North CarolinaHB 11262025-2026 SessionHouseWALLET

AN ACT TO MAKE ADMINISTRATIVE, TECHNICAL, AND CLARIFYING CHANGES TO THE LAWS RELATED TO THE DEPARTMENT OF STATE TREASURER.

Sponsored By: Carson Smith (Republican), Diane Wheatley (Republican)

Signed by Governor

ARMED FORCESATTORNEYSAUTHORITIESBOARDSCJRSCOMMISSIONSCOUNCIL OF STATEDEATH & DYINGDEATH BENEFITSEMERGENCY SERVICESFIREFIGHTERS & FIREFIGHTINGFUNDS & ACCOUNTSGENERAL ASSEMBLYGOVERNMENTAL OPERATIONS COMN

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Bill Overview

Analyzed Economic Effects

28 provisions identified: 8 benefits, 5 costs, 15 mixed.

One-time pension transfers for bigger checks

You can make a one‑time, irrevocable transfer of eligible retirement balances (not Roth) from 403(b), 457(b), IRAs, 401(a)/403(a), SRIPNC, and similar plans into the State Retirement System for a special allowance. The Board sets straight‑life annuity factors and updates them every five years; for vested law‑enforcement officers as of June 30, 2010, factors assume a 4% annual post‑retirement increase. You may choose a special allowance with no increases or with CPI‑based increases. Transfers cannot push your allowance over statutory limits, and the Board may charge a one‑time admin fee (plans cannot charge transfer‑specific fees). For transfers on or after July 1, 2022, ineligible elections are undone, prior payments must be returned, and your transfer is sent back or handled under allowed alternatives.

Retirees face payback and yearly income checks

If you earn pay in the first six months after your retirement date, you must repay three times that pay. If you cannot pay at once, the system withholds your full monthly benefit until recovered. The Treasurer can require a yearly income statement listing pay, business income, Social Security, VA, workers’ comp, and other listed benefits. If you do not respond within 120 days, your benefit can be suspended; after 180 days, it can be ended. The Revenue Department may share state tax returns, wage statements, and employer NC‑3 data with the Treasurer to verify statements or investigate fraud; federal tax data stays protected unless federal law allows sharing.

Stiffer penalties for unclaimed property violators

If a holder willfully fails to report, pay, deliver, or perform required unclaimed‑property duties, the penalty is $1,000 per day, up to $25,000 per violation. The holder also pays 25% of the value of the unreported property, plus interest.

Disability pay rules and coverage updates

Long‑term disability (LTD) pays 65% of monthly base pay plus 65% of monthly longevity, up to $3,900. It is reduced by Social Security disability, workers’ comp, VA, and other listed payments, with a $10 minimum. After 36 months, LTD continues only if you are approved for and get primary Social Security disability; retroactive SSA approvals within the first 36 months restore LTD back to the stop date. A Medical Board must certify your incapacity; the five‑year service rule is waived if certain first responders are disabled from duty injuries. The Board may require medical reexams and can suspend or revoke benefits if you refuse. If you have at least five years of service and receive approved disability benefits, you get State Health Plan coverage on a non‑ or partially contributory basis while you remain eligible.

Easier claims and lower fees for owners

You get clearer, faster claim checks on unclaimed money. The Treasurer can require a holder to verify your claim within 30 days, signed by company officers, and you can appeal a denial. Starting December 1, 2026, holders must mail you a notice for property worth $25 or more before they report it to the State. Any property‑finder deal must be notarized and their total fee is capped at the lesser of $1,000 or 20% of what is recovered. The law also defines who counts as a property finder so these rules apply.

Local appeals on sales taxes; charter update

Starting July 7, 2026, counties and towns can appeal noncompliance findings to the Local Government Commission and delay or reverse sales‑tax withholding when they show enough evidence. Withheld sales‑tax funds for the Town of Speed must be released within 45 days after LGC approves a plan to distribute assets and liabilities, or sooner if another statute’s conditions are met. The suspension of Spencer Mountain’s town charter is extended through June 30, 2029.

System actuaries must certify pension costs

Starting July 7, 2026, committees must use the retirement system’s actuary to prepare actuarial notes for amendments that change pension or benefit program costs. Floor amendments are out of order without such a note. For service purchases, notes must also use the 30‑year U.S. Treasury rate and matching assumptions from the latest valuation year.

More groups can use state project financing

Effective July 7, 2026, charter schools count as elementary and secondary institutions and can seek financing from the NC Capital Facilities Finance Agency. Facilities for sectarian instruction, worship, or divinity programs are now eligible projects. More entity types, including for‑profit and nonprofit corporations and LLCs, can qualify as special purpose institutions. The State Treasurer serves as chair of the Agency’s board.

Investment Authority bonuses don’t boost pensions

Performance bonuses paid to Investment Authority employees on or after July 1, 2025 do not count as ‘compensation’ for retirement. That lowers pensionable pay and can reduce future pension amounts for those employees.

Investment bans for Iran ties and Israel boycotts

The Investment Authority must ban investing state funds in companies with Iran investment activities and in companies that boycott Israel. The Board publishes restricted lists within 120 days, gives companies 90 days’ written notice and a chance to comment, and divests within 180 days after listing, with annual updates. Companies on the Iran list cannot contract with the State or local governments. A company may be excluded if its Iran investments were only before October 1, 2015, were not renewed, and it is carrying out a public plan to cease; the Authority publishes and updates this exception list, and removes companies after five years with no activity. Existing Treasurer policies stay in effect until the Authority adopts its own.

Convert unused sick leave into service credit

You can turn unused sick leave into retirement credit at one month per 20 days (hours convert to days using your employer’s monthly hours). Only leave accrued monthly under an adopted policy and payable without restriction counts. Sick leave does not help you qualify for disability retirement or a vested deferred allowance. Your last workday must be close to your retirement date to use this credit (up to five years in some systems, 365 days in others).

New deadlines and e-filing for retirement

If you leave before age 60 and meet service‑year rules, you can elect deferred or early retirement. You must submit your election electronically or in writing within set time windows (as short as 1–120 days or 30–90 days, depending on the option). If you do not respond within 120 days after figures and forms are sent or after your retirement date, the election is void. You may also name a beneficiary for your contributions electronically or by written designation; paying those contributions ends your system membership and cannot happen earlier than 60 days after you leave, unless death or retirement occurred.

New limits and exceptions for legislators’ pensions

Beginning July 1, 2026, a legislative service pension cannot exceed 75% of the member’s highest annual salary. Starting the same date, serving in the Legislative Retirement System does not trigger earnings‑based suspensions or automatic cessation of a retiree’s allowance. A subsection of prior law expires July 1, 2026, but suspensions already in place under it continue until the member withdraws from TSERS or the Judicial system; no retroactive reinstatement is allowed. Several General Assembly retirement provisions are repealed, but any accrued or inchoate rights as of Jan 1, 2027 are preserved.

Pension cap: who is exempt or limited

The pension ‘contribution‑based benefit cap’ does not cut benefits for members who joined before Jan 1, 2015 or who have under five years of service after that date; employers may owe extra contributions. You are also exempt if your average final pay is below an indexed $100,000 (raised each Jan 1 by CPI). Armed‑service credit years listed in law do not count in the cap’s accumulated‑contribution calculation. If your pension was restored, then suspended three years for returning to work, and later recalculated after three years of reemployment, the later restoration is reduced dollar‑for‑dollar by the earlier restoration amount.

Restore military service; update pension payout rules

Beginning January 1, 2027, TSERS and LGERS members who gave up credited service and then buy the full allowed service get their prior service restored. The Board must set and review a contribution‑based benefit cap factor so that no more than 0.75% of retirement payments are reduced by the cap. If multiple beneficiaries are alive at a member’s death and one renounces, that does not make another beneficiary eligible under this rule; only one beneficiary may receive the return of contributions.

Some TSERS statutes repealed; rights kept

Several Teachers’ and State Employees’ Retirement System subsections are repealed. Any accrued or inchoate member rights as of January 1, 2027 are preserved and not reduced.

Health Plan: Medicare first, more maternity coverage

If you have Medicare and the State Health Plan, Medicare pays first for the same covered expenses, unless federal law says otherwise or the Treasurer finds coordination costs more than it saves. The Plan now covers maternity benefits for eligible dependent children; this starts 30 days after the act becomes law. The Treasurer may also use deposited funds to run the State Health Plan before paying the final payee, but payments that need State Auditor certification wait until certified.

Pay changes for retirement staff and trustees

The Board lets the State Treasurer set special pay plans and bonuses for up to 40% of Retirement Systems Division employees with key skills; those employees are exempt from some HR classification and pay rules. Certain Treasurer’s employees are no longer covered by most of Chapter 126, with listed protections that still apply. Trustees who are not paid from State funds get $100 per Board‑session day plus expense reimbursement; trustees paid by the State do not get the per diem.

New e-filing rules for unclaimed property holders

Beginning December 1, 2026, holders must e‑file unclaimed‑property reports and electronic certifications in the Treasurer’s format. Detailed owner data is required for amounts of $25 or more (and for some special categories) but amounts under $25 may be reported in aggregate. The Treasurer can ask for follow‑up information, and you must respond within 30 days. Small amounts get relief: you do not report intangible property if your yearly total is $250 or less, and you must report in any year it exceeds $250. Business associations must also certify any presumed‑abandoned property on their North Carolina income tax return (or another form) and the Secretary of Revenue sends this to the Escheat Fund each October 1. The Treasurer may hire outside consultants, with contingent fees capped at 12% of the final assessment.

Investment Authority manages many state funds

The State Treasurer stays custodian of the State Property Fire Insurance Fund, the State Public Education Property Insurance Fund, and many other special funds. Their assets must be deposited with the North Carolina Investment Authority, which invests them under Article 6 of Chapter 147. Earnings remain with each fund as its law requires.

Death benefit can’t be reduced for debts

The retirement system cannot reduce a retired member’s fully contributory death benefit to recover overpayments or other amounts. This keeps that death benefit whole for the named beneficiary.

Public hearings before agency bond projects

Effective July 7, 2026, the Capital Facilities Finance Agency must hold a public hearing before issuing bonds for a project. The hearing may be held anywhere, including the Agency’s Raleigh offices. No hearing is needed to refinance a previously approved project. Notices must meet the federal standards in 26 U.S.C. § 147(f).

Venture Capital Multiplier Fund policy adopted

The Investment Authority must adopt a written investment policy for the Venture Capital Multiplier Fund. The policy guides how the fund is invested and managed.

Short hold on police SRIP withdrawals

The SRIP administrator may block a law‑enforcement officer’s withdrawals for up to 60 days while deciding if a conviction causes forfeiture. Any forfeited contributions are deposited into the SRIP.

Standard reporting for firefighter and rescue pensions

Eligible fire departments and rescue or EMS squads must submit Board forms and contributions for the Firefighters’ and Rescue Squad Workers’ Pension Fund. Sending the forms certifies the accuracy of the information reported.

Global Transpark board seat removed

Effective July 7, 2026, the NC Global Transpark Authority board is reduced to 19 members. The State Treasurer’s nonvoting ex officio seat is removed.

Treasurer names board legal adviser

The State Treasurer must appoint a Department‑employed attorney as legal adviser to the Retirement Systems Board. The Treasurer may also designate private counsel to represent benefit program administration.

Tiny slice of contributions funds system fixes

Beginning July 1, 2026, up to 0.01% of required contributions may be set aside in a separate fund to support cost‑saving changes or prevent Retirement System operations from being disrupted. Money stays in a separate fund and can be transferred to the System as an extra employer contribution.

Sponsors & Cosponsors

Cosponsors

Jeffrey C. McNeely
Republican • House
Howard Penny, Jr.
Republican • House

Roll Call Votes

All Roll Calls

Yes: 352 • No: 179

House vote • 6/30/2026

HB 1126: 2026 Department of State Treasurer Administrative/Technical/Clarifying Cha

Yes: 83 • No: 29 • Other: 7

Senate vote • 6/23/2026