Home   Retirement ORP

Optional Retirement Program
(ORP)

1. ELIGIBLE EMPLOYEES

Senior Academic and Administrative Officers and the President's professional staff, both as designated by the Board of Governors of The University of North Carolina; a faculty member with the rank of instructor or above at any of the sixteen constituent institutions of The University of North Carolina; and field faculty of the Cooperative Agriculture Extension Service are eligible to participate in the ORP if they are permanently employed at least three-fourths time (at least 30 hours per week) for nine or more months per year on a recurring basis.

2. PROCEDURES
   
1. Enrollment: Eligible employees have 60 days from commencing employment to elect to enroll in the ORP. During this period, the employee will need to select an ORP carrier and complete certain enrollment forms that are available in Benefits Office. Failure to make an election will result in automatic membership in the Teachers' and State Employees' Retirement System (TSERS), the defined benefit plan. This consequence is irrevocable.
   

2. Contributions: Employer and employee contribution percentages are established by the General Assembly. Employee contributions to the ORP are made on a pre-tax basis as provided under Section 414(h) of the Internal Revenue Code. As a result, the University will deduct this contribution from your pay before calculating federal or state income tax withholding. Monies contributed by the employee and the University will be invested in an annuity contract or mutual fund offered among the approved carriers. Once enrolled in the ORP, the employee may elect to allocate both their contributions and the University's contributions to any one of the carriers or may direct their contributions to one carrier and the University contributions to another. These allocations may be changed during any future month for which the payroll office can accommodate the change. The employee also decides what portion of their contributions and the University's will go into a fixed account and/or what portion will go into an investment account. Employees may change the allocation for future premiums at any time by contacting their ORP carrier.
   

3. Applying for Benefits: To begin retirement benefits, employees must sign and file a Application for Retirement (form 6) by no earlier than 90 days or no later than one day before the effective date of your retirement. The effective retirement date is always the first day of the month and is not the date that you quit work. If the retirement application is not executed at least one day before the effective retirement date, the Retirement Systems Division must change the effective date to the first of the following month.
   

4. Calculation of Benefits: Under the ORP, the amount of the benefit is based on the total accumulation in the account(s) including any credited interest or dividends, your age, the age of your annuity partner, if applicable, and the income option selected. There are no age or service requirements to meet in order for a vested participant to begin receiving a benefit.
   

5. Options for Retirement Benefits: Each ORP carrier makes available optional forms of payments and a variety of retirement payment options designed to allow employees to tailor-make their retirement program to meet their financial needs. These may be fixed annuity payments or payments on a variable basis, or a combination thereof. Employees may also elect to receive a lump sum distribution, as permitted by the ORP carrier(s). However, to continue the State Health Plan coverage in retirement, the employee must begin to receive an ORP benefit on a monthly basis at retirement.
   

1. Upon termination of employment with less than five years of ORP participation employees become 100% vested in the ORP employer contribution provided they meet all of the following requirements:
   
   1. the new employer is a higher education institution that sponsors a substantially similar or "like" retirement plan,
      

   2. the successor plan offers a "like retirement plan" that is underwritten by one of the four carriers currently underwriting the ORP benefit, and
      

   3. the employee begins participation in that successor plan as their "core retirement plan" within 12 months following their termination of employment with The University of North Carolina.
      

2. Employees become eligible to receive distributions upon termination of employment or retirement. Employees decide when the benefit distributions begin. However, to continue the State Health Plan coverage in retirement, retirees must begin to receive an ORP benefit on a monthly basis at retirement.
   

1. Under the ORP, employees may receive the employer and employee contribution balances in cash, as permitted by the carrier(s) or as annuity distributions; or may leave the balance on deposit to accumulate earnings tax deferred until they elect to receive them. Under IRS regulations, however, an individual must start to receive a benefit no later than the April 1 of the calendar year following the calendar year in which you either (1) become age 70 1/2 or (2) retire, whichever is later. Distributions may be restricted by the chosen carrier and/or the new employer if the employee terminates from the University.
   

6. Additional benefits that ORP provides:
   

1. If you become disabled, the total value of your ORP account is available for income benefits that will begin upon retirement.
   

2. In the event of the employee's death, the total account value from both employee and employer contributions is 100% vested and available to the designated beneficiary designated on the ORP enrollment application. If there is a need to change the beneficiary, contact the ORP authorized carrier or the Benefits Office.
   

3. The University system offers a voluntary supplemental disability benefit policy that eligible ORP participants may purchase; and
   

4. Participation in the Disability Income Plan of North Carolina.