#Exempt January 27

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Thinking you should be EXEMPT from an obligation often stems from feeling entitled. There are exceptions and I want to talk about one.

Taxes often share a common disdain amongst citizens, but we realize without legal EXEMPTIONS we have to pay them. One of the blessings of my financial life was being a retiree from the State of North Carolina. That pension program is often called TSERS which stands for Teachers & State Employees Retirement System.

North Carolina State Employee Benefits

Starting back in the late 1970’s there were palpable retirement benefits by working for the State of NC. Even at 23 years of age I grasped my job had great fringes. Knowing if I worked a set number of years, I would not only qualify for a tax-free pension but free health insurance. For employees that began working for the State of NC after January 1, 2021, the health insurance promise is gone.

Over the next thirty years and beyond that loss of health insurance is going to change the retirement paradigm for those that work for the state.

When I started work there was something going on with not only my paycheck but every other state employee. Participation in the TSERS retirement system required a 6% payroll deduction. That amount was not-EXEMPT from taxes, and I considered it no big issue. Yet, unbeknownst to me there was legislation passed on August 12, 1989, by NC General Assembly that I would become aware of when I retired. Session Law 759 in 1989 took away the promise of tax-free pension for North Carolina retirees. So, in essence the new law was saying we are going to continue to tax you on your withholdings and we are going to start taxing you on your pension.

As expected, that decision was met with legal challenges. Got enlightened by pdf document that outlined the legal fight called the Bailey Case. The author was Eugene Boyce. Mr. Boyce was an attorney for Boyce and Isley PLLC.

Bottom line is a settlement was reached and that caused me and many others NC State Employees in my age group to become EXEMPT from paying State Taxes on my pension income. That settlement restored the promise made back in the 1970’s. Key component of this agreement was to qualify for the EXEMPTION you had to have been vested in TSERS before August 12, 1989. If not, you are not EXEMPT.

Qualifying for EXEMPT status feels good.