Questions Re: Bailey Settlement for NC Employees

[OhTheQuestions]

Running Premier on Windows 11.

As a retired teacher from NC for whom the Bailey Settlement previously applied, my taxable amount for a number of years was different from the gross (box 2a did not match box 1).  That was true until 2024, when I noticed my 1099-R had identical amounts in both boxes.  When I called asking why, the NC Retirement System clerk said the ruling had only applied until a certain amount of income had been removed from taxability by NC.  She said mine was fully credited now, so from 2024 on, the gross would be the same as the taxable.  So in 2024, I entered it as retirement income per that 1099-R; the gross was the same as the taxable.

Now I'm doing tax year 2025, and TT Premier on Windows 11 is asking me if I was ever part of the Bailey Settlement.  It pretty clearly seems to be asking about the past.

Q1. Should I just click "none of the above" regarding the Bailey Settlement, since it is apparently no longer affecting my taxes?  Or is it still affecting my taxes somehow, even though my entire gross is now the same as the taxable amount?  Why would I even need to go back to 2023 and years prior to start showing them what was happening back then, since my tax filings during those years were approved?

If I enter the thicket by clicking, "I was receiving the Bailey Settlement," the software then wants to know how I calculated the taxable amount each year.  General method or Simple method are my only two choices.  But I can't click either of those, because I never had to calculate anything.  The state had precalculated it and put the taxable amount in box 2a.   I don't know what method they used, but Premier is insisting I tell them one method or the other.

Q2. If I do have to discuss having received the Baily Settlement through 2023, when the software asks which method I used to calculate the taxable amount, should I click General or Simple?  (Remember, I never used either of them. NC Retirement System did the calculations.)

Whichever method I click, the software then insists I enter some figures on a calculation sheet. I have no figures to enter.  Nor did my 1099-R ever have a calculation sheet.  (As I said, I have no idea how the NC Retirement System calculated the taxable amount; I simply used the Taxable Amount they put into box 2a on my 1099-R.)  

Q3.  If I must click a calculation method, how on earth can I fill out the calculation sheets?   I don't even know what they're talking about.  I have no figures, and I don't know if I can even find the right calculation sheet.

Can someone help me out of this briar patch?🙄   I had started by answering the question as asked, clicking yes to had I ever received Bailey Settlement adjustments.  But now it's asking my calculation methods, and wanting figures, when the settlement doesn't even apply anymore in my case. 

Q4. Even if I should just click "none of the above" when I get to the Bailey Settlement question, I now need to somehow delete my entries on the subsequent pages if I'm backing out of this loop.   It doesn't seem to have a way to delete those entries.    I tried clicking "none of the above" on the "did you ever get Bailey Settlement" page, thinking it can probably be skipped because it no longer applies - but the pages after that seem to still have the entries (as if I had clicked yes).

For anyone familiar with what Premier is asking for (and why), and how I should handle these four questions, I would be extremely grateful for insights.   Thank you in advance!

[NCperson]

@OhTheQuestions you are confusing two separate issues.

1) if you are eligible for Bailey, you are ALWAYS eligible for Bailey.  If you are Bailey elgiible, the vesting date should be listed at the bottom of Form 1099-R.  If the word "vesting and the date Aug 14, 1989" is not listed you are NOT and have never been Bailey Eligible.  This only affects your NC tax return - and not the federal.  If you are Bailey eligible, NC will not tax your State Pension.  Your federal tax return will tax the pension. 

You are Bailey eligible if your pension was vested as of 8/14/1989 which generally means you began working for the State or local government prior to 8/14/1984.  

2) Separately, you contribited after tax dollar through your paycheck to your pension when you were working.  Since those dollars were after tax dollars, then when you receive your pension you are not taxed on the part of your pension that represent those after tax dollars.  That is why Box 1 and Box 2a were different.  The IRS requires the pension plan to amortize those dollars over time.  Once the amortization period is complete, Box 1 and Box 2a will be the same.  THIS HAS NOTHING TO DO WITH BAILEY.

I not sure why it's asking all the questions about the general or simple method.  You may want to delete the 1099-R and start that section again.  However, as long as the 1099-R indicates your vesting date,  you will indicate that you are subject to Bailey.  You will always be subject to Bailey.  If there is no vesting date, you are NOT Bailey eligible. 

[OhTheQuestions]

Okay then.  The NC Retirement System clerks (both of them) said I had been eligible for Bailey, but the money had all been paid out - apparently they were wrong. 

Perhaps I was hired a week too late to make that cut off to be fully vested.  I thought I had been. Nobody at the NCRS office ever said I was not vested in time for the Bailey; nor did they ever explain any other reason my taxable would have differed from my gross.  So I assumed that was what had been happening.  Nobody ever explained I should have been seeing the Bailey explanation written on my 1099-R, either.    Sigh...   
But at least I understand now and can solve the filing issue.  At your suggestion, I have deleted the 1099-R from the NCRS and re-entered it.  No problems are showing up this time around.  Thank you for your help!