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Retirement and Social Security FAQs

Retirement and Social Security Frequently Asked Questions

Q: When can I retire as a North Carolina state employee with full retirement?

A: There are three ways to qualify for full retirement under the NC Teachers’ and State Employees’ Retirement System TSERS:

  • 30 Years of service regardless of age,
  • Age 60 with at least 25 Years of service,
  • Age 65 with at least 5 Years of service.

 

Q: Can I retire as a North Carolina state employee with early (reduced) retirement?

A: There are two ways to qualify for early (reduced) retirement under the NC Teachers’ and State Employees’ Retirement System TSERS:

  • Age 50 with at least 20 Years of service,
  • Age 60 with at least 5 Years of service.

 

Q: When can I withdraw money from my 401(k) or 403(b) program without penalty?

A:  Generally, a distribution can’t be made from a 403(b) account until the employee:

  • Reaches age 59½;
  • Has a severance from employment;
  • Dies;
  • Becomes disabled;
  • In the case of elective deferrals, encounters financial hardship; or
  • Has a qualified reservist distribution.

 

In most cases, the payments you receive or that are made available to you under your 403(b) account are taxable in full as ordinary income. In general, the same tax rules apply to distributions from 403(b) plans that apply to distributions from other retirement plans. These rules are explained in IRS Pub. 575. IRS Pub. 575 also discusses the additional tax on early distributions from retirement plans.

 

Q: Is there an additional income tax on early distributions from retirement plans and IRAs?

A: An additional 10% tax applies to early distributions (before the participant reaches age 59½) from a retirement plan or IRA under Code §72(t)(1). Section 72(t)(2) lists exceptions to this tax, including distributions received in substantially equal periodic payments.

 

Q: Is there an exception to the tax for distributions in substantially equal periodic payments?

A: Yes. If distributions are made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary, the §72(t) tax does not apply. If these distributions are from a qualified plan, not an IRA, you must separate from service with the employer maintaining the plan before the payments begin for this exception to apply. If the series of substantially equal periodic payments is subsequently modified (other than by reason of death or disability) within 5 years of the date of the first payment, or, if later, age 59½, the exception to the 10% tax does not apply. In that case, your tax for the modification year is increased by the amount that would have been imposed (but for the exception), plus interest for the deferral period.

 

Q: Does taking the TSERS Social Security Leveling option allow me to start drawing my Social Security before my full retirement age or age 62?

A: No. This option does not allow the early withdrawal of funds from your Social Security account.


 Q: I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?

A: Social security benefits include monthly retirement, survivor and disability benefits. They don't include supplemental security income (SSI) payments, which aren't taxable. The net amount of social security benefits that you receive from the Social Security Administration is reported in Box 5 of Form SSA-1099, Social Security Benefit Statement, and you report that amount on your income tax return (Form 1040, line 20a or Form 1040A, Line 14a). The taxable portion of the benefits that's included in your income and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year. You report the taxable portion of your social security benefits on Form 1040, line 20b or Form 1040A, line 14b.

To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:

  • One-half of your benefits; plus
  • All of your other income, including tax-exempt interest.

The base amount for your filing status is:

  • $25,000 if you're single, head of household, or qualifying widow(er),
  • $25,000 if you're married filing separately and lived apart from your spouse for the entire year,
  • $32,000 if you're married filing jointly,
  • $0 if you're married filing separately and lived with your spouse at any time during the tax year.

If you're married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Even if your spouse didn't receive any benefits, you must add your spouse's income to yours when figuring on a joint return if any of your benefits are taxable.

You can figure the taxable amount of the benefits in Are My Social Security or Railroad Retirement Tier I Benefits Taxable?, on a worksheet in the Instructions for Form 1040Instructions for Form 1040A, or in Publication 915Social Security and Equivalent Railroad Retirement Benefits.

 

Q: I want to check and see what my Social Security benefits are, can I print my statements online?

 

A: Yes. Go to https://www.ssa.gov/myaccount/, click Sign In or Create an Account in the center of the screen and follow directions. You will need to have a cell phone available for identity verification.

 

Q: How often should I check my credit report for errors or inaccuracies?

 

A: You should check your credit report annually.