In this Issue:
- How to handle 2026 Budget Bonuses regarding NC 401(k) and NC 457 Contributions
- LEO Members Need to Name/Update Beneficiaries
- Member and Employer Events
Employee Bonuses in the 2026 Budget Are Subject to Contribution Deferrals to NC 401(k) and NC 457 Plans
Unsure how to process employee bonuses recently enacted by the General Assembly in the Current Operations Appropriations Act of 2026 (the “budget”, or Session Law 2026-41)? We have the answer. The bonuses are considered compensation for the purposes of the North Carolina Supplemental Retirement Plans (that is, the NC 401(k) Plan and the NC 457 Plan). So, if an employee contributes part of their income to their NC 401(k) and/or NC 457 account, that deferral will also apply to any bonus they receive under the budget.
The General Assembly did not intend, and did not provide funds in the budget, for employers to make mandatory employer contributions on such bonus amounts for pension purposes or where otherwise provided by law for the NC Supplemental Retirement Plans (for example, the mandatory five percent 401(k) employer contribution for law enforcement officers). Later this year, the NC Supplemental Retirement Plans intend to provide a method for employers of law enforcement officers that wish to do so to make a similar discretionary 401(k) employer contribution relating to the employee bonuses provided in the budget.
Employers: Encourage LEO Members to Name/Update Beneficiaries
The Retirement Systems Division offers a death benefit to law enforcement officers through a separate insurance benefits plan. If your death occurs while you are in active service:
- $5,000 is paid to your surviving spouse unless you designate a different beneficiary. The amount is increased by $2,100 if your death is line-of-duty related.
If your death occurs after you are retired from active service:
- $4,000 is paid to your surviving spouse unless you designated a different beneficiary.
Many LEOs have never named beneficiaries. Some named a beneficiary at the beginning of their career but never updated thereafter as circumstances changed. Due to the importance of having the current information on file to ensure the benefit is paid to the correct individual(s), we encourage employers to direct their LEO members to ORBIT Self Service to designate their beneficiaries. Once new employees have been enrolled into ORBIT, and after an employer reporting submission (usually within two pay cycles), the LEO member can go into ORBIT and designate beneficiaries.
Discover upcoming Retirement Systems webinars and events. Registration is required.