Do I have to prove that I was on active duty 2001-2005 in North Carlina in order to be eligible for the Baily Settlement?

[SteamTrain · Accepted solution]

You might have to prove you were in-service 5 years before 12 Aug of 1989.

AD in 2001-2005 doesn't change that.

That 1989 date is critical for a military retirement 1099-R ...otherwise it is not Bailey Settlement eligible.

[Bobby502]

In my research I found that it is after the year 1989 that makes me qualified for Bailey. So my active duty time period, 2001-2005 is valid for Bailey. Last years taxes had no problem being filed. Now it starts all over again.

"As a result of the North Carolina Supreme Court's decision in Bailey v. State of North Carolina, North Carolina may not tax certain retirement benefits received by retirees of the State of North Carolina and its local government or by the United States government retirees (including military) for each retirement plan if the retiree has five or more years of creditable service as of August 12, 1989. The exclusion also applies to retirement benefits received from the State's 401 (k) and 457 plans if the retiree had contributed or contracted to contribute to the plan prior to August 12, 1989."  

Thanks for your help.

[SteamTrain]

I do not agree..but that's up to you.  

You should seek local professional Tax help for confirmation

[TomD8]

Agree with @SteamTrain.  Bailey requires 5 years of creditable service "as of" August 12, 1989.  If you served from 2001 to 2005, you had zero years of creditable service "as of" August 12, 1989.

[SteamTrain]

Unless he isn't explaining what he is doing  properly.

If you rolled over your active duty TSP account into a Bailey eligible Federal or state 401k or State (not local) 457 account that was 5-year eligible as-of 12 Aug of 1989...then distributions can be NC-exempt under Bailey...but only form that exact Bailey-eligible account..

And then there are some 3-year and 2-year exceptions...but they still must be before 12 Aug of 1989.
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