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posted Mar 5, 2023 4:21:43 PM

Bailey settlement applicability question on TSP RMDs for CSRS Federal Retiree after moving to North Carolina

Based on what I have read I believe my CSRS pension meets the criteria for exclusion from NC taxes because I retired with 39 years of service in 2020 and my service computation date was in January 1982, which was 7 years (only 5 years is required) before the 1989 vesting date.  In 1987 I also began contributing to the TSP. Since I was under the CSRS pension plan there were no matching Federal Employer matching funds of contributions that the FERS pension plan would have. I read NC Directive PD-99-1 regarding Qualified Federal Retirement Systems, and CSRS, FERS and TSP are all listed a QUALIFIED. My question has to do with my TSP account. When I begin to take RMDs from my TSP account (at age 73 thanks to the recent Federal tax rule change), when I move to NC will those RMDs from my TSP account be excluded from NC taxes? I am trying to determine if the exclusion applies to me because I retired under the CSRS pension system rather than the FERS pension system. Every little bit helps. Thanks.

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1 Replies
Expert Alumni
Mar 6, 2023 8:33:01 AM

Yes, it sounds like you do qualify for this exclusion on your North Carolina taxes. 

 

Both the Federal Employees' Retirement System (FERS), and  the United States Civil Service Retirement System (CSRS), are specifically mentioned in the NCDOR guidance for this exclusion. Click here to learn more

 

In addition if you follow this link and check page 46, you will see that the Thrift Savings Plan is also listed as an eligible plan. 

 

The information is entered in the federal interview, just after the screen to enter your 1099-R information:

 

  1. Under  Wages & Income, find IRA, 401(k), Pension Plan Withdrawals (1099-R).
  2. Select Add/ Edit to the right.
  3. Select Edit, to the right of your 1099-R entry.
  4. Continue until you  get to Where is your distribution from?
  5. Select Bailey settlement retirement benefits.
  6. Continue through the end of the section.