyourworkisconsideredtemporary employ-ment or statutorily-required interim employment . See page 38fordefinitionsoftemporaryandstatutorily-requiredinterimemployment.

Aparticipatingunitisanycounty,city,townorotherlocalgovernmentthathasagreedtoparticipateinLGERS. IfyouareanAgriculturalExtensionServiceemployeeandamemberoftheFederalEmployees’RetirementSystem,youmaynotjoinLGERS.Contactyouremployer for more details about the alternate Systems .

● Designating Beneficiaries

AfteryouremployerenrollsyouinLGERS,youshouldnamebeneficiary(ies)toreceiveareturnofyourretirementcontributionsand,ifapplicable,adeathbenefit,shouldyoudiebeforeretirement.Todesignatebeneficiaries,complete:

• Form2RC(DesignatingBeneficiary(ies)forRetirementSystemReturnofContributions)

• Form2DB(DesignatingBeneficiary(ies)fortheDeathBenefit)

● Forfeiting Eligibility for Criminal Offenses

EffectiveJuly1,2007,electedgovernmentofficialswillforfeittheirrighttoamonthlybenefitfromLGERSifconvictedofcertainstateorfederaloffensesinvolvingpubliccorruption.

EffectiveDecember1,2012,ifyouwerenot vested as of December 1, 2012, and are convicted of a state or federal felony directly related to youremploymentwhileinserviceunderLGERS,youareprohibitedfromreceivinganyretirementbenefitotherthanareturnofyourcontributionsplusinterest.Ifyouwere vested as of December 1, 2012, you are prohibited fromreceivinganyretirementbenefitforservicerenderedafterDecember1,2012,otherthanareturnofyourcontributionsplusinterestfortheperiodofserviceafterDecember1,2012.

Membership in LGERS is automatic for eligible employees.

To designate beneficia-ries, complete Forms 2RC and 2DB found in ORBIT.

Section 2: Membership in LGERS



Section 3: Qualifying for BenefitsVesting

YoubecomevestedinLGERSonceyouhavecompletedaminimumof5yearsofcreditableservice.Thismeansthatyouareeligibletoapplyforlifetimemonthlyretirementbenefitsbasedontheretirementformulaineffectatthetimeofyourretirementandtheageandservicerequirementsdescribedinthishandbookprovidedyoudonotwithdrawyourcontributions.

Service Retirement (Unreduced Benefits)

Youmayretirewithanunreducedserviceretirementbenefitafteryou: • Reach age 65 and complete 5 years of creditable service • Reach age 60 and complete 25 years of creditable service • Complete 30 years of creditable service at any age

Early Retirement (Reduced Benefits)

Youmayretireearlywithareducedretirementbenefitafteryou: • Reach age 50 and complete 20 years of creditable service • Reachage60(age55ifyouareafirefighterorrescuesquadworker)and

complete 5 years of creditable service

Yourearlyretirementbenefitiscalculatedusingthesameformulaasaserviceretirementbenefitmultipliedbyareductionpercentagebasedonyourageand/orserviceatearlyretirement.Becauseyourbenefitmaybepaidoveralongerperiodoftimethanifyouhadwaiteduntilbeingeligibleforservicere-tirement,yourbenefitwillbereduced.Thetablesonpage 11showtheeffectsthesereductionswouldhaveonyourbenefit.

Vested Deferred Benefit

IfyouleaveLGERSforanyreasonotherthanretirementordeath,youcanei-therreceivearefundofyourcontributionsandinterest,orleaveyourcontribu-tionsinLGERSandkeepallthecreditableserviceyouearnedtothatdate.

Youmaybeentitledtoapplytoreceiveadeferredbenefitatalaterdateonceyoumeeteligibilityrequirementsafteryouhavecompleted5yearsofcredit-ableserviceprovidedyoudonotwithdrawyourcontributions.Yourbenefitiscalculatedusingtheformulaineffectonyourretirementdate.Itisbasedonyouraveragefinalcompensationandyearsofcreditableserviceatthattime.



To receive a refund, com-plete Form 5, found in ORBIT.

Disability Retirement

Youbecomeeligibletoapplyfordisabilityretirementbenefitsafter5yearsofcreditable service if you become totally and permanently disabled for your job, asapprovedbytheMedicalReviewBoard.Ifyouareafirefighterorrescuesquadworkerwhobecomesdisabledasaresultofa“line-of-dutyinjury,”youareeligibletoapplyfordisabilityretirementregardlessoftheamountofyourcreditable service .

YourdisabilitybenefitundertheMaximumAllowanceiscalculatedusingthesameformulaasaserviceretirementbenefitandyoumaychooseanypay-mentoptionexceptOption4.Seepages14-17fordescriptionsofretirementpaymentplans.Ifyouchooseasurvivorshipoption,itwillbecalculatedusingdisabilityreductionpercentages.

Youraveragefinalcompensationiscalculatedasofyourdisabilityretirementdate,butcreditableserviceiscountedasthoughyoucontinueworkingtotheearliestdateyouwouldhavequalifiedforanunreducedserviceretirementallowance,whetheritbeage65,orwith30yearsofservice,orage60with25years of service .

Ifyoudieafteryouhavefiledanapplicationfordisabilityretirementbutbeforeitseffectivedate,andyouhaveotherwisemetallrequirementsfordisabilityretirementbenefits,yourbeneficiarymayelecttoreceiveamonthlyretirementallowanceprovidedbyOption2,insteadofareturnofyourretirementcontri-butionsandinterest,providedthefollowingconditionsapply:

• Youhaveonlyoneeligiblebeneficiaryforthereturnofcontributionsliv-ingatthetimeofyourdeath.

• YouhavenotindicatedtotheRetirementSystem,inwriting,thatyoudidnotwantyourbeneficiarytohavethischoiceofreceivingaretirementallowanceprovidedbyOption2.

Pleasevisitourwebsiteatwww.MyNCRetirement.comforadditionalinforma-tionaboutdisabilitybenefitsandtherequiredforms.

Refund of Contributions

IfyouleaveLGERSbeforeyouhave5yearsofcreditableservice,theonlypay-mentyoucanreceiveisarefundofyourcontributionsandinterest.

Statelawprohibitsusfrommakingarefundearlierthan60daysafteryouleavecoveredemployment.Onceyoureceivearefundofyourcontributions,youwaiveanyrightstoyourformeremployer’scontributionsoranyotherbenefitfromLGERS.



Setbystatelaw,theinterestcreditedonyourcontributionsandpaidwitharefundis4%compoundedannuallyonyourprior-yearendingbalance.

Toreceivearefund,completeForm5(WithdrawingYourRetirementServiceCreditandContributions).

Reciprocity Between Retirement Systems

AnycredityoumayhaveinthefollowingretirementsystemsmaybecountedalongwithyourcreditinLGERSinordertodetermineyoureligibilityforare-ducedorunreducedbenefit:

• Legislative(LRS) • ConsolidatedJudicial(CJRS) • Teachers’andStateEmployees’RetirementSystem

However,onlyyourcreditableserviceinLGERSisusedincomputingtheamountofyourbenefitinLGERS.Creditableserviceinanyothersystemisusedtocomputebenefitsfromthatsystem.

Transferring Service & Contributions Between Systems

YoucantransferyourcontributionsandcreditableservicebetweenLGERSandTSERSaslongasyouareaneligiblememberofthesystemtowhichyouaretransferring,donotreceivearefundofyourcontributionsfromthesystemfromwhichyouaretransferring,andfileForm5TR(TransferringServiceandContributionsBetweenSystems).

Transferredcreditableservicecountstowardyoureligibilityforamonthlybene-fitandisusedtocomputetheamountofyourbenefit.Overlappingtransferredservicecannotbecountedtwiceforthesametimeperiod.

Required Distributions After Age 70 1/2

Inmostcases,LGERSisrequiredtopaybenefitstonon-retiredmemberswithopenLGERSaccountsbyApril1oftheyearfollowingtheyearinwhichthememberreachesage701/2orceasestobeanemployee,whicheverislater.Memberswhoarevested(5ormoreyearsofcreditableservice)whofailtocompletetheretirementprocesswillreceiveamonthlyretirementbenefitbasedontheMaximumAllowance.Non-vestedmemberswhofailtocompletearefundapplicationwillreceivearefundoftheircontributionsandinterest.

Credit in other North Car-olina retirement systems may be counted along with your LGERS credit to determine retirement eligibility.

To request a Form 5TR, please contact our office.



Section 4: How Your Benefit is CalculatedRetirement Formula

Your annual benefit =

1.85% of average final compensation

X

years and months of creditable service

Average final compensation is the average of your salary during your four highest-paidyearsinarow.Ifyourfourhighest-paidyearsinarowincludeafi-nalpaymentforunusedvacationleaveand/orproratedlongevity,youraveragefinalcompensationmaybeincreasedbytheextrapayment(s).Finalpayments,ifany,forunusedsickleaveorreimbursementsforexpensesarenotincludableinyouraveragefinalcompensation.

Creditable serviceisthetotalofallservicecreditthatcountstowardretire-ment.Itincludesmembershipserviceforanyperiodduringwhichyoucontrib-utetoLGERS,providedyouhavenotwithdrawnyourcontributions.Italsoin-cludes credit for eligible purchased service and eligible unused sick leave that is convertedtocreditableserviceatretirement.Seepages18-21 for more details .

Service Retirement Calculation Example

AssumeemployeeMaryBensonretiresatage60with32yearsand2monthsofcredit-ableserviceandanaveragefinalcompen-sationof$40,331.BecauseMaryhasmorethan30yearsofcreditableserviceatretire-ment,shereceivesherbasicbenefitofabout$24,000ayear(about$2,000monthly)fortherestofherlifeunderthemaximumallowance.Monthlypaymentswouldstopatherdeath.Inaddition,MarymayalsobeeligibleforSocialSecurityben-efitsasearlyasage62.

ThefollowingtableshowshowwecalculateMary’sbenefit.Usethespacesintheright-handcolumntofillinyourfiguresforanestimateofyourbenefit.

You can create your own retirement estimate by logging into your person-al ORBIT account.



At Service Retirement Mary You

Step 1Addyoursalaryduringyour4 $38,930 $highest-paidyearsinarow. 39,830 40,830 + 41,734 $161,324 $

Step 2DivideStep1by4toget $40,331 $ averagefinalcompensation.

Step 3MultiplyStep2by.0185to $40,331 $apply formula . x.0185 x.0185 $746.12 $

Step 4Determine creditable service 32 .1667 years(seepages17-20) .

Step 5MultiplyStep3byStep4 $746.12 $to determine your annual x32.1667 xretirementbenefit. $24,000.22 $

Step 6DivideStep5by12toget $2,000.02 $monthlymaximumallowance.

Early Retirement Calculation Example

AssumeemployeeFredWiseretiresatage61with24yearsand3monthsofcreditableserviceandanaveragefinalcompensationof$40,331.

Hereishowwecalculatehisbenefit:

$ 40,331 (averagefinalcompensation) x .0185 $ 746.12 x 24.25 (creditableservice) $ 18,093.41

Nowapplytheearlyretirementreductionpercent-age from the chart on page 11 .

$ 18,093.41 x .88 (percentageatage61) $ 15,922.20



Fredreceivesabenefitunderthemaximumallowanceofabout$15,922ayear(about$1,326monthly).Hispaymentwillstartatage61andcontinuefortherestofhislife.

Assume,however,thatFredisage59insteadofage61.With24.25yearsofcreditableservice,hisearlyserviceretirementreductionpercentageis0.80insteadof0.88.Inthiscase,Fredreceivesabenefitunderthemaximumallowanceofabout$14,474ayear(about$1,206amonth).Hispaymentwillstartatage59andcontinuefortherestofhislife.Inaddition,FredmayalsobeeligibleforSocialSecuritybenefitsasearlyasage62.

Early Retirement Reduction Percentages

Ifyouarebetweenages60and65,withlessthan25yearsofcreditableservice,yourearlyserviceretirementbenefitwillbereducedtothefollowingpercentages.

If you are this age You receive this when payments start percentage of your benefit 64 97% 63 94% 62 91% 61 88% 60 85%

Ifyouarebetweenbirthdayswhenpaymentsstart,thereductionwillbead-justedproportionately.

Ifyouarebetweenages50and59,withfewerthan30yearsofcreditableservice,yourearlyretirementwillbereducedtothepercentagesshowninthetablebelow.

Ifyouareafirefighterorrescuesquadworkerbetweenage55and60with5to20yearsofcreditableservice,yourearlyretirementwillbereducedtothepercent-agesshownbelowinthe20yearsofcreditableservicecolumn.

Age 29 28 27 26 25 24 23 22 21 20

59 95% 90% 85% 80% 80% 80% 80% 80% 80% 80%58 95% 90% 85% 80% 75% 75% 75% 75% 75% 75%57 95% 90% 85% 80% 75% 70% 70% 70% 70% 70%56 95% 90% 85% 80% 75% 70% 65% 65% 65% 65%55 95% 90% 85% 80% 75% 70% 65% 60% 60% 60%54 95% 90% 85% 80% 75% 70% 65% 60% 55% 55%53 95% 90% 85% 80% 75% 70% 65% 60% 55% 52%52 95% 90% 85% 80% 75% 70% 65% 60% 55% 50%51 95% 90% 85% 80% 75% 70% 65% 60% 55% 50%50 95% 90% 85% 80% 75% 70% 65% 60% 55% 50%

Creditable Service

Early retirement benefits are calculated using the same formula as a ser-vice retirement benefit multiplied by a reduction percentage based on your age and/or service at early retirement.



Examples of Benefits Paid

Thefollowingchartshowstheapproximatemonthlybenefitpaidunderthemaximumallowanceatvarioussalarylevels,dependingonageandcreditableservice.Theseareonlyexamples.Yourownbenefitiscalculatedindividuallyanddependsonyourage,creditableservice,andaveragefinalcompensation.

Monthly Retirement Benefit Under Maximum Allowance

Aver

age

Fina

l Com

pens

ation

Age 50 55 60 N/A N/AService 20 28 25 30 40

$80,000 $1,233 $3,108 $3,083 $3,700 $4,93370,000 1,079 2,719 2,697 3,237 4,31660,000 925 2,331 2,312 2,775 3,70055,000 847 2,136 2,119 2,543 3,39150,000 770 1,942 1,927 2,312 3,08345,000 693 1,748 1,734 2,081 2,77540,000 616 1,554 1,541 1,850 2,46635,000 539 1,359 1,348 1,618 2,15830,000 462 1,165 1,156 1,387 1,85025,000 385 971 963 1,156 1,541

Benefit Limitations

Occasionally,aretireemaybesubjecttothebenefitlimitationsdescribedbelow:

● Contribution-Based Benefit Cap

IfyouretireonandafterJanuary1,2015,withanaveragefinalcompensation(AFC)of$100,000orhigher,youmayfallunderacontribution-basedbenefitcap.Thiscapwascreatedtocontrolthepracticeof“pensionspiking,”inwhichyourcompensationsignificantlyincreasesinyour4-yearAFCperiodtocreateabenefitwhichissignificantlygreaterthanyourcontributionswouldfund.Ifyourretirementallowancehasbeencappedandissubjecttoanadjustment,LGERSwillnotifyyouandyouremployerandwillprovideastatementofthecostoftheadditionalcontributionrequiredtopayforyourbenefitinexcessofthecap.IfyouwerefirsthiredbeforeJanuary1,2015,yourlastemployerwillberequiredtopaytheadditionalamount.IfyouwerefirsthiredonorafterJanuary1,2015,youremployermaychoosewhetherornottopaythisadditionalcontribution;ifyouremployerchoosesnottopay,youmaychooseeithertopaytheamountoryoumayacceptabenefitreducedtothebenefitcap.



● IRC Section 415(b) Annual Pension Benefit Limit

Ifyouareahighlycompensatedemployee(i.e.,generallyearningmorethan$180,000annually),yourLGERSbenefitsmaybesubjecttotheInternalRevenueCode(IRC)section415(b)annualpensionbenefitlimit.In2013,theGeneralAssemblyenactedlegislationwhichestablishedaQualifiedExcessBenefitArrangement(QEBA)fundtopaythepartofahighlycompensatedretiree’sretirementallowancethatwouldotherwisebepayableexceptforthislimitation.Duetosunsetlegislation,QEBAwillnotbeavailableforanyemployeewhobecameaLGERSmemberonorafterJanuary1,2015.ThismeansthatLGERSretirementbenefitsforanyemployeewhobecameaLGERSmemberonorafterJanuary1,2015,willbesubjecttotheIRClimit.

IfyoubecameaLGERSmemberbeforeJanuary1,2015,youareeligibletoparticipateinQEBA.ThelastLGERSemployerisrequiredtoreimburseQEBAfortheamountpaidtoaretireefromQEBAforanyLGERSmemberwhoretiresonorafterAugust1,2016.Eachcalendaryear,thereimbursementamountwillbecalculatedandaninvoicewillbesenttotheemployer.Iftheemployerdoesnotpaythefullamountwithin60calendardaysoftheinvoice,theemployerwillbeassesseda1%penaltyforeachmonth,orfractionthereof,thepaymentismadebeyondtheduedate.Pleaseseethefact sheet onourwebsiteformoreinformation.

https://www.nctreasurer.com/ret/Documents/415%20QEBA%20Fact%20Sheet.pdf



Section 5: Your Benefit Payment OptionsAtretirement,youmustelectoneofthepaymentoptionsdescribedbelow.Onaverage,thepaymentoptionsaremathematicallyequaltooneanother.Thatis,eachoptioniscalculatedsothatitstotalvalueisthesameasthevalueoftheotheroptionsifyouandthebeneficiaryyouname(ifany)toreceiveamonthlypaymentafteryourdeathliveyourexpectedlifespans.

First,decidewhetheryouneedapaymentoptionthatprovidesamonthlybenefittoabeneficiaryafteryourdeath.Ifyoudonotselectsuchanoption,allofyourretirementbenefitswillbeusedtoprovideyouwithalifetimemonthlypayment that stops at your death .

Yourchoiceofpaymentoptionsispersonalandshouldtakeintoaccountyourneedsduringretirementandtheneedsofadependent,ifany,afteryourdeath.Neitherthepaymentplanselectedbyaco-workernortheoneselectedbythelargestnumberofretireesshouldhaveanyeffectonyourpersonaldecision.

Youcannotchangeyourselectedpaymentoptiononceyoucashyourfirstretirementcheckorafterthe25thofthemonthfollowingthemonthyourfirstcheckismailed(whicheverisearlier)exceptunderoneofthefollowingtwoconditions:

• Ifyouselectanoptionthatprovidesamonthlybenefittoyourspouseasabeneficiaryafteryourdeath(Option2,3,6-2,or6-3)andlaterbecomedivorced from that spouse .

• IfyouarerehiredinapositioncoveredbyLGERSandcontributetoyournewaccountforatleast3years.

Your retirement benefit comes with a Guaranteed Refund. This means thatshouldyouandyourmonthlysurvivorbeneficiary(ifany)bothdiebeforethetotalofallmonthlypaymentsequalstheamountofyourcontributionsandinter-est,thebalanceofyourcontributionsandinterestwillbepaidinonelumpsumtoanotherbeneficiary(ies).

TheGuaranteedRefundalsocoversanypurchasesyoumadeforadditionalcred-itableserviceafterretirement.YoumaynameoneormorebeneficiariesfortheGuaranteedRefund,andyoumaychangethisbeneficiary(ies)asoftenasyoulike.However,thebeneficiaryyouchoosefortheGuaranteedRefundcannotbethesameasyourmonthlysurvivorbeneficiary.

Choose your payment option carefully; you can change it only under spe-cific circumstances.

All payment options include the Guaranteed Refund.



● Maximum Allowance

Whenyouretirewithaserviceretirementbenefit,yourbasicbenefitisthemaximumallowanceandiscalculated under the formula on page 9.Ifyouretireearly,yourmaximumallowanceiscalculated using the same formula,whichisthenreducedforearlyretirement.Ineithercase,youwillreceiveyourmaximumallowanceforaslongasyoulive.Allmonthly payments stop at your death .

● Option 2: 100% Joint & Survivor

• You receive reduced monthly payments for life . • Afteryoudie,yourmonthlysurvivorbeneficiaryreceivesthesame

amount monthly for life .

● Option 3: 50% Joint & Survivor

• You receive reduced monthly payments for life . • Afteryoudie,1/2ofyourpaymentcontinuestoyourmonthlysurvivorbeneficiaryforlife.

● Option 4: Social Security Leveling

• Youreceivelargermonthlypaymentsthanyouwouldotherwisebeen-titledtoreceiveuntilyouareeligibleforSocialSecurityatage62.

• BeginningthemonthfollowingthemonthofinitialentitlementforSocialSecurityage62benefits,yourmonthlypaymentswillbereducedtoanamountthatislessthanwhatyouwouldotherwisebeentitledtoreceive.Nevertheless,yourreducedretirementpaymentsafterage62,plusyourallowancefromtheSocialSecurityAdministration,shouldbeapproximatelythesameamountastheinflatedpaymentyoureceivedfromLGERSbeforeage62.

• Theactualamountofyourretirementpaymentsbothbeforeandafterage62willbebasedontheestimateofbenefitsyouprovidetousfromtheSocialSecurityAdministrationbeforeyourretirement.

• Allmonthlypaymentsstopatyourdeath.

The Maximum Allowance and Option 4 provide monthly benefits that stop at your death, with no monthly survivor ben-eficiary.

Options 2, 3, 6-2, and 6-3 provide a monthly benefit to your survivor benefi-ciary after your death.



Thereductioninyourmonthlyretirementpaymentsafterage62allowsustorecovertheinflatedamountsyoureceivedbeforeage62.Therefore,onaverage,theinflatedamountsyoureceivebeforeage62,togetherwiththereducedamountsyoureceiveafterage62,areequalinvaluetotheotherpaymentoptionsoveryourlifeexpectancy.

ContacttheSocialSecurityAdministrationforinformationonapplyingforbenefitsandthedatethatyourfirstage62SocialSecuritybenefitwillbepaidtoyou.YourLGERSbenefitunderOption4willbereducedinthemonthfollowingthemonthofinitialentitlementforSocialSecurityage62benefits.

Anypercentageincreaseyouaregrantedinyourretirementbenefitbeforeage62willbeappliedtotheinflatedbenefityouarereceivingatthattime.However,whenyoureachage62,yourretirementbenefitwillbereducedtotheoriginalamountpromisedafterage62plusthepercentageincreases(notthedollaramountofincreases)grantedbeforeage62.

● Option 6–2: Modified Joint & Survivor (combination Maximum Al-lowance and Option 2)

• You receive reduced monthly payments for life . • Afteryoudie,yourmonthlysurvivorbeneficiaryreceivesthesame

amount monthly for life . • However,ifyourbeneficiarydiesbeforeyoudo,yourmonthlypaymentsincreasetotheamountpayableunderthemaximumallowance.

● Option 6–3: Modified Joint & Survivor (combination Maximum Al-lowance and Option 3)

• You receive reduced monthly payments for life . • Afteryoudie,1/2ofyourpaymentcontinuestoyourmonthlysurvivorbeneficiaryforlife.

• However,ifyourbeneficiarydiesbeforeyoudo,yourmonthlypaymentsareincreasedtotheamountpayableunderthemaximumallowance.

UnderOptions2,3,6-2,and6-3,youmaynameonlyonebeneficiarytoreceiveamonthlysurvivorbenefitafteryourdeath.Youmaynotchangeyoursurvivorbeneficiaryafteryouretireexceptunderoneofthefollowingcircumstances:

• Ifyounamedyourspouseassurvivorbeneficiaryatthetimeofretire-ment and later become divorced from that spouse .

• IfyoureturntoemploymentcoveredunderLGERSandcontributetoanewretirementaccountforatleast3years.

• IfyouchoseOption2or3atretirement,anddesignatedyourspouseassurvivorbeneficiary,andthisspousediesbeforeyou,andyouremarry,

You can change your monthly survivor benefi-ciary under Options 2, 3, 6-2, and 6-3 only under specific circumstances.



youmayrequesttonominateyournewspouseasyourbeneficiarywithin90daysofyourremarriageunderthesameoptionyouchoseatretirement.YoumustfilethisredesignationwithLGERSwithin120daysofyourremarriage.Yournewbenefitwillbereducedonthebasisofyourageandtheageofyourspouseatthetimeofthechange.Thebenefitpayabletoyouwillbethebenefityoureceivedbeforethedeathofyourpreviousspouse,additionallyreducedtocoveryournewspouseasbeneficiary.

Example of Payment Options

AssumeJohnMurphyhasearnedaserviceretirementbenefitunderthemaxi-mumallowanceof$2,000amonth.Hewantstosharehisbenefitwithhiswife,Pam,whois51whenJohnretiresat57after30yearsandthreemonthsofcreditableservice.ThetablebelowshowshowmuchJohnandPamwouldreceivemonthlyundereachpaymentoption.

Theseareonlyexamples.Yourownbenefitiscalculatedindividuallyandtheactualamountsofyourpaymentoptionsarebasedonmanyfactors,suchasyourage,yourbeneficiary’sage,andwhenpaymentsstart.

Payment Option To John To Pam After John’s Death

Maximum Allowance $2,000monthly $0.00

Option 2 $1,834.60monthly $1,834.60monthly

Option 3 $1,913.80monthly $956.90monthly

Option 4* $2,650.90uptoage62,$1,650.90thereafter $0.00

Option 6-2 $1,822.60monthly;ifPamdiesbeforeJohn,hereceives$2,000monthlythereafter $1,822.60

Option 6-3 $1,907.20monthly;ifPamdiesbeforeJohn,hereceives$2,000monthlythereafter $953.60

*AssumesJohn’sprimarySocialSecuritybenefitis$1,000amonthatage62.



Section 6: Adding to Your Creditable ServiceYourbenefitatretirementisbased,inpart,onyourcreditable service . Creditable service includes your yearsandmonthsofmembershipserviceinwhichyoucontributedtoLGERSandmayalsoincludeprior service credit, sick leave credit, military service credit, and certain types of purchased service credit, whicharedescribedbelow.

● Prior Service

IfyouwereemployedbyyouremployerbeforeitsparticipationinLGERS,youmayhavereceived credit for your service before you became a member .

● Sick Leave

Unusedsickleavecanbeconvertedtoadditionalretirementservicecreditatthetimeofyourretirementifallofthefollowingconditionsaremet:

• Yoursickleavewasearnedunderadulyadoptedsickleavepolicy. • Youwouldreceivefullsalarywhenusingthesickleaveifabsentfromworkbecauseofillness.

• Youhavenot,andwillnot,receiveanycompensationforthissickleave .

• YourlastdayofservicewithyourlastparticipatingLGERSemployeriswithin365daysbeforeyourLGERSeffectivedateofretirement.

Whenyouretire,youareallowed1monthofcreditforeach20daysofunusedsickleave.Foranypartof20daysleftover,1additionalmonthisallowedprovidedtheremainingportionisatleast1hour.

Asickleave“day”isdeterminedbyyouremployer’ssickleaveaccrualpolicyandmayormaynotbeequalto8hours.Forexample,assumeJohnSmithearns1dayofsickleavepermonthunderhisemployer’ssickleaveaccrualpolicywhileworkinganextendedshiftof12hoursperdayandheaccrues12hoursofsickleaveeachmonth.Whenhisemployercertifieshisunusedsickleaveonhisretirementapplication(Form6),foreach12hoursofeligibleunused sick leave, his employer should report 1 day of unused sick leave, ratherthan1.5days.Inanotherexample,assumeMaryBrownearns1dayofsickleavepermonthwhileworking7.5hoursperdayandaccrues7.5hoursofsickleaveeachmonth.WhenheremployercertifiesherunusedsickleaveonherForm6,foreach7.5hoursofeligibleunusedsickleave,heremployershould report 1 day of unused sick leave .

On your retirement appli-cation (Form 6), your last employer will certify the amount of your unused sick leave.



Sick leave is used to increase your creditable service, but it cannot be used tomeettheminimumqualificationsforadisabilityretirementbenefitordeferredbenefit.Youmayuseyoursickleavetocomplete30yearsofserviceregardlessofage,25yearsofserviceafterage60,20yearsofserviceafterage50,and5yearsofserviceatorafterage60(age55ifyouareafirefighterorrescuesquadworker).

● Military Service

You may receive retirementcreditforupto 5 years of qualifying military service at no cost ifyouwereaneligibleLGERSmemberwhenyouenteredactiveduty,and:

• You returned to employment for 10 ormoreyearswiththesameLGERSemployerafterdischargefromthemilitary, or

• YoureturnedtoLGERSmembershipservicewithinthetimelimitman-datedbyfederallawforreportingbacktoworkandmeetallofthefol-lowingrequirements:

ᛜYoudidnotprovidewrittennoticeofintentnottoreturntoworkaftermilitary service .

ᛜYouarenoteligibleforbenefitsfromanyotherretirementplanbasedon this service .

ᛜYoupurchasedyourLGERSwithdrawnservicecredit,ifany.

YourLGERSemployerisrequiredtopaytheemployercontributionstoLGERSforthefullperiodofyourmilitaryserviceundertheaboveprovisionsifyoureturntoworkwithin2yearsafteryourearliestmilitarydischargedate .

Ifyouareineligibleforfreecreditundertheserules,youmaybeeligibletobuycreditforyourfirstperiodpluslaterrequiredperiodsofactivedutybymakingalump-sumpayment.

To be eligible to purchase military service credit, you must have contributed toLGERSfor5years.Yourcostwillbeequaltothefullactuarialliabilitiescreatedfromtheadditionalcreditpurchased.

Ifyourmilitaryserviceiscreditableinanotherretirementsystem,generallyyouwillnotbeeligibletopurchasecreditinLGERS.

To purchase retirement service credit, you will need to complete the ap-propriate purchase form found in ORBIT.



● Withdrawn Service

IfyouhaveeverreceivedarefundofyourcontributionsfromLGERS,TSERS,ortheformerLawEnforcementOfficers’RetirementSystem,youmaybeeligibletopurchase,withalump-sumpayment,inLGERS,theamountofcreditableserviceyoulostwhenyoureceivedyourrefund.

Beforeyouareeligibletopayforthisservice,youmustberehiredandcontributetoLGERSfor5yearsorhaveacombinationof5yearsofcurrentmembershipserviceinCJRS,LRS,TSERS,orLGERS.

Yourcost,whichmustbepaidinalumpsum,willbeequaltotheamountofcontributionswithdrawnplusinterestat6.5%compoundedannuallyfromtheyearofwithdrawaltotheyearofrepayment.Inaddition,youwillpaya$25administrativefee.

● Purchasing Other Withdrawn Service

IfyoueverreceivedarefundofyourcontributionsfromCJRS,LRS,orTSERS,youmaybeeligibletomakealump-sumpaymenttopurchasetheamountofwithdrawncreditableserviceinthesystemfromwhichitwaswithdrawn.

Beforeyouareeligibletopayforthisservice,youmusthave5yearsofcurrentmembershipserviceinLGERSorinCJRS,LRS,orTSERS,orhaveacombinationof5yearsofmembershipserviceinanyofthesesystems.Thistype of purchased service may be used to determine your eligibility for benefitsinLGERS.However,onlyyourcreditableserviceinLGERSwillbeusedincomputingtheamountofyourLGERSbenefit.Creditableserviceinanyothersystemwillbeusedtocomputebenefitsfromthatsystem.

EligiblewithdrawnserviceyoupurchaseinLGERSorTSERScountsascreditable service, not membership service .

Yourcost,whichmustbepaidinalumpsum,willbecalculatedusingthewithdrawnservicepurchaseprovisionsintheSystemfromwhichyouarepurchasing the service credit .



● Other Types of Service Purchases

Inadditiontowithdrawnserviceandmilitaryservice purchases, you may be eligible to purchasecreditforthefollowingtypesofservice:

• Out-of-StateService • TemporaryLocalandStateService • EducationalLeave • LocalProbationaryorWaitingPeriodService • Workers’CompensationLeave • Part-TimeLocalandStateService • OtherServicewithaLocalGovernment • ServicewiththeFederalGovernment • Federally-fundedPublicCommunityServiceinNC • OmittedService

Fordetailedinformationabouttheeligibilityrequirementsforpurchasingcredit-able service, please see the applicable purchase form in ORBIT .

● Rollovers to Purchase Retirement Credit

Wewillacceptpre-taxmoneyfromaneligibleretirementplanoraneligibleIRAviarolloverorin-serviceplan-to-plantransfertopurchasecreditableservice.Formoreinformationandinstructions,seeForm398(UsingaDistributionofTax-ShelteredSavingstoPurchaseRetirementCredit),available in ORBIT .

You may roll over funds from other eligible retire-ment plans or IRAs to purchase credible service.



Section 7: Death BenefitsActive Employee Death Benefits

AlthoughLGERS’primarypurposeistoprovideretirementincome,werecog-nizethatsomeemployeeswillnotlivetoenjoytheirretirementbenefits.Forthatreason,LGERSprotectsyourbeneficiary(ies)shouldyoudiebeforeretiringwiththedeathbenefitsdescribedbelow.

● Return of Contributions

Afteryourdeath,yourbeneficiarywillreceiveareturnofyourcontributionsplusinterestat4%compoundedannuallyonyourprior-yearendingbalance,throughyourdateofdeath.Thisisalump-sumpayment.Ifyoumeetcertaineligibilityrequirements,amonthlySurvivor’sAlternateBenefitmaybepaidtoyourbeneficiaryinsteadofareturnofcontributionsifyouhaveonlyoneeligiblebeneficiarylivingatthetimeofyourdeath.

● Lump-Sum Death Benefit for Active Employees

Ifyouremployerelectedthiscoverage,andyoudiewhilestillinactiveserviceafter1yearasacontributingmember,yourbeneficiarywillreceivealump-sumpaymentequaltoyourhighestsalaryfor12consecutivemonthsduringthe24monthsbeforeyoudie.Thelump-sumpaymentwillbeatleast$25,000butnomorethan$50,000andisalsopaidifyoudiewithin180daysofyourlastdayofservice.Thedeathbenefitisinadditiontoanyotherbenefitstowhichyourbeneficiary(ies)maybeentitled.Forthisdeathbenefit,youmaynamethesameoradifferentbeneficiary(ies)thantheone(s)younamedtoreceivethereturnofcontributions.

Ifyouareafirefighterorrescuesquadworkerkilledinthelineofduty,yourbeneficiaryalsomaybeentitledtoa$50,000line-of-dutydeathbenefit.ThislumpsumbenefitisadministeredjointlybytheNorthCarolinaIndustrialCommissionandtheDepartmentofStateTreasurer.

● Survivor’s Alternate Benefit

Providedyouhavenotretired,themonthlySurvivor’sAlternateBenefitmaybepayableifyouhaveonlyoneeligiblebeneficiaryforthereturnofyourcontributionslivingatthetimeofyourdeathandyoudiewhileinactiveserviceorwithin180daysofyourlastdayofserviceaftermeetingoneofthefollowingconditions:

• Youcomplete20yearsofcreditableservice(notincludingcreditforunusedsickleave)regardlessofage.

As an active employee, keep your beneficiary des-ignations up to date using Form 2RC and 2DB found in ORBIT.



• Youreachage60with5yearsofcreditableservice. • Youcomplete15yearsofcreditableserviceasafirefighterorrescuesquadworkerifkilledinthelineofduty.

ThiseligiblebeneficiarymaychoosetoreceivealifetimemonthlySurvivor’sAlternateBenefitinsteadofareturnofyourcontributions.

TheSurvivor’sAlternateBenefitdoesnotapplyifyouhave2ormoreeligiblebeneficiariesforthereturnofcontributionslivingatthetimeofyourdeath,orifyourestateorlivingtrustisyoureligiblebeneficiaryatthetimeofyourdeath,orifyouhaveretired.

ThislifetimemonthlybenefitequalstheamountyouwouldhavebeenentitledtoreceiveunderOption2hadyousurvivedandretiredonthefirstofthemonthfollowingyourdeath.

IfyoudonotwantyourbeneficiarytoreceivetheSurvivor’sAlternateBenefit,youmustnotifytheRetirementSysteminwriting.

Retiree Death Benefits

Ifyouremployerelectedthelump-sumdeathbenefitforactiveemployeesdescribedon page 22,andyoudiewithin180daysofyourlastdayofservice,andmeetalleligi-bilityrequirements,thisbenefitwillbepayable.Otherretireedeathbenefitsmayalsobepayableasdescribedbelow.

● Guaranteed Refund

UndertheGuaranteedRefundprovision,ifyouandyourmonthlysurvivorbeneficiary(ifany)bothdiebeforethetotalofallmonthlypaymentsequalstheamountofyourcontributionsandinterest,thebalanceofyourcontributionsandinterestwillbepaidinonelumpsumtoanotherbeneficiary(ies).TheGuaranteedRefundisprovidedundereachretirementpaymentoption.

● Optional $10,000 Contributory Death Benefit

Ifyouenrolledintheoptional$10,000ContributoryDeathBenefitforRetiredMembersandyourdeathoccursonorafterthefirstdayofthemonthfollowingthe24thmonthofcoverage,alump-sumpaymentof$10,000willbepaidtoyourdesignatedbeneficiary(ies).Ifnobeneficiaryhasbeendesignated,thebenefitwillbepaidtoyourspouse,orlegalrepresentativeifyouarenotsurvivedbyaspouse.Ifyourdeathoccursbeforethefirstdayofthemonthfollowingthe24thmonthofcoverage,theamountpayablewillbeequaltoyourpremiumsplusinterest.

You may change your Contributory Death Benefit beneficiary by completing Form 333BEN found in ORBIT.

As a retiree, you may change your Guaranteed Refund beneficiary by completing a Form 336 found in ORBIT.



● Continuation of Monthly Benefits under Survivor Options

Ifyouelectedoneofthesurvivoroptions(Options2,3,6-2and6-3),yoursurvivorbeneficiarywillreceiveamonthlylifetimebenefitafteryourdeath.

ItisaClass1Misdemeanortofraudulentlyreceivetheretirementbenefitofadeceasedretireeorbeneficiaryfortwomonthsorlongeraftertherecipient’sdeath.



Section 8: Initiating Your Retirement BenefitsOnceyoudecidetoretireandmeettheeligibilityrequirementsformonthlybenefits,youmustfollowcertainstepstobeginyourretirementprocess.

Tobelegallyretired,youmustendyouremployment,liveuntilyoureffectivedateofretirement,andgenerallynotperformanyworkforanLGERSemployeratanytimeduringthemonthofyoureffectivedateofretirement.

Generally,ifyoudiebeforeyoureffectiveretirementdate,yourbeneficiaryisineligibleforamonthlyretirementallowance,basedonyourretirementac-count,exceptasprovidedundertheSurvivor’sAlternateBenefit.

Retirement Application Process

Beforeyoubegintheretirementprocess,weencourageyoutodiscussyourretirementplanswithyourfamilyandyouremployer’sbenefitscoordinator.

Monthlyretirementbenefitsareeffectivethefirstdayofanymonth.Youmustsign,date,andfileyourretirementapplication(Form6)atleast1dayandnotmorethan120daysbeforeyoureffectivedateofretirement.

About120to90daysbeforeyourplannedretirementdate,completeForm6(ClaimingYourMonthlyRetirementBenefit),availablefromyouremployerorin ORBIT.Theformhasadditionaldetailedinformationabouttheretirementprocess .

IfyoucontributetoLGERSduringthe6monthsbeforeyoureffectivedateofretirement(oryouarecurrentlyoutofservice,butyourlastdayofservicewithyourlastparticipatingLGERSemployeriswithin365daysbeforeyoureffec-tivedateofretirement,andyouhadunusedsickleave),youremployershouldcompletetheemployercertificationsection(SectionH)onyourForm6beforethe form is sent to us .

IfyouwantanestimateofyourbenefitunderOption4,youmustalsosendusanestimatefromtheSocialSecurityAdministration(SSA)ofyourage62SocialSecuritybenefit.RequestthisestimatefromSSAwithin2yearsbeforeyouref-fectiveretirementdate.

Begin the retirement pro-cess 120-90 days before your planned retirement date.



OncewereceiveyourForm6,wewillsendyouanacknowledgmentletterthatincludesinstructionsonyournextstepsintheretirementprocess.Wewillalsosend you:

• Form170(AuthorizingDirectDeposit) • Form333(ChoosingtheContributoryDeathBenefitforRetiredMem-

bers),whichincludesinformationaboutthecostandcoverageprovisionsoftheoptional$10,000ContributoryDeathBenefitforRetiredMembers.Toenroll,youmustmakeyourelectionwithin60daysoftheeffectivedateofyourretirement.

• Form333BEN(DesignatingBeneficiary(ies)fortheContributoryDeathBenefitforRetiredMembers)

Later,wewillsendyouanestimateofthemaximumallowanceandtheotherpaymentoptions,ifapplicable.Alongwiththeestimate,youwillreceive:

• Form6E(ChoosingYourRetirementPaymentOption) • Form290(ChoosingIncomeTaxWithholdingPreferences) • Form336(DesignatingBeneficiary(ies)fortheGuaranteedRefundasa

Retiree)

Your First Monthly Benefit

Yourfirstmonthlyretirementbenefitwillbemailedtoyou.Thereafter,ourpolicyistodirectlydeposityourmonthlybenefitintoyourbankaccountonthe25thdayofeachmonth.InDecember,yourbenefitwillbedepositedonthe20th.IfthepaydatefallsonaSaturday,Sunday,orholiday,yourdepositwillbemadeonthelastworkdaybeforethepaydate.Directdepositisfast,automatic,andfree.

Optional Supplemental Insurance

OptionalsupplementalinsurancecoverageisavailabletoretireesandbenefitrecipientsthroughPierceInsuranceAgency.Piercewillmailinformationtoyouafteryourfirstretirementbenefithasbeenissued.

Post-retirement Increases

Post-retirementincreasesarenotguaranteed.However,yourbenefitmaybein-creasedperiodicallyafterretirementtohelpyoukeepupwiththecostofliving.In-creasesdependonchangesintheConsumerPriceIndexandtheavailabilityoffunds.

Cost-of-livingincreasesareusuallyfiguredasapercentageincreaseinyourmonthlybenefit,whichbecomesapermanentpartofyourmonthlybenefit,underallpaymentplans,andthemonthlybenefittobepaidtoyourbenefi-ciaryafteryourdeathunderOptions2,3,6-2,and6-3.(See page 16 regarding increasesunderOption4.)

Your first benefit payment will be mailed; thereafter, directly deposited into your bank account.

Your benefit cannot be paid until we receive a properly completed Form 6E.

For information about optional supplemental in-surance available through Pierce Insurance Agency, visit www.ncretiree.com or contact Pierce at 1-855-627-3847.



Section 9: NC 401(k)/NC 457 Transfer BenefitAtorfollowingretire-ment, you can make a one-timetransferofanyportionofyoureli-giblecontributions,notincludingRothcontributionsandearnings,fromyourNC401(k)Planand/orNC457PlantoLGERSandreceiveanadditionalmonthlylifetimebenefit.Oncetransferred,thedecisionisirrevocable,andyoucannotaccessthefundsexceptasthemonthlybenefitwithdrawal.

Allowancesareavailablebothwithandwithoutcost-of-livingincreases.Thereisaone-timefeeof$100.Visitwww.MyNCRetirement.comforadditionalinfor-mationabouttheTransferBenefit.YouwillalsofindaTransferBenefitEstima-torandtherequiredformsinORBIT.

For information about the supplemental retirement plans, visit the NC Total Retirement Plans page on our website.

https://www.nctreasurer.com/Retirement-and-Savings/Managing-My-Retirement/Pages/NC-Total-Retirement.aspx/

https://www.nctreasurer.com/Retirement-and-Savings/Managing-My-Retirement/Pages/NC-Total-Retirement.aspx/



Section 10: Income TaxBeginningJuly1,1982,ifyouremployeradoptedaresolutiontohaveyourcontributionmadeasabefore-taxbasis,yourcontributionshavebeentax-de-ferred.Thismeansyourcontributionsaredeductedfromyourpaybeforetaxesarecalculated,andyoupaytaxesonthemwhenyoubeginreceivingmonthlyretirementbenefitsorifyouelectarefundofyourcontributions.ThefollowingisabriefoutlineofcurrenttaxlawsastheyapplytoLGERSbenefits.However,becausetaxlawsoftenchange,werecommendyouconsultyourtaxadvisorformore details .

Retirement Benefits

Afteryouretire,eachyearbyJanuary31wewillsendyouForm1099-R,whichissimilartoFormW-2(StatementofIncomeandTaxWithheld),whichyoureceivedannuallywhileyouwereemployed.The1099-Rshowstheamountofyourretirementbenefits,thetaxableportion(ifany)ofthosebenefits,theamountoftaxwithheld(ifany),andotherrelatedinformation.WealsosendcopiestotheInternalRevenueServiceandtheNorthCarolinaDepartmentofRevenue.Therefore,youshouldreportyourretirementbenefitsonyourfed-eralandNorthCarolinataxreturnsregardlessofwhetheryouoweanyincometax.

● Federal Income Tax

Partofyourretirementbenefitmaynotbesubjecttofederalincometaxbecausethetaxwaswithheldwhileyouwereworking.Includedinthenon-taxablepartofyourretirementbenefitsarecontributionsyoumadebeforethedateyouremployeradoptedataxshelteringresolution(iftheyhavedoneso),andanynon-rolloverservicepurchasesyoumade.

Allorpartofyourretirementbenefitmaybesubjecttofederalincometaxbecauseitwasnotpreviouslytaxed.Includedinthetaxablepartofyourretirementbenefitsarecontributionsyoumadeafterthedateyouremployeradoptedataxshelteringresolution(iftheyhavedoneso),anyrolloverservicepurchases,andallbenefitspaidfromtheemployercontributionsandinvestmentearnings.

Underfederallaw,themajorityofeachretirementbenefitissubjecttofederalincometax.Althoughyouwillnotpaytaxesagainonanycontributionsforwhichyouhavealreadypaidtax,youmayexcludeonlyasmallportionofyourpreviouslytaxedcontributionseachmonththroughoutaperiodoftimespecifiedbythefederalgovernment.

The Local Governmental Employees’ Retirement System will mail you a 1099-R each year after retirement.



● North Carolina Income Tax

IfyouareaNorthCarolinaresidentand have maintained 5 or more yearsofretirementservicecreditasofAugust12,1989,yourLGERSretirementbenefitisnotsubjecttoNorthCarolinaincometax.Ifyoudo not have 5 years of maintained retirementservicecreditasofAugust12,1989,thetaxableportionofyourretirementbenefitissubjecttoNorthCarolinaincometax.

IfyouarenotaresidentofNorthCarolina,youmaynotoweNorthCarolinaincometaxonyourLGERSretirementbenefit.However,youmayowestateincometaxinthestatewhereyoulive.Contactyourtaxadvisor,theNorthCarolina Department of Revenue, or the Department of Revenue in your residentstateforinformationrelativetoyoursituation.NCRetirementSystemscanwithholdonlyNorthCarolinaincometax.Wecannotwithholdanyotherstate’sincometaxfromyourmonthlybenefit.

Refunds

ByJanuary31oftheyearfollowingtheyearyoureceivedarefund,wewillsendyouForm1099-Rshowingtheamountofyourrefund,thetaxableportion,theamountoftaxwithheld(ifany),andotherrelatedinformation.WewillalsosendcopiestotheInternalRevenueServiceandNorthCarolinaDepartmentofRevenue .

● Federal Income Tax

Youpaynofederalincometaxontheamountyoucontributedbeforethedateyouremployeradoptedataxshelteringresolution(iftheyhavedoneso).However,theamountyoucontributeafterthedateyouremployeradoptedataxshelteringresolution(iftheyhavedoneso),issubjecttofederalincometax.Also,allinterestyourcontributionshaveearnedissubjecttofederalincometax.

FederalincometaxlawsrequirewithholdingfromthetaxableportionofyourrefundunlessthatportionofyourrefundisdirectlyrolledovertoaneligibleIRAoreligibleemployerretirementplanthatwillacceptyourrollover.IfyoudonotrolloverthetaxableportionofyourrefunddirectlytoaneligibleIRAoreligibleemployerplanthatwillacceptyourrollover,wewillwithhold20%ofthetaxableportionofyourrefundforfederalincometaxpurposes.Withholdingismandatoryunlessthetaxableportionofyourrefund is directly rolled over .

A 1099-R will be mailed to you by January 31 of the year following the year you received a refund.



Inadditiontoincometax,youmayowea10%excisetaxonthetaxableportionofarefundreceivedbeforeyourdeath,disability,orreachingage59½.Youcandefertheincometaxandavoidthe10%excisetaxbyrollingoverthetaxableportionofyourrefundtoaneligibleIRAoreligibleemployerplan.ConsulttheInternalRevenueService,yourattorney,oryouraccountantforinformationrelativetoyoursituation.

● North Carolina Income Tax

IfyouareaNorthCarolinaresidentandhavemaintained5ormoreyearsofretirementservicecreditasofAugust12,1989,yourrefundofLGERScontributionsisnotsubjecttoNorthCarolinaincometax.Ifyoudonothave5yearsofmaintainedretirementservicecreditasofAugust12,1989,thetaxableportionofyourrefundissubjecttoNorthCarolinaincometax.

Death Benefits

Generally,yourbeneficiarypaysnoincometaxonthelump-sumdeathbenefitforactiveemployeesorthe$10,000ContributoryDeathBenefitforRetirees,whicharetreatedaslifeinsurancebenefitsfortaxpurposes.



Section 11: Return to Work After RetirementIfyouworkinanycapacityforanemployerunderLGERSafteryouhaveofficiallyretiredandarereceivingmonthlybenefits,youwillbesubjecttothereturn-to-workprovisionsdescribedbelow.Theseprovisionsmaylimityourearningsorrequireyoutore-enrollasacontributingmemberofLGERS.

Youwillbesubjecttoreturn-to-workprovisionsbasedonthenatureoftheparticu-larworkyouperformforaLGERSemployer,regardlessofyourjobclassificationoryourtechnicalemploymentstatus(whichmayincludebeingassignedtoworkforaLGERSemployerbyaprivatecompanysuchasatemporarystaffingagency).

● Penalty for Working During Required 1-Month Break

ThefinancialpenaltyforreturningtoworkforanLGERSemployeronapart-time,temporary,interim,orfeeforservicebasis,duringthemonthimmediatelyfollowingtheeffectivedateofLGERSretirement,willbethelesserofthefollowingasdeterminedbytheretirementsystem:

• Youwillbedeemedtohaveretiredthemonthafterthemonthyouperformedservicesfortheemployerandrepayallretirementbenefitsreceiveduntilthatdate;or

• YouwillberequiredtomakealumpsumpaymenttoLGERSequaltothreetimesthecompensationearnedduringthemonthimmediatelyfollowingtheeffectivedateofretirement.

IfyoureturntoactiveLGERSmembershipserviceduringthemonthofyoureffectivedateofretirement,yourLGERSbenefitwillbecancelledretroac-tivelytoyourretirementdate,andyoumustrepayallretirementbenefitsreceivedsinceyourretirementdate.

● Working After a 1-Month Break

Aftera1-monthbreak,youmayreturntoworkinapositionthatrequiresmembershipinLGERS.Yourretirementbenefitwillbesuspendedonthefirstdayofthemonthfollowingthemonthofyourre-employment,andyouwillagainbecomeacontributingLGERSmemberinthemonthinwhichyou are restored to membership service .

IfyoureturntoserviceandcontributetoLGERSforatleast3additionalyears,atthetimeyouendyoursecondperiodofemployment,youcanchooseoneofthefollowingoptionsforyourbenefit:

• Youcancombineyourservicefromyourfirstandsecondperiodsofemploy-menttocreateone(generallylarger)monthlyretirementbenefit.Youcanchangetheretirementpaymentplanand/orbeneficiaryyouselectedatthe

A 1-month wait after your LGERS retirement date before returning to work for an LGERS employer is required to avoid a finan-cial penalty.

Your LGERS benefit will be suspended if you return to work in a position requir-ing membership in LGERS.



timeofyouroriginalretirement.IfyouselectedOption4foryourfirstretire-ment,wemustactuariallyadjustbenefitswhenyouretireagain.

• Youcanre-instateyourfirstretirementaccountandwithdrawyourcon-tributionsonlyfromyoursecondaccount.

IfyoureturntoserviceandcontributetoLGERSforfewerthan3additionalyears,atthetimeyouendyoursecondperiodofemployment,yourfirstretirementbenefitwillbere-instated.Youcanchooseoneofthefollowingoptionsforyoursecondretirementaccount:

• Youcanapplytoreceiveasecond(generallysmaller)monthlybenefitbased on your second period of employment .

• Youcanwithdrawyourcontributionsfromyoursecondaccount. • You can leave your second account open .

Aftera1-monthbreak,ifyoureturntoworkwithanLGERSemployerinapositionineligibleforLGERSmembership,yourearningswillberestrictedtothegreaterofthefollowing:

• 50%ofyourgross12-monthpre-retirementsalary(excludingtermina-tionpayments)

• $32,260(2017amount)

ThedollarfigureisadjustedannuallyaccordingtotheConsumerPriceIndex.Theseearningsrestrictionsapplyforthe12monthsimmediatelyfollowingyourretirementandforeachcalendaryearfollowingtheyearofretirement.

● Exceeding Your Earnings Limitations

Ifyouexceedyourearningslimitations,yourretirementbenefitwillbesuspendedonthefirstdayofthemonthfollowingthemonthinwhichyouexceededthelimitfortheremainderofthecalendaryear.YourretirementpaymentwillstartagainonJanuary1oftheyearafteryourbenefitissuspended.IfyourearningsexceedtheallowableamountinthemonthofDecember,yourbenefitwillnotbesuspended.

● After Receiving Disability

Ifyouacceptpublicorprivateemployment,youmayearnonanannualbasis,uptothedifferencebetweenyourhighestconsecutive12monthsofsalaryinthe48monthspreceding your disability retirement date and the amount of your annual disability retirementbenefits,withoutaffectingyourdisabilityretirementbenefit.Ifyouearnmorethanthisamount,yourdisabilityretirementbenefitwillbereduceddollar-for-dollarbytheamountofyourexcessearnings.TheamountyouareallowedtoearnisadjustedeachJanuarybyanyincreaseintheannualnationalConsumerPriceIndex.

Foradditionalinformation,pleaseseetheDisabilitysectiononourwebsiteatwww.MyNCRetirement.com .

After a 1-month break, you may return to work with a LGERS employer in a position ineligible for LGERS membership with-out affecting your LGERS benefit, provided you do not exceed your earnings limitations.

For additional informa-tion, see “Return-to-Work Laws” on our website at www.MyNCRetirement.com .

http://www.myncretirement.com

http://www.myncretirement.com



Section 12: Administration & Funding ● Administration

LGERSisadministeredbytheBoardofTrustees,whosemembersare:

StateTreasurerDaleR.Folwell,CPA,ChairJohnAnerallaMikeBradleyLentzBrewerJimBurginRandyByrdKevinGordonMarkJohnsonGregPatterson

Sally SandyCarson SmithMarkStohlmanAshleyWooten

● Assets

TheStateTreasureristhecustodianofLGERSassetsandservesastheChiefInvestmentOfficer.

Equityassets(e.g.,commonstock,preferredstock,anddebenturesconvertibleintocommonstock)areinvestedinconjunctionwithpoliciesadoptedbytheInvestmentAdvisoryCommittee.Committeemembersare:

StateTreasurerDaleR.Folwell,CPA,ChairJohnAnerallaDavid Hartzell

Steve JonesMichaelMebaneNealF.Triplett

CourtneyA.Tuttle

● Medical Review Board

TheMedicalReviewBoarddetermineseligibilityfordisabilitybenefits.Boardmembersare:

Dr.GeorgeS.Edwards,Sr.Dr.RobertH.FlemingDr.RobertGaddyDr.BobbySellers

Dr.NathanielL.Sparrow



● Future of the System

ThestateexpectstocontinuetheLocalGovernmentalEmployees’RetirementSystemindefinitely;however,becausefutureconditionsareunforeseeable,theNorthCarolinaGeneralAssemblyreservestherighttomodify the provisions of the system .

● System Documents

ThishandbooksummarizesthemainfeaturesoftheLocalGovernmentalEmployees’RetirementSystemofNorthCarolina.TheofficialtextgoverningtheoperationsofthesystemandthepaymentofallbenefitsisfoundinChapter128oftheGeneralStatutesandTitle20oftheNorthCarolinaAdministrativeCode.

● Contributions

Memberscurrentlycontribute6%ofgrosssalaryeachmonthtoLGERS.

Employerscontributeanactuarially-determinedpercentageofthegrosspayrollofmemberseachmonthtoLGERSforbenefits.

● Funded Status & Ratio

TheLocalGovernmentalEmployees’RetirementSystemhasbeenlabeledas“actuariallysound”becauseoftheconsistentuseovertheyearsof:

• Actuarialassumptionsbasedonexperience • Anapprovedactuarialfundingmethod • Therecognitionofallpromisedbenefitsintheactuarialliabilities

Agenerallyacceptedmeasureofthesoundnessofanyretirementsystemistorelatethetotalassetstothetotalaccruedliabilities.Thisdeterminesthefundedratioorpercentageofthesystem.Thetotaloftheaccruedliabilitiesisfoundbyaddingthetotalassetsandtheunfundedaccruedliabilities.Shownaretheassetsandunfundedliabilitiesforthepastseveralyears,asofDecember31ofeachyearandthefundedratiooftheLocalGovernmentalEmployees’RetirementSystem(thepercentageoftheassetstothetotalaccruedliabilities).



Unfunded Accrued Assets Liabilities

2015 $23,649,311,273 $710,808,5962014 $22,682,380,725 $35,749,3992013 $21,498,147,032 $39,666,2492012 $20,295,238,845 $43,545,9462011 $19,326,359,293 $47,440,4242010 $18,570,513,903 $75,916,1272009 $17,723,253,496 $81,538,254

‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15

110

100

90

80

70

60

50

40

30

20

10

0

%Funded Funded Ratio

99% 99% 99% 99% 99% 97%99%



Section 13: Resources and Contacts

TheNorthCarolinaDepartmentofStateTreasurercreatedORBITtoallowmembersconvenientaccesstotheirretirementaccountinformation24hoursaday,sevendaysaweek.Thissecuresiteenablesyoutoviewyourpersonalinformation,accountinformation,andotherrelevantdetailsspecifictoyourretirementsystemaccount.

InORBIT,activeemployeesareabletoview:

• Service credit history • Retirementestimates • Servicepurchasecostestimates • NC401(k)/NC457TransferBenefitestimates • Annualbenefitstatements

Retireesareableto:

• Maintaintaxwithholdings • Viewanddownload1099-R • Generateincomeverificationletters • Updatetheircontactinformation

ToaccessORBIT,gotoourwebsiteatwww.MyNCRetirement.com, click on the ORBITiconandfollowtheinstructionstologintoyourpersonalORBITaccount.

1 . RegisterforORBITviatheRegisterbuttonontheloginpage2 . Followthepromptsforregistration3 . AccessORBITusingtheUserIDandPasswordthatyoucreated



Resources

Visitourwebsiteto:

• View and download retirement benefits handbooks • See Frequently Asked Questions • Learn about North Carolina Total Retirement Plans – NC 401(k) and NC

457 Plans • Review the retirement checklist • Use our service purchase estimator • Read retirement newsletters • Use our benefit estimators • Learn about retirement planning resources • Log into your personal ORBIT account

Contact Us

Toll-free1-877-627-3287(1-877-NCSECURE)FraudandAbuseHotline1-855-903-7283

LocalGovernmentalEmployees’RetirementSystemDepartment of State Treasurer3200AtlanticAvenueRaleigh, North Carolina 27604

Office visits scheduled by appointment only. Please call or email our office to schedule an appointment.

[email protected]

https://www.facebook.com/MyNCRetirement

www.MyNCRetirement.com

Phone

Address

Email

Facebook

https://www.facebook.com/MyNCRetirement



Section 14: Glossary of TermsActuary:Abusinessprofessionalwithexpertiseinthefieldsofeconomics,sta-tisticsandmathematicswhocompilesandanalyzesstatisticsinordertocalcu-latefinancialrisksandreserves.

Average final compensation: The average of your salary during your four highest-paidyearsinarow.

CJRS:ConsolidatedJudicialRetirementSystem

Consumer Price Index:Anationalmeasureofincreaseinthecost-of-livingfromoneyeartothenext.

Creditable service:Thetotalofallservicecreditthatcountstowardretirement.

LGERS: LocalGovernmentalEmployees’RetirementSystem

LRS:LegislativeRetirementSystem

Membership service: Serviceyouearnedwhileanactiveemployeecontribut-ingtoLGERSthathasnotbeenwithdrawn.

ORBIT:OnlineRetirementBenefitsthroughIntegratedTechnology

Statutorily-required interim employment: Employment as an interim city or countymanagerforaperiodthatdoesnotexceed12monthsonanon-recur-ring basis .

Temporary employment:Employmentforalimitedtermwhichdoesnotex-ceed12consecutivemonthsonanon-recurringbasisforanLGERSemployer.

TSERS:Teachers’andStateEmployees’RetirementSystem

Vesting: Havingtheright,afteryouhaveaminimumof5yearsofLGERScredit-ableservice,toapplyforlifetimemonthlyretirementbenefitsonceyoumeetallretirementeligibilityrequirements,providedyoudonotwithdrawyourcontributions.