Benefits from the Retirement System receive special income tax treatment. However, since tax laws often change, the Retirement System cannot give you detailed tax advice concerning your retirement benefits. If you need more specific information with regard to how your retirement benefits are taxed, we would suggest that you consult the Internal Revenue Service, the North Carolina Department of Revenue, your attorney, or your accountant. You can reach the Internal Revenue Service and the North Carolina Department of Revenue at the following telephone numbers:
- 800-829-1040 (Internal Revenue Service)
- 877-252-3052 (North Carolina Department of Revenue)
You may also contact your local branch of the North Carolina Department of Revenue.
If you are a North Carolina resident and have maintained five or more years of retirement service credit as of August 12, 1989, your retirement benefit paid by this System is not subject to North Carolina income tax. If you do not have five years of maintained retirement service credit as of August 12, 1989, you will be required to pay North Carolina income tax on the taxable portion of your retirement benefit. The amount of retirement benefits subject to North Carolina income tax is the same amount of retirement benefits on which federal income tax must be paid.
You may elect to have federal and/or North Carolina income tax withheld or not withheld from your retirement benefit. Your election will remain in effect until you revoke it. You may change your election at any time during the year by completing a Form 290 (Choosing Income Tax Withholding Preferences). You may also change your election online by logging into your personal ORBIT account and following the insructions to change your tax withholding. An election or revocation received by the 10th of the month will be effective that month. If not received by the 10th, it will likely be effective the next month.
Please note: The Retirement Systems does not withhold state taxes for states other than North Carolina.