A senior officer may elect to withdraw his or her TSERS employee contributions (plus
statutory interest, if the officer has at least five years of service as a contributing member) but
forfeit any membership credits earned towards age and service requirements and eligibility for
the Disability Income Plan of North Carolina, even if these contributions are rolled over to the
ORP. For example, if TSERS contributions are withdrawn, under the Disability Income Plan a
senior officer must have at least one year of participation in the ORP earned within the 36
calendar months preceding disability to be eligible for short-term disability benefits, and five
years of ORP participation earned within the 96 calendar months prior to the end of the short-
term disability period to be eligible for long-term benefits. Credit towards vesting of ORP
employer contributions begins at the time of enrollment in the ORP.
A refund of TSERS employee contributions that is eligible for rollover can be taken in two ways.
The taxable portion of the payment can be (1) paid as a direct rollover to an IRA or other
qualified plan (such as the ORP) or (2) paid directly to the employee.
If a direct rollover is chosen, the employee is not taxed on the payment until it is later withdrawn
from the IRA or other qualified plan. If the refund is paid directly to the employee, it is subject
to 20 percent income tax withholding and also taxed in the year in which the employee receives
it unless, within 60 days, it is rolled over to an IRA or other qualified plan that accepts rollovers.
An employee may roll over up to 100 percent of the eligible rollover distribution, including an
amount equal to the 20 percent that was withheld. If 100 percent is rolled over, the employee
must find other money within the 60-day period to contribute to the IRA or qualified plan to
replace the 20 percent that was withheld. Alternatively, if only 80 percent that is received by the
employee is rolled over, the employee will be taxed on the 20 percent that was withheld. If the
refund is not rolled over, a 10 percent penalty charge is imposed on the taxable portion of the
refund, which is made prior to death, disability, or the attainment of age 59 1/2. The employee
should consult his or her accountant, attorney, or other financial counsel with regard to tax
treatment on these distributions.
designated by the President and subject to confirmation by the Board of Governors (October 12, 1990 and as
