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NC Lifetime Income

Taxes

There may be some potential tax impacts of a transfer that you may wish to discuss with a tax advisor:

  1. This transfer will NOT change the NC tax status of the transferred funds under the Bailey decision. For example, if you are Bailey-eligible in the Retirement System, but not in the NC 401(k), this transfer will not shield the transferred funds from NC state income taxes. Likewise, if you are Bailey-eligible in the NC 401(k), but not in the Retirement System, this transfer will not cause you to lose your NC state income tax exemption on the transferred funds. This treatment was specified in the law enabling the transfers (SL2010-124).
  2. Depending on when you were planning to otherwise withdraw these funds from the NC 401(k)/457, doing this transfer may accelerate or delay the federal and state taxation of the transferred funds.
  3. The payments resulting from the transfer may qualify as regular periodic distributions under IRS distribution rules (see IRS Distribution Rules for more information.)
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