2026 DST Admin/Technical/Clarifying Changes.-AB

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025

SESSION LAW 2026-50
HOUSE BILL 1126

*H1126-v-7*
AN ACT TO MAKE ADMIN ISTRATIVE, TECHNICAL, AND CLARIFYING CHA NGES
TO THE LAWS RELATED TO THE DEPARTMENT OF STATE TREASURER.

The General Assembly of North Carolina enacts:

PART I. ADMINISTRATIVE CHANGES/RETIREMENT SYSTEMS

PREVIOUSLY CREDITED MILITARY SERVICE TO BE REINSTATED UPON
PURCHASE OF PREVIOUSLY WITHDRAWN SERVICE
SECTION 1.1.(a) G.S. 135-4(g) reads as rewritten:
"(g) Teachers All of the following apply to teachers and other State employees who served
in the uniformed services services, as defin ed in the Uniformed Services Employment and
Reemployment Rights Act of 1994, 38 U.S.C. § 4303, who (i) were not dishonorably discharged,
and who discharged and (ii) returned to the service of the State within a period of two years from
date of discharge shall discharge:
(1) The member shall be credited with prior service for such the period of service
in the uniformed services for the maximum period that they are the member
is entitled to reemployment under the Uniformed Services Employment and
Reemployment Rights Act of 1994, 38 U.S.C. § 4301, et seq., or other federal
law, and the law.
(2) The salary or compensation of such a the teacher or State employee during
that period of service credited under subdivision (1) of this subsection is
deemed to be that salary or compensation the employee would have received
but for the period of service had the employee remained continuously
employed, if the determination of that salary or co mpensation is reasonably
certain. If the determination of the salary or compensation is not reasonably
certain, then it is deemed to be that employee's average rate of compensation
during the 12-month period immediately preceding the period of service.
(3) When a member who has served in the uniformed services returns to work in
compliance with the conditions of this subsection, that member's employer
shall remit to the System all employer and employee contributions for the full
period of that member's military service.
(4) If a member forfeited service previously credited under this subsection by
electing to receive a return of accumulated contributions, as provided for
under G.S. 135-5(f), and subsequently purchases the maximum amount of
service allo wed under G.S. 135-4.5(a)(1), then that member shall have the
service previously credited under this subsection restored."
SECTION 1.1.(b) Subsection (a) of this section is effective January 1, 2027, and
applies to members of the Teachers' and State Emplo yees' Retirement System with forfeited
service that was previously credited under G.S. 135-4(g) who subsequently purchase the
maximum amount of service allowed under G.S. 135-4.5(a)(1) on or after January 1, 2027.
SECTION 1.1.(c) G.S. 128-26 is amended by adding a new subsection to read:

Page 2 Session Law 2026-50 House Bill 1126
"(a2) If a member forfeited service previously credited under subsection (a1) of this section
by electing to receive a return of accumulated contributions, as provided for under
G.S. 128-27(f), and subsequently purchases t he maximum amount of service allowed under
G.S. 128-26.5(a)(1), then that member shall have the service previously credited under
subsection (a1) of this section restored."
SECTION 1.1.(d) Subsection (c) of this section is effective January 1, 2027, and
applies to members of the Local Governmental Employees' Retirement System with forfeited
service that was previously credited under G.S. 128-26(a1) who subsequently purchase the
maximum amount of service allowed under G.S. 128-26.5(a)(1) on or after January 1, 2027.

CONTRIBUTORY DEATH BENEFIT NOT SUBJECT TO OVERPAYMENT OFFSETS
SECTION 1.2.(a) G.S. 135-9(b) reads as rewritten:
"(b) Notwithstanding any provisions of law to the contrary, any overpayment of benefits
or erroneous payments to a member in a State -administered retirement system or the former
Disability Salary Continuation Plan or the Disability Income Plan of North Carolina, including
any benefits paid to, or State Health Plan premiums or claims paid on behalf of, any member or
beneficiary who is later determined to have been ineligible for those benefits or unentitled to
those amounts, may be offset against any retirement allowance, return of contributions or any
other right accrui ng under this Chapter to the same person, the person's estate, or designated
beneficiary. The ability to offset under this subsection does not apply to the fully contributory
death benefit for retired members under G.S. 135-175 or G.S. 135-64(k)."
SECTION 1.2.(b) G.S. 128-31(b) reads as rewritten:
"(b) Notwithstanding any provisions of law to the contrary, any overpayment of benefits
or erroneous payments to a member in a State -administered retirement system, the Disability
Salary Continuation Plan, or the Disability Income Plan of North Carolina, including any benefits
paid to, or State Health Plan premiums or claims paid on behalf of, any member who is later
determined to have been ineligible for those benefits or unentitled to those amounts, may be
offset against any retirement allowance, return of contributions or any other right accruing under
this Chapter to the same person, the person's estate, or designated beneficiary. The ability to
offset under this subsection does not apply to the fully contribut ory death benefit for retired
members under G.S. 128-38.40."
SECTION 1.2.(c) G.S. 120-4.29 reads as rewritten:
"§ 120-4.29. Exemption from garnishment, attachment.
(a) Except for the applications of the provisions of G. S. 110-136, and in connection with
a court -ordered equitable distribution under G.S. 50-20, the right of a person to a pension,
annuity, or retirement allowance, to the return of contributions, or to the receipt of the pension,
annuity or retirement allowance itself, any optional benefit or any other right accrued or accruing
to any person under the provisions of this Article, and the moneys in the various funds created
by this Article, are exempt from levy and sale, garnishment, attachment, or any other process
whatsoever, and shall be unassignable except as this Article specifically provides.
(b) Notwithstanding any provisions of law to the contrary, any overpayment of benefits
or erroneous payments to a member in a State -administered retirement system, the Disability
Salary Continuation Plan, or the Disability Income Plan of North Carolina, including any benefits
paid to, or State Health Plan premiums or claims paid on behalf of, any member who is later
determined to have been ineligible for those benefits or unentitled to those amounts, m ay be
offset against any retirement allowance, return of contributions, or any other right accruing under
this Article to the same person, the person's estate, or designated beneficiary. The ability to offset
under this subsection does not apply to the fully contributory death benefit for retired members
under G.S. 120-4.27."

CONTRIBUTION-BASED BENEFIT CAP (CBBC) INVOICE/SECOND RETIREMENT

House Bill 1126 Session Law 2026-50 Page 3
SECTION 1.3.(a) G.S. 135-5(a3) reads as rewritten:
"(a3) Anti-Pension-Spiking Contribution-Based Benefit Cap. – Notwithstanding any other
provision of this section, every service retirement allowance provided under this section for
members who retire on or after January 1, 2015, is subject to adjustment pursuant to a
contribution-based benefit cap under this subsection. All of the following shall apply to the
contribution-based benefit cap under this subsection:
(1) The Board of Trustees shall adopt a contribution -based benefit cap factor
recommended by the actuary, based upon actual experience, such that no more
than three -quarters of one percent (0.75%) of retirement allowances are
expected to be capped. The Board of Trustees shall modify such factors every
five years, as shall be deemed necessary, based upon the five-year experience
study as required by G.S. 135-6(n). Prior to establishing a service retirement
allowance under this section, the Board shall:shall do all of the following:
(1)a. Determine an amount equal to the member's accumulated
contributions as required under G.S. 135-8(b)(1) for all years during
which the member earned membership service, other than service
earned through armed service credit under G.S. 135-4(f),
G.S. 135-4(g), or G.S. 135-4.5, used in the calculation of the
retirement allowance that the member would r eceive under this
section.
(2)b. Determine the amount of a single life annuity that is the actuarial
equivalent of the amount determined under subdivision (1)
sub-subdivision (1)a. of this subsection, adjusted for the age of the
member at the time of retir ement or, when appropriate, the age at the
time of the member's death.
(3)c. Multiply the annuity amount determined under subdivision (2)
sub-subdivision (1)b. of this subsection by the contribution -based
benefit cap factor.
(4)d. Determine the amount of the retirement allowance that results from
the member's membership service, service to which the member would
be entitled but for the adjustment under this subsection. The amount
shall be calculated in the same manner as the member' s service
retirement allowance, with the following exceptions:
1. The applicable percentage of the member's average final
compensation shall be multiplied by the number of years of
membership service, rather than the number of years of
creditable service; the service.
2. The amount shall include the effect of any percentage
reduction that applies to the member's service retirement
allowance by virtue of the member's age or amount of
creditable service as of the service retirement date; and the
date.
3. The amount shall not be adjusted for an optional allowance
elected under subsection (g) of this section.
(2) The product of the multiplication in subdivision (3) sub-subdivision (1)c. of
this subsection is the member's contribution-based benefit cap. If the amount
determined under subdivision (4) sub-subdivision (1)d. of this subsection
exceeds the member's contribution -based benefit cap, then the member's
retirement allowance shall be reduced by an amount equal to the difference
between the contribution-based benefit cap and the amount determined under
subdivision (4) sub-subdivision (1)d. of this subsection.

Page 4 Session Law 2026-50 House Bill 1126
(3) Notwithstanding the foregoing, anything to the contrary under subdivisions
(1) and (2) of this subsection, the retirement allowance of a member with an
average final compensation of less than one hundred thousand dollars
($100,000), as hereinafter indexed, indexed under this subdivision, shall not
be subject to the contribution -based benefit cap. The minimum av erage final
compensation necessary for a retirement allowance to be subject to the
contribution-based benefit cap shall be increased on January 1 each year by
the percent change between the June Consumer Price Index in the year prior
to retirement and the June Consumer Price Index in the fiscal year most
recently ended, calculated to the nearest tenth of a percent (0.1%), provided
that this percent change is positive.
(4) Notwithstanding the foregoing, anything to the contrary under subdivisions
(1) through (3) of this subsection, the retirement allowance of a member who
became a member before January 1, 2015, or who has not earned at least five
years of membership service in the Retirement System after January 1, 2015,
shall not be reduced; however, the member's last employer, or if the member's
last employer did not report to the retirement system any compensation paid
to the member during the period used to compute the member's average final
compensation, the member's employer or employers who reported
compensation to the member during such period, shall be required to make an
additional contribution as specified in G.S. 135-8(f)(2)f., if applicable.
(5) For any member whose retirement allowance was (i) initially restored to the
pre-contribution-based benefit cap level, in accordance with G.S. 135-4(jj),
(ii) subsequently suspended for a period of at least three years due to the
member being restored to service, and (iii) recalculated based on becoming
reemployed for at least three years on the basis of the member's compensation
and service before and after the period of prior retirement without restrictions,
the amount required to restore the member 's benefit to the
pre-contribution-based benefit cap level shall be reduced on a dollar-for-dollar
basis by the amount required to restore the initial retirement allowance."
SECTION 1.3.(b) G.S. 128-27(a3) reads as rewritten:
"(a3) Anti-Pension-Spiking Contribution-Based Benefit Cap. – Notwithstanding any other
provision of this section, every service r etirement allowance provided under this section for
members who retire on or after January 1, 2015, is subject to adjustment pursuant to a
contribution-based benefit cap under this subsection. All of the following shall apply to the
contribution-based benefit cap under this subsection:
(1) The Board of Trustees shall adopt a contribution -based benefit cap factor
recommended by the actuary, based upon actual experience, such that no more
than three -quarters of one percent (0.75%) of retirement allo wances are
expected to be capped. The Board of Trustees shall modify such factors every
five years, as shall be deemed necessary, based upon the five-year experience
study as required by G.S. 128-28(o). Prior to establishing a service retirement
allowance under this section, the Board shall:shall do all of the following:
(1)a. Determine an amount equal to the member's accumulated
contributions as required under G.S. 128-30(b)(1) for all years during
which the member earned membership service, other than ser vice
earned through armed service credit under G.S. 128-26(a1),
G.S. 128-26(a2), G.S. 128-26(j1), or G.S. 128-26.5, used in the
calculation of the retirement allowance that the member would receive
under this section.

House Bill 1126 Session Law 2026-50 Page 5
(2)b. Determine the amount of a single life annuity that is the actuarial
equivalent of the amount determined under subdivision (1)
sub-subdivision (1)a. of this subsection, adjusted for the age of the
member at the time of retirement or, when appropriate, the age at the
time of the member's death.
(3)c. Multiply the annuity amount determined under subdivision (2)
sub-subdivision (1)b. of this subsection by the contribution -based
benefit cap factor.
(4)d. Determine the amount of the retirement allowance that results from
the member's membership service, service to which the member would
be entitled but for the adjustment under this subsection. This amount
shall be calculated in the same manner as the member's service
retirement allowance, with the following exceptions:
1. The applicable percent age of the member's average final
compensation shall be multiplied by the number of years of
membership service, rather than the number of years of
creditable service; the service.
2. The amount shall include the effect of any percentage
reduction that applies to the member's service retirement
allowance by virtue of the member's age or amount of
creditable service as of the service retirement date; and the
date.
3. The amount shall not be adjusted for an optional allowance
elected under subsection (g) of this section.
(2) The product of the multiplication in subdivision (3) sub-subdivision (1)c. of
this subsection is the member's contribution-based benefit cap. If the amount
determined unde r subdivision (4) sub-subdivision (1)d. of this subsection
exceeds the member's contribution -based benefit cap, then the member's
retirement allowance shall be reduced by an amount equal to the difference
between the contribution-based benefit cap and the amount determined under
subdivision (4) sub-subdivision (1)d. of this subsection.
(3) Notwithstanding the foregoing, anything to the contrary under subdivis ions
(1) and (2) of this subsection, the retirement allowance of a member with an
average final compensation of less than one hundred thousand dollars
($100,000), as hereinafter indexed, indexed under this subdivision, shall not
be subject to the contribution -based benefit cap. The minimum av erage final
compensation necessary for a retirement allowance to be subject to the
contribution-based benefit cap shall be increased on January 1 each year by
the percent change between the June Consumer Price Index in the year prior
to retirement and the June Consumer Price Index in the fiscal year most
recently ended, calculated to the nearest tenth of a percent (0.1%), provided
that this percent change is positive.
(4) Notwithstanding the foregoing, anything to the contrary under subdivisions
(1) through (3) of this subsection, the retirement allowance of a member who
became a member before January 1, 2015, or who has not earned at least five
years of membership service in the Retirement System after January 1, 2015,
shall not be reduced; however, the member's last employer, or if the member's
last employer did not report to the retirement system any compensation paid
to the member during the period used to compute the member's average final
compensation, the member's employer or employers who reported

Page 6 Session Law 2026-50 House Bill 1126
compensation to the member during such period, shall be required to make an
additional contribution as specified in G.S. 128-30(g)(2)b., if applicable.
(5) For any member whose retirement allowance was (i) initially restored to the
pre-contribution-based benefit cap level, in accordance with G.S. 128-26(y),
(ii) subsequently suspended for a period of at least three years due to the
member being restored to service, and (iii) recalculated based on becoming
reemployed for at least three years on the basis of the member's compensation
and service before and after the period of prior retirement without restrictions,
the amount required to restore the member 's benefit to the
pre-contribution-based benefit cap level shall be reduced on a dollar-for-dollar
basis by the amount required to restore the initial retirement allowance."

LEGISLATIVE RETIREMENT SYSTEM REEMPLOYMENT FLEXIBILITY
SECTION 1.4.(a) G.S. 135-3(a)(8)c. reads as rewritten:
"c. Unless otherwise provided, if a beneficiary who retired on an early or
service retirement allowance under this Article is reemployed by, or
otherwise engaged to perform services for, an employer participating
in the Retirement System on a part time, temporary, interim, or on a
fee for service basis, whether contractual or otherwis e, and if the
beneficiary earns an amount during the 12 month period immediately
following the effective date of retirement or in any calendar year which
exceeds fifty percent (50%) of the reported compensation, excluding
terminal payments, during the 12 m onths of service preceding the
effective date of retirement, or twenty thousand dollars ($20,000),
whichever is greater, as hereinafter indexed, then the retirement
allowance shall be suspended as of the first day of the month following
the month in which the reemployment earnings exceed the indexed
amount, for the balance of the calendar year, unless the reemployment
earnings exceed the indexed amount in the month of December. If the
reemployment earnings exceed the indexed amount in December, then
the ret irement allowance shall not be suspended. A suspended
retirement allowance of the beneficiary shall be reinstated as of
January 1 of each year following suspension. The amount that may be
earned before suspension shall be increased on January 1 of each year
by the percentage change between the December Consumer Price
Index in the year prior to retirement and the December Consumer Price
Index in the year most recently ended, calculated to the nearest tenth
of a percent (1/10 of 1%), provided that this percen tage change is
positive. This sub-subdivision shall not apply to service as a member
of the Legislative Retirement System of North Carolina under Article
1A of Chapter 120 of the General Statutes."
SECTION 1.4.(b) G.S. 135-3(a)(8)d. reads as rewritten:
"d. Should a beneficiary who retired on an early or service retirement
allowance under this Chapter be restored to service as an employee or
teacher, then the retirement allowance shall cease as of the first of the
month following the month in which the bene ficiary is restored to
service and the beneficiary shall become a member of the Retirement
System and shall contribute thereafter as allowed by law at the uniform
contribution payable by all members. This sub-subdivision shall not
apply to service as a member of the Legislative Retirement System of

House Bill 1126 Session Law 2026-50 Page 7
North Carolina under Article 1A of Chapter 120 of the General
Statutes.
…."
SECTION 1.4.(c) G.S. 120-4.21(d) expires July 1, 2026.
SECTION 1.4.(d) G.S. 120-4.21(c) reads as rewritten:
"(c) Limitations Applicable to Members Retiring Before September 1, 2005. All
Members. – In no event shall any member receive a service retirement allowance greater than
seventy-five percent (75%) of his the member's "highest annual salary"."
SECTION 1.4.(e) This section is effective July 1, 2026, and applies to all members
of the Legislative Retirement System of North Carolina on or after that date, including those
members who retired after September 1, 2005.
SECTION 1.4.(f) If the service retirement allowance of a member who retired on or
after September 1, 2005, and before July 1, 2026, was suspended in accordance with
G.S. 120-4.21(d) prior to its expiration on July 1, 2026, then that service retirement allowance
shall continue to be suspended until the mem ber withdraws from membership in either the
Teachers' and State Employees' Retirement System or the Consolidated Judicial Retirement
System and the member is not entitled to any retroactive reinstatement of a service retirement
allowance related to the expiration of G.S. 120-4.21(d).

ELECTRONIC REPORTING OF CONTRIBUTIONS/FIREFIGHTERS' AND RESCUE
SQUAD WORKERS' PENSION FUND
SECTION 1.5. Article 86 of Chapter 58 of the General Statutes is amended by
adding a new section to read:
"§ 58-86-41. Collection and reporting of contributions.
(a) Under rules adopted by the Board , each eligible fire department and each eligible
rescue or emergency medical services squad shall, on account of each eligible firefighter and
each eligible rescue squad worker, certify any information necessary for the proper
administration of the Pension Fund. The submission of this information by an eligible fire
department or an eligible rescue or emergency medical services squad constitutes a certification
of its accuracy.
(b) Each eligible fire department and each eligible rescue or emergency medical services
squad shall transmit contributions as certified under subsection (a) of this section on the forms
prescribed by the Board."

CLARIFICATION/FELONY FORFEITURE OF CERTAIN SUPPLEMENTAL
RETIREMENT INCOME PLAN BENEFITS
SECTION 1.6.(a) G.S. 143-166.30(g1) reads as rewritten:
"(g1) Forfeiture of Benefits for Certain Felonies. – Participants in the Supplemental
Retirement Income Plan for State Law-Enforcement Officers whose benefits are forfeited under
G.S. 135-18.10A shall also forfeit contributions paid on or after December 1, 2012, on behalf of
the participant by the State to the Supplemental Retirement Income Plan. Pending the
determination of whether G.S. 135-18.10A applies to a law enforcement officer's conviction, the
administrator of the Supplemental Retirement Income Plan may prohibit the withdrawal of
contributions from the law enforcement officer 's account for a period of up to 60 days to allow
for a post -conviction forfeiture determination . Any contribution funds forfeited under this
subsection shall be deposited in the Supplemental Retirement Income Plan."
SECTION 1.6.(b) G.S. 143-166.50(e2) reads as rewritten:
"(e2) Forfeiture of Be nefits for Certain Felonies. – Participants in the Supplemental
Retirement Income Plan for Local Governmental Law-Enforcement Officers whose benefits are
forfeited under G.S. 128-38.4A shall also forfeit contributions paid on or after December 1, 2012,
on behalf of the participant by local government employers of law enforcement officers to the

Page 8 Session Law 2026-50 House Bill 1126
Supplemental Retirement Income Plan for Local Governmental Law -Enforcement Officers.
Pending the determination of whether G.S. 128-38.4A applies to a law enforcement officer's
conviction, the administrator of the Supplemental Retirement Income Plan may prohibit the
withdrawal of contributions from the law enforcement officer 's account for a period of up to 60
days to allow for a post -conviction forfeiture determination. Any contribution funds forfeited
under this subsection shall be deposited in the Supplemental Retirement Income Plan."
SECTION 1.6.(c) This section is effective when this act becomes law and applies to
law enforcement officers with applicable convictions on or after that date.

PERSONNEL FLEXIBILITY
SECTION 1.7.(a) G.S. 135-6 reads as rewritten:
"§ 135-6. Administration.
…
(g) Officers and Other Employees; Salaries and Expenses. – The State Treasurer shall be
ex officio chair of the Board of Trustees and shall appoint a director. The Board shall engage
actuarial and other services required to transact the business of the Retirement System. The State
Treasurer and the Board of Trustees may appoint employees as they deem advisable to carry out
the terms and conditions of the Retirement Systems. The compensation of all persons, other than
the director, engaged by the Board, and all other expenses of the Board necessary for the
operation of the Retirement System, System shall be paid at rates and in amounts approved by
the Board, subject to the approval of the Director of the Budget.Board.
(g1) Compensation of Designated Employees. – The Board of Trustees shall authorize the
State Treasurer to establish compensation plans, including salaries and performance -related
bonuses, for employees who possess specialized skills or knowledge necessary for the proper
administration of the Retirement Systems. All of the following apply:
(1) Employees designated under this subsection shall be exempt from the
classification and compensation rules established by the Office of State
Human Resources, in accordance with G.S. 126-5(c13).
(2) The total number of designated employees under this subsection and
G.S. 128-28(h1) shall not exceed forty percent (40%) of the employees of the
Retirement Systems Division.
(h) Actuarial Data. – The Board shall engage actuarial and other services required to
transact the business of the Retirement System. The Board of Trustees shall keep in convenient
form data necessary for actuarial valuation of the various funds of the Retirement System and for
checking the experience of the System.
…."
SECTION 1.7.(b) G.S. 128-28 reads as rewritten:
"§ 128-28. Administration and responsibility for operation of System.
…
(h) Officers and Other Employees, Salaries, and Employees; Expenses. – The State
Treasurer shall be ex officio chair of the Board of Trustees and shall appoint a director. The
Board shall engage actuarial and other services required to transact the business of the Retirement
System. The State Treasurer and the Board of Trustees may appoint empl oyees as they deem
advisable to carry out the terms and conditions of the Retirement Systems. The compensation of
all persons engaged by the Board, and all other expenses of the Board necessary for the operation
of the Retirement System, System shall be paid at rates and in amounts approved by the Board.
(h1) Compensation of Designated Employees. – The Board of Trustees shall authorize the
State Treasurer to establish compensation plans, including salaries and performance -related
bonuses, for employees wh o possess specialized skills or knowledge necessary for the proper
administration of the Retirement Systems. All of the following apply:

House Bill 1126 Session Law 2026-50 Page 9
(1) Employees designated under this subsection shall be exempt from the
classification and compensation rules establish ed by the Office of State
Human Resources, in accordance with G.S. 126-5(c13).
(2) The total number of designated employees under this subsection and
G.S. 135-6(g1) shall not exceed forty percent (40%) of the employees of the
Retirement Systems Division.
(i) Actuarial Data. – The Board shall engage actuarial and other services required to
transact the business of the Retirement System. The Board of Trustees shall keep in convenient
form data necessary for actuarial valuation of the various funds of the Retirement System and for
checking the experience of the System.
…."
SECTION 1.7.(c) G.S. 126-5(c13) reads as rewritten:
"(c13) Except as to G.S. 126-13, 126-14, 126-14.1, and Articles 6, 7, 14, 15, and 16 of this
Chapter, this Chapter does not apply to any of the following employees of the Department of
State Treasurer Treasurer:
(1) Employees possessing specialized skills or knowledge necessary for the
proper administration of the Supplemental Retirement Plans and compensated
pursuant to G.S. 135-91(c).G.S. 135-91(c2).
(2) Designated employees under G.S. 135-6(g1) or G.S. 128-28(h1)."

LEGAL COUNSEL FLEXIBILITY
SECTION 1.8.(a) G.S. 135-6(u) is recodified as the second sentence of
G.S. 135-6(j).
SECTION 1.8.(b) G.S. 135-6(j), as amended by subsection (a) of this section, reads
as rewritten:
"(j) Legal Adviser. Counsel. – The Attorney General is State Treasurer shall designate a
licensed attorney employed by the Department of State Treasurer as the legal adviser of the Board
of Trustees. The State Treasurer may designate legal counsel, including private counsel, to
represent the interests of the administration of benefit programs under this Chapter."
SECTION 1.8.(c) G.S. 128-28(k) reads as rewritten:
"(k) Legal Adviser. Counsel. – The Attorney General is State Treasurer shall designate a
licensed attorney employed by the Department of State Treasurer as the legal adviser of the Board
of Trustees. The State Treasurer may designate legal counsel, including private counsel, to
represent the interests of the administration of benefit programs under this Article."
SECTION 1.8.(d) G.S. 120-4.10 is amended by adding a new subsection to read:
"(c) The State Treasurer shall designate a licensed attorney employed by the Department
of State Treasurer as the legal a dviser of the Board of Trustees. The State Treasurer may
designate legal counsel, including private counsel, to represent the interests of the administration
of benefit programs under this Article."

BOARD OF TRUSTEES PER DIEM
SECTION 1.9.(a) G.S. 135-6(c) reads as rewritten:
"(c) Compensation of Trustees. – The During sessions of the Board, trustees shall be paid
during sessions of the Board at the prevailing rate established for members of State boards and
commissions, and they receive one hundred dollars ($100.00) per day, except for any trustee
whose salary, in whole or in part, is paid from State funds . In accordance with G.S. 138-5 and
G.S. 138-6, trustees shall be reimbursed for all necessary expenses that they incur through service
on the Board."
SECTION 1.9.(b) G.S. 128-28(d) reads as rewritten:
"(d) Compensation of Trustees. – The During sessions of the Board, trustees shall be paid
during sessions of the Board at the prevailing rate established for members of State boards and

Page 10 Session Law 2026-50 House Bill 1126
commissions, and they receive one hundred dollars ($1 00.00) per day, except for any trustee
whose salary, in whole or in part, is paid from State funds . In accordance with G.S. 138-5 and
G.S. 138-6, trustees shall be reimbursed for all necessary expenses that they incur through service
on the Board."
SECTION 1.9.(c) G.S. 135-96 is amended by adding a new subsection to read:
"(f) During sessions of the Board, trustees shall receive one hundred dollars ($100.00) per
day, except for any trustee whose salary, in whole or in part, is paid from State funds . In
accordance with G.S. 138-5 and G.S. 138-6, trustees shall be reimbursed for all necessary
expenses that they incur through service on the Board."
SECTION 1.9.(d) G.S. 147-86.72 is amended by adding a new subsection to read:
"(a1) Compensation of Trustees. – During sessions of the Board, trustees shall receive one
hundred dollars ($1 00.00) per day, except for any trustee whose salary, in whole or in part, is
paid from State funds . In accordance with G.S. 138-5 and G.S. 138-6, t rustees shall be
reimbursed for all necessary expenses that they incur through service on the Board."
SECTION 1.9.(e) This section is effective when it becomes law and applies to
sessions of the Boards of Trustees on or after that date.

SURVIVOR'S ALTERNATIVE BENEFIT RENUNCIATION CLARIFICATION
SECTION 1.10.(a) G.S. 135-5(m)(2) reads as rewritten:
"(2) At the time of the member's death, one and only one beneficiary is eligible to
receive a return of his the member's accumulated contributions. If multiple
beneficiaries are designated and living at the time of the member 's death and
any beneficiary elects to renounce that beneficiary's portion of the member 's
accumulated contributions , th e renunciation shall not result in another
beneficiary becoming eligible for benefits under this subsection."
SECTION 1.10.(b) G.S. 128-27(m)(2) reads as rewritten:
"(2) At the time of the member's death, one and only one beneficiary is eligible to
receive a return of his the member's accumulated contributions. If multiple
beneficiaries are designated and living at the time of the member 's death and
any beneficiary elects to renounce that beneficiary's portion of the member 's
accumulated contributions , th e renunciation shall not result in another
beneficiary becoming eligible for benefits under this subsection."

LEIA MODIFICATIONS
SECTION 1.11.(a) G.S. 135-7(h) reads as rewritten:
"(h) Legislative Enactment Implementation Arrangement. – The Legislative Enactment
Implementation Arrangement, or LEIA, is established effective October 1, 2017, and placed
under the management of the Board of Trustees. The purpose of the LEIA is to provide for timely
and ongoing administrative implementation of legislative provisions regarding the retirement of,
or payment of retirement benefits to, public officers or public employees. The LEIA shall have
the following parameters:
(1) Administration. – The LEIA shall be administered by the Board of Trustees,
which shall compile and maintain all records necessary or appropriate for
administration. The Board of Trustees shall have full discretionary authority
to interpret, construe, and implement the LEIA and to a dopt such rules and
regulations as may be necessary or desirable to implement the provisions of
the LEIA.
(2) Funding of the LEIA. – In the event that (i) the General Assembly creates or
modifies any provision for the retirement of, or payment of retirement benefits
to, public officers or public employees that has a cost savings as measured by
actuarial note required by Article 15 of Chapter 120 of the General Statutes,

House Bill 1126 Session Law 2026-50 Page 11
or (ii) the Board of Trustees identifies a specific administrative or information
technology purpose that is necessary to prevent an interruption to the normal
operation of the Retirement System, the Board of Trustees may direct up to
one hundredth percent (0.01%) of the required contributions to fund the LEIA.
These funds must be deposited i n a separate fund from the fund into which
regular employer contributions are deposited for the Retirement System. The
Board of Trustees shall not direct any employer contributions into the LEIA
after January 1, 2035.
(3) Allocation of LEIA funds. – The Board of Trustees may allocate LEIA funds
to (i) the implementation of legislative provisions regarding the retirement of,
or payment for retirement benefits to, public officers or public employees, or
(ii) be used for administrative or information technology purposes, subject to
the following restrictions:
a. The Board of Trustees must identify individual implementation
projects that will be paid for with LEIA funds. These implementation
projects must be necessitated by a specific statute or session law that
was enacted within five years of the allocation of the funds. The Board
of Trustees must also identify the number of years for which each
individual implementation project will be paid for with LEIA funds.
b. For implementation projects that will be paid for with LEIA funds for
a period of one year or less, the Board of Trustees must determine that
the cost savings from implementing the project is projected to be no
less than half of the amount of LEIA funds utilized to pay for
implementation.
c. For implementation projects that will be paid for with LEIA funds for
a period of greater than one year, but not more than four years, the
Board of Trustees must determine that the long-term cost savings from
implementing the project is projected to be at least three times greater
than the cost of implementation.
d. No implementation project shall be paid for with LEIA funds for a
period of more than four years.
e. The Board of Trustees shall identify the specific administrative or
information technology purpose for which LEIA funds will be used.
Any use of LEIA funds for administrative or information technology
purposes requires a determination by the Board of Trustees that the
use of funds is necessary to prevent an interruption to the normal
operation of the Retir ement System. purposes that the Board of
Trustees determines are necessary to prevent an interruption to the
normal operation of the Retirement System.
(4) Treatment of unused assets. – Any assets of the LEIA not used to pay allowed
administrative expenses for timely administrative implementation of
legislative provisions shall be transferred The Board of Trustees may transfer
assets of the LEIA to the Retirement System as an additional employer
contribution.
…."
SECTION 1.11.(b) G.S. 128-29(g) reads as rewritten:
"(g) Legislative Enactment Implementation Arrangement. – The Legislative Enactment
Implementation Arrangement, or LEIA, is established effective October 1, 2017, and placed
under the management of the Board of Trustees. The purpose of the LEIA is to provide for timely
and ongoing administrative implementation of legislative provisions regarding the retirement of,

Page 12 Session Law 2026-50 House Bill 1126
or payment of retirement benefits to, public officers or public employees. The LEIA shall have
the following parameters:
(1) Administration. – The LEIA shall be administered by the Board of Trustees,
which shall compile and maintain all records necessary or appropriate for
administration. The Board of Trustees shall have full discretionary authority
to interpret, construe, and implement t he LEIA and to adopt such rules and
regulations as may be necessary or desirable to implement the provisions of
the LEIA.
(2) Funding of the LEIA. – In the event that (i) the General Assembly creates or
modifies any provision for the retirement of, or payment of retirement benefits
to, public officers or public employees that has a cost savings as measured by
actuarial note required by Article 15 of Chapter 120 of the General Statutes,
or (ii) the Board of Trustees identifies a specific administrative or information
technology purpose that is necessary to prevent an interruption to the normal
operation of the Retirement System, the Board of Trustees may direct up to
one hundredth percent (0.01%) of the required contributions to fund the LEIA.
These funds mus t be deposited in a separate fund from the fund into which
regular employer contributions are deposited for the Retirement System. The
Board of Trustees shall not direct any employer contributions into the LEIA
after January 1, 2035.
(3) Allocation of LEIA funds. – The Board of Trustees may allocate LEIA funds
to (i) the implementation of legislative provisions regarding the retirement of,
or payment for retirement benefits to, public officers or public employees, or
(ii) be used for administrative or information technology purposes, subject to
the following restrictions:
a. The Board of Trustees must identify individual implementation
projects that will be paid for with LEIA funds. These implementation
projects must be necessitated by a specific statute or session law that
was enacted within five years of the allocation of the funds. The Board
of Trustees must also identify the number of years for which each
individual implementation project with be paid for will LEIA funds.
b. For implementation projects that will be paid for with LEIA funds for
a period of one year or less, the Board of Trustees must determine that
the cost savings from implementing the project is projected to be no
less than half of the amount of LEIA funds utilized to pay for
implementation.
c. For implementation projects that will be paid for with LEIA funds for
a period of greater than one year, but not more than four years, the
Board of Trustees must determine that the long-term cost savings from
implementing the project is projected to be at least three times greater
than the cost of implementation.
d. No implementation project shall be paid for with LEIA funds for a
period of more than four years.
e. The Board of Trustees shall identify the specific administrative or
information technology purpose for which LEIA funds will be used.
Any use of LEIA funds for administrative or information technology
purposes requires a determination by the Board of Trustees that the
use of funds is necessary to prevent an interruption to the normal
operation of the Retirement System. purposes that the Board of
Trustees determines are necessary to prevent an interruption to the
normal operation of the Retirement System.

House Bill 1126 Session Law 2026-50 Page 13
(4) Treatment of unused assets. – Any assets of the LEIA not used to pay allowed
administrative expenses for timely administrative implementation of
legislative provisions shall be transferred The Board of Trustees may transfer
assets of the LEIA to the Retirement System as an additional employer
contribution.
…."
SECTION 1.11.(c) This section is effective July 1, 2026.

PART II. STATE HEALTH PLAN

ALLOW MATERNITY BENEFITS FOR ALL ELIGIBLE DEPENDENT
CHILDREN/REMOVE REFERENCE TO MATERNITY BENEFITS FROM THE
STATUTE DEALING WITH CATEGORIES OF COVERAGE
SECTION 2.1.(a) G.S. 135-48.43(d) reads as rewritten:
"(d) Categories of Coverage Available. – There The following are four categories of
coverage which that an employee or retiree may elect.elect:
(1) Employee Only. – Covers enrolled employees only. Maternity benefits are
provided to employee only.
(2) Employee and Child. – Covers enrolled employee and all eligible dependent
children. Maternity benefits are provided to the employee only.
(3) Employee and Family. – Covers employee and spouse, and all eligible
dependent children. Maternity benefits are provided to employee or enrolled
spouse.
(4) Employee and Spouse. – Covers employee and spouse only. Maternity
benefits are provided to the employee or the employee's enrolled spouse."
SECTION 2.1.(b) This section is effective 30 days after this act becomes law.

COORDINATION OF BENEFITS WITH MEDICARE
SECTION 2.2. G.S. 135-48.38(a) reads as rewritten:
"(a) Benefits payable for covered expenses under this Plan will be reduced by any benefits
payable for the same covered expenses under Medicare, so that Medicare. Medicare will be the
primary carrier except where compliance with federal law specifies otherwise.otherwise or when
the Treasurer has determined that the administrative cost of coordinating with Medicare is likely
to exceed the financial benefit of the coordination to the Plan."

EXCEPTION FROM FINAL PAYEE REQUIREMENT
SECTION 2.3. G.S. 147-86.11(f)(1) reads as rewritten:
"(1) Moneys deposited with the State Treasurer remain on deposit with the State
Treasurer until final disbursement to the ultimate payee, except (i) for the
purposes of the operation of North Carolina State Health Plan for Teacher s
and State Employees , as determined by the State Treasurer , and (ii) as
provided in G.S. 147-86.12. If an ultimate payee is required by law to submit
information for certification or verification by the State Auditor, then no
disbursement may be made to that ultimate payee if the certification or
verification has not been issued by the State Auditor to the State Controller."

PART III. NORTH CAROLINA INVESTMENT AUTHORITY

CONFORM WITH THE CHANGE FROM THE STATE TREASURER AS CUSTODIAN
OF FUNDS TO THE NORTH CAROLINA INVESTMENT AUTHORITY
SECTION 3.1.(a) G.S. 58-31-1 reads as rewritten:

Page 14 Session Law 2026-50 House Bill 1126
"§ 58-31-1. State Property Fire Insurance Fund created.
Upon the expiration of all existing policies of fire insurance upon state -owned buildings,
fixtures, furniture, and equipment, including all such property the title to which may be in any
State department, institution, or agency, the State of North Carolina shall not reinsure any of such
properties.
There is hereby created a "State Property Fire Insurance Fund," which shall be as a special
fund in the State treasury, for the purpose of providing a reserve against loss from fire at State
departments and institutions. The State Treasurer shall be the custodian of the "State Property
Fire Insurance Fund" and shall invest deposit its assets in accordance with the provisions of G.S.
147-69.2 and 147 -69.3. with the North Carolina Inves tment Authority to invest these assets in
accordance with Article 6 of Chapter 147 of the General Statutes. The unexpended appropriations
of State departments and institutions for fire insurance premiums for the fiscal year 1944 -1945
and the appropriations for fire insurance premiums made for the biennium 1945-1947 or that may
thereafter be made for this purpose shall be transferred to the "State Property Fire Insurance
Fund.""
SECTION 3.1.(b) G.S. 58-31A-20(a) reads as rewritten:
"(a) There is established a State Public Education Property Insurance Fund (Fund) as a
special fund in the State treasury for the purpose of providing a reserve against property loss of
public education boards. The State Treasurer shall be the custodian of the Fund and shall invest
deposit its assets in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3. with the
North Carolina Investment Authority to invest these assets in accordance with Article 6 of
Chapter 147 of the General Statutes. All funds paid over to the State Treasurer by the State Fire
Marshal for premiums on insurance by public education boards and all money received from
interest or from loans and deposits and from any other source connected with the insurance of
the property shall be held by the State Treasurer in the Fund for the purpose of paying all
insurable hazards for which the Fund shall be liable and the expenses necessary for the proper
conduct of the insurance of such property, together with such premiums for reinsurance that the
State Fire Marshal may deem necessary to reinsure as provided by this Article."
SECTION 3.1.(c) G.S. 58-86-20 reads as rewritten:
"§ 58 -86-20. State Treasurer to be custodian of fund; appropriations; contributions to
fund; expenditures.
(a) The State Treasurer shall be the custodian of the North Carolina Firefighters' and
Rescue Squad Workers' Pension Fund and shall invest its assets in accordance with the provisions
of G.S. 147 -69.2 and G.S. 147 -69.3.deposit these assets with the North Carolina Investment
Authority to invest these assets in accordance with Article 6 of Chapter 147 of the General
Statutes.
(b) The appropriations made by the General Assembly out of the general fund General
Fund to provide money for administrative expenses of the Pension Fund shall be handled in the
same manner as any other general fund General Fund appropriation. One -fourth of the
appropriation made out of the general fund General Fund to provide for the financing of the
pension fund Pension Fund shall be transferred quarterly to a special fund to be known as the
North Carolina Firefighters' and Rescue Squad Workers' Pension Fund. There shall be set up
(c) The North Carolina Firefighters ' and Rescue Squad Workers ' Pension Fund is a
special fund established in the Department of State Treasurer's office a special fund to be known
as the North Carolina Firefighters' and Rescue Squad Workers' Pension Fund, and all Treasurer.
All contributions made by the members of this pension fund shall be deposited in the special
fund. All expend itures for refunds, investments or benefits shall be in the same manner as
expenditures of other special funds."
SECTION 3.1.(d) G.S. 58-87-5(a) reads as rewritten:
"(a) There is created in the Department of Insurance the Volunteer Rescue/EMS Fund to
provide grants to volunteer rescue units, rescue/EMS units, EMS units that are volunteer fire

House Bill 1126 Session Law 2026-50 Page 15
departments that are a part of a county's EMS system plan, and EMS units providing rescue or
rescue and emergency medical services to purchase equipment and make capital improvements.
An eligible unit may apply to the Office of the State Fire Marshal for a grant under this section.
The application form and criteria for grants shall be established by the Office of the State Fire
Marshal. The North Carolina Association of Rescue and Emergency Medical Services, Inc., shall
provide the Office of the State Fire Marshal with an advisory priority listing for rescue equipment
eligible for funding, and the Department of Health and Human Services shall provide the Office
of the State Fire Marshal with an advisory priority listing of EMS equipment eligible for funding.
The State Treasurer shall invest deposit the Fund's assets according to law, with the North
Carolina Investment Authority to invest these assets in accordance with Article 6 of Chapter 147
of the General Statutes , and the earnings shall remain in the Fund. On December 15, or on the
first business day after December 15 if December 15 falls on a weekend or a holiday, of each
year, the Office of the State Fire Marshal s hall make grants to eligible units subject to all of the
following limitations:
…."
SECTION 3.1.(e) G.S. 74C-30(d) reads as rewritten:
"(d) The State Treasurer shall invest and reinvest deposit the moneys in the Fund in a
manner provided by law. with the North Carolina Investment Authority to invest these assets in
accordance with Article 6 of Chapter 147 of the General Statutes. The Board, in its discretion,
may use the Fund for any of the following purposes:
…."
SECTION 3.1.(f) G.S. 74D-30(d) reads as rewritten:
"(d) The State Treasurer shall invest and reinvest deposit the moneys in the Fund in a
manner provided by law. with the North Carolina Investment Authority to invest these assets in
accordance with Article 6 of Chapter 147 of the General Statutes . The Board in its discretion,
may use the Fund for any of the following purposes:
…."
SECTION 3.1.(g) G.S. 113-173.1(a) reads as rewritten:
"(a) Establishment. – There is hereby established the North Carolina Commercial Fishing
Resources Fund (Fund) as a nonreverting special revenue fund in the office of the State Treasurer.
The purpose of the Fund is to provide funding for the development of sustainable commercial
fishing in the State. The principal of the Fund shall consist of all of the following:
…
The State Treasurer shall hold the Fund separate and apart from all other moneys, funds, and
accounts. The State Treasurer shall invest deposit the assets of the Fund in accordance with the
provisions of G.S. 147-69.2, with the North Carolina Investment Authority to invest these assets
in accordance with Article 6 of Chapter 147 of the General Statutes, except that interest and other
income received on the fund balance shall be treated as set forth in G.S. 147-69.1(d)."
SECTION 3.1.(h) G.S. 113-175.1(b) reads as rewritten:
"(b) The State Treasurer shall hold the Marine Resources Fund separate and apart from all
other moneys, funds, and accounts. The State Treasurer shall invest deposit the assets of the
Marine Resources Fund in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3,
with the North Carolina Investment Authority to invest these assets in accordance with Article 6
of Chapter 147 of the General Statutes , and all marine resources investment income shall be
deposited to the credit of the Marine Resources Fund. The State Treasurer shall disburse the
principal of the Marine Resources Fund and marine resources investment income only upon the
written direction of the Division of Marine Fisheries of the Department of Environmental
Quality."
SECTION 3.1.(i) G.S. 113-175.5(b) reads as rewritten:
"(b) The State Treasurer shall hold the Endowment Fund separate and apart from all other
moneys, funds, and accounts. The State Treasurer shall invest deposit the assets of the

Page 16 Session Law 2026-50 House Bill 1126
Endowment Fund in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3. with
the North Carolina Investment Authority to invest these assets in accordance with Article 6 of
Chapter 147 of the General Statutes. The State Treasurer shall disburse the endowment
investment income only upon the written direction of the Division of Marine Fisheries of the
Department of Environmental Quality."
SECTION 3.1.(j) G.S. 115C-546.10 reads as rewritten:
"§ 115C-546.10. Fund created; purpose; prioritization.
There is created t he Needs -Based Public School Capital Fund as an interest -bearing,
nonreverting special fund in the Department of Public Instruction. The State Treasurer shall be
the custodian of the Needs-Based Public School Capital Fund and shall invest deposit its assets
in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3. with the North Carolina
Investment Authority to invest these assets in accordance with Article 6 of Chapter 147 of the
General Statutes. The Department of Public Instruction shall awar d grants from the Fund to
counties to assist with their critical public school building capital needs in accordance with the
following priorities:
…."
SECTION 3.1.(k) G.S. 116-209 reads as rewritten:
"§ 116 -209. Reserve Trust Fund created; transfer of Es cheat Fund; pledge of security
interest for payment of bonds; administration.
The appropriation made to the Authority under this Article shall be used exclusively for the
purpose of acquiring contingent or vested rights in obligations which it may acquire under this
Article; such these appropriations, payments, revenue and interest as well as other income
received in connection with such the obligations is hereby established as a trust fund. Such This
fund shall be used for the purposes of the Authority other than maintenance and operation.
The maintenance and operating expenses of the Authority shall be paid from funds
specifically appropriated for such those purposes. No part of the trust fund established under this
section shall be expended for such those purposes.
The State Treasurer shall be the custodian of the assets of the Authority and shall invest them
in accordance with the provisions of G.S. 147-69.2 and 147-69.3. deposit its assets with the North
Carolina Investment Authority to invest these assets in accordance with Article 6 of Chapter 147
of the General Statutes. All payments from the accounts thereof shall be made by him the State
Treasurer issued upon vouchers signed by such persons as are a person or persons designated by
the Authority. A duly attested copy of a resolution of the Authority designating such the persons
authorized to sign the vouche rs and bearing on its face the specimen signatures of such the
persons shall be filed with the State Treasurer as his authority for issuing warrants upon such
vouchers.vouchers in accordance with this section.
…."
SECTION 3.1.(l) G.S. 116-209.25 reads as rewritten:
"§ 116-209.25. Parental Savings Trust Fund.
…
(c1) Investments. – The Authority shall determine an appr opriate investment strategy for
the Parental Savings Trust Fund. The strategy may include a combination of fixed income assets
and preferred or common stocks issued by any company incorporated, or otherwise located
within or without the United States, or o ther appropriate investment instruments to achieve
long-term return through a combination of capital appreciation and current income. The
Authority may deposit all or any portion of the Parental Savings Trust Fund for investment either
with the State Treasurer, North Carolina Investment Authority, or in the individual, common, or
collective trust funds of an investment manager or managers that meet the requirements of this
subsection. Contributions to the Parental Savings Trust Fund on deposit with the State Treasurer
shall be invested by the State Treasurer as authorized in G.S. 147-69.2(b)(1) through (6) and the
applicable provisions of G.S. 147-69.3. North Carolina Investment Authority to invest these

House Bill 1126 Session Law 2026-50 Page 17
assets in accordance with Article 6 of Chapter 147 of the General Statutes. Contributions to the
Parental Savings Trust Fund may be invested in the individual, common, or collective trust funds
of an investment manager provided that the investment manager meets both of the following
conditions:
…
(f) Limitations. – Nothing in this section shall be con strued to create any obligation of
the Authority, the State Treasurer, the North Carolina Investment Authority, the State, or any
agency or instrumentality of the State to guarantee for the benefit of any parent, other interested
party, or designated benef iciary the rate of return or other return for any contribution to the
Parental Savings Trust Fund and the payment of interest or other return on any contribution to
the Parental Savings Trust Fund."
SECTION 3.1.(m) G.S. 120-4.18 reads as rewritten:
"§ 120-4.18. Management of funds.
The Board of Trustees shall manage All of the following appl y to the fund established by
G.S. 120-4.17 pursuant to G.S. 135-7.G.S. 135-7:
(1) The Board of Trustees shall manage the fund.
(2) The State Treasurer shall be the custodian of the assets of this fund and shall
deposit these assets with the North Carolina Investment Authority to invest
these assets in accordance with Article 6 of Chapter 147 of the General
Statutes."
SECTION 3.1.(n) G.S. 122E-3(c) reads as rewritten:
"(c) The State Treasurer shall serve as trustee for the Fund. The Treasurer shall deposit
these assets with the North Carolina Investment Authority to invest the North Carolina Housing
Trust Fund revenues he receives as p rovided in G.S. 147 -69.2(b). in accordance with Article 6
of Chapter 147 of the General Statutes. The Treasurer North Carolina Investment Authority shall
provide the Agency with quarterly and annual reports of Fund revenues and interest earnings."
SECTION 3.1.(o) G.S. 127A-40.1 reads as rewritten:
"§ 127A-40.1. North Carolina National Guard Pension Fund.
(a) As used in this section, the term "Board of Trustees" means the The following
definitions apply in this section:
(1) Board of Trustees. – The Board of Trustees of the Teachers' and State
Employees' Retirement System.
(2) Fund. – The North Carolina National Guard Pension Fund.
(b) The North Carolina National Guard Pension Fund shall include general fund General
Fund appropriations made to the Departmen t of State Treasurer and held with the Pension
Accumulation Fund of the Teachers' and State Employees' Retirement System.
(b1) The State Treasurer shall be the custodian of the assets of this Fund and shall deposit
these assets with the North Carolina Investment Authority to invest these assets in accordance
with Article 6 of Chapter 147 of the General Statutes.
…."
SECTION 3.1.(p) G.S. 131A-32 reads as rewritten:
"§ 131A-32. The Rural Health Care Stabilization Fund.
The Rural Health Care Stabilizati on Fund is created as a nonreverting special fund in the
Office of State Budget and Management. The Fund shall operate as a revolving fund consisting
of funds appropriated to, or otherwise received by, the Rural Health Care Stabilization Program
and all funds received as repayment of the principal of or interest on a loan made from the Fund.
The State Treasurer is the custodian of the Fund and shall deposit the assets of the Fund with the
North Carolina Investment Authority to invest its assets in accordanc e with G.S. 147-69.2 and
G.S. 147-69.3. Article 6 of Chapter 147 of the General Statutes. Moneys in the Fund shall only
be used for loans made pursuant to this Article."
SECTION 3.1.(q) G.S. 135-66(a) reads as rewritten:

Page 18 Session Law 2026-50 House Bill 1126
"(a) The State Treasurer shall be the custodian of the assets of this Retirement System and
shall invest them in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3.deposit
these assets with the North Carolina Investment Authority to invest these assets in accordance
with Article 6 of Chapter 147 of the General Statutes."
SECTION 3.1.(r) G.S. 135-110(d) reads as rewritten:
"(d) The State Treasurer shall be the custodian of the funds and shall invest the assets of
the fund in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3.deposit the funds
with the North Carolina Investment Authority to invest these assets in accordance with Article 6
of Chapter 147 of the General Statutes."
SECTION 3.1.(s) G.S. 143-58.5(b) reads as rewritten:
"(b) The Alternative Fuel Revol ving Fund is created and shall be held by the State
Treasurer. The Fund shall consist of moneys received from the sale of EPAct credits under
G.S. 143-58.4, any moneys appropriated to the Fund by the General Assembly, and any moneys
obtained or accepted by the Department for deposit into the Fund. The Fund shall be managed to
maximize benefits to the State for the purchase of alternative fuel, related refueling infrastructure,
and AFV purchases. To the extent possible, benefits from the sale of EPAct credit shall be
distributed to State departments, institutions, and agencies in proportion to the number of EPAct
credits generated by each. No portion of the Fund shall be transferred to the General Fund, and
any appropriation made to the Fund shall not revert. The State Treasurer shall deposit the funds
with the North Carolina Investment Authority to invest moneys in the Fund in the same manner
as other funds are invested. accordance with Article 6 of Chapter 147 of the General Statutes.
Interest and moneys earned on such investments shall be credited to the Fund."
SECTION 3.1.(t) G.S. 143-166.82(b) reads as rewritten:
"(b) The State Treasurer shall be the custodian of the Sheriffs' Supplemental Pension Fund
and shall invest deposit its assets with the North Ca rolina Investment Authority to invest the
assets in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3.Article 6 of Chapter
147 of the General Statutes."
SECTION 3.1.(u) G.S. 143-250.1(b) reads as rewritten:
"(b) There is created the Board of Trustees of the Wildlife Endowment Fund of the
Wildlife Resources Commission, with full authority over the administration of the Wildlife
Endowment Fund, whose ex officio chairman, vice -chairman, and members shall be the
chairman, vice -chairman, and mem bers of the Wildlife Resources Commission. The State
Treasurer shall be the custodian of the Wildlife Endowment Fund and shall invest deposit its
assets with the North Carolina I nvestment Authority to invest the assets in accordance with the
provisions of G.S. 147-69.2 and 147-69.3.Article 6 of Chapter 147 of the General Statutes."
SECTION 3.1.(v) G.S. 143-719(b) reads as rewritten:
"(b) Fund Earnings, Assets, and Balances. – The State Treasurer shall hold the Fund
separate and apart from all other moneys, funds, and accounts. The State Treasurer is the
custodian of the Fund and shall deposit its assets with the North Carolina Investment Authority
to invest the assets in accordance with G.S. 147-69.2 and G.S. 147-69.3. Article 6 of Chapter 147
of the General Statutes. Investment earnings credited to the Fund become part of the Fund. Any
balance remaining in the Fund at the end of any fiscal year is carried forward in the Fund for the
next succeeding fiscal year. Payments from the Fund shall be made on the wa rrant of the chair
of the Commission, pursuant to the directives of the Commission."
SECTION 3.1.(w) G.S. 143B-135.236(a) reads as rewritten:
"(a) The North Carolina Conservation Easement Endowment Fund is established as a
special fund in the Office of th e State Treasurer. The principal of the Endowment Fund shall
consist of a portion of grant funds transferred by the Trustees to the Endowment Fund from the
North Carolina Land and Water Fund for stewardship activities related to projects for
conservation easements funded from the North Carolina Land and Water Fund. The principal of
the Endowment Fund may also consist of any proceeds of any gifts, grants, or contributions to

House Bill 1126 Session Law 2026-50 Page 19
the State that are specifically designated for inclusion in the Endowment Fund and a ny
investment income that is not used in accordance with subsection (b) of this section. The State
Treasurer shall hold the Endowment Fund separate and apart from all other moneys, funds, and
accounts. The State Treasurer shall deposit its assets with the North Carolina Investment
Authority to invest the assets of the Endowment Fund in accordance with the provisions of
G.S. 147-69.2 and G.S. 147-69.3. Article 6 of Chapter 147 of the General Statutes. The State
Treasurer shall disburse the endowment investment income only upon the written direction of
the Chair of the Board of Trustees. No expenditure or disbursement shall be made from the
principal of the Endowment Fund."
SECTION 3.1.(x) G.S. 143C-9-2(a) reads as rewritten:
"(a) The Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse
Services and Bridge Funding Needs is established as an interest -bearing, nonreverting special
trust fund in the Office of State Budget and Management. Moneys in the Trust Fund shall be held
in t rust and used solely to increase community -based services that meet the mental health,
developmental disabilities, and substance abuse services needs of the State. The Trust Fund shall
be used to supplement and not to supplant or replace existing State and local funding available
to meet the mental health, developmental disabilities, and substance abuse services needs of the
State.
The State Treasurer shall hold the Trust Fund separate and apart from all other moneys, funds,
and accounts. The State Treasure r shall be the custodian of the Trust Fund and shall deposit its
assets with the North Carolina Investment Authority to invest its assets in accordance with G.S.
147-69.2 and G.S. 147 -69.3. Article 6 of Chapter 147 of the General Statutes. Investment
earnings credited to the assets of the Trust Fund shall become part of the Trust Fund. Any balance
remaining in the Trust Fund at the end of any fiscal year shall be carried forward in the Trust
Fund for the next succeeding fiscal year.
Moneys in the Trust Fund shall be expended only in accordance with subsection (b) of this
section and in accordance with limitations and directions enacted by the General Assembly."
SECTION 3.1.(y) G.S. 147-54.5(e) reads as rewritten:
"(e) Revenues derived from consent orders re sulting from negotiated settlements of
securities investigations by the Secretary of State shall be credited to the Fund. The State
Treasurer shall deposit its assets with the Investment Authority to invest the assets of the Fund
according to law. in accordance with Article 6 of this Chapter. Any interest or other investment
income earned by the Investor Protection and Education Trust Fund shall remain in the Fund.
The balance of the Investor Protection and Education Trust Fund at the end of each fiscal yea r
shall not revert to the General Fund."
SECTION 3.1.(z) G.S. 147-69.6(a) reads as rewritten:
"(a) The Swain County Settlement Trust Fund is established as a special fund in the Office
of the State Treasurer under the management of the Investment Authorit y. The Investment
Authority may invest the assets of the Fund in any of the investments authorized under
subdivisions (b)(1) through (6) and subdivision (b)(8) of G.S. 147-69.2. in accordance with
Article 6 of this Chapter. The Fund shall consist of the proceeds of any payments made by the
United States in settlement of the 1943 agreement between Swain County and the United States
Department of Interior, such other contributions as Swain County or other entities may choose
to make to the Fund, and the int erest and other investment income earned by the Fund. For the
purposes of this section, the initial balance of the Fund shall be defined as fifty -two million
dollars ($52,000,000)."
SECTION 3.1.(aa) G.S. 161-50.2(b) reads as rewritten:
"(b) The State Trea surer shall be the custodian of the Registers of Deeds' Supplemental
Pension Fund and shall invest its assets in accordance with the provisions of G.S. 147-69.2 and
G.S. 147-69.3.deposit its assets with the North Carolina Investment Authority to invest the se
assets in accordance with Article 6 of Chapter 147 of the General Statutes."

Page 20 Session Law 2026-50 House Bill 1126

REASSIGN RESPONSIBILITY FOR PROHIBITIONS ON STATE INVESTMENT
FROM THE STATE TREASURER TO THE NORTH CAROLINA INVESTMENT
AUTHORITY
SECTION 3.2.(a) G.S. 147-86.57 is amended by adding a new subdivision to read:
"(4a) "Investment Authority " means the North Carolina Investment Authority
established under Part 4 of Article 6 of this Chapter."
SECTION 3.2.(b) G.S. 147-86.58 reads as rewritten:
"§ 147-86.58. Prohibitions on State investment.
No more than 30 days after October 1, 2015, the State Treasurer The Board of Directors of
the Investment Authority shall adopt a policy prohibiting the North Carolina Retirement Systems
or Systems, the Investment Authority, and the Department of the State Treasurer from investing
funds with a company engaging in investment activities in Iran. At a minimum, the policy shall
provide:provide for the following:
(1) List of restricted companies. – Within 120 days of adoption of the policy, the
State Treasurer Board of Directors of the Investment Authority shall develop
and make publically publicly available, a list of companies it determines
engage in investment activities in Iran. The State Treasurer Investment
Authority shall use any other state lists of restricted companies pursuant to
similar laws and any federal information or guidance on companies engaged
in investment activities in Iran and any other credible information provided
by nonprofit organizations, research firms, govern mental entities, and
generally public information. The State Treasurer Investment Authority shall
make every effort to avoid erroneously including a company on the list. The
State Treasurer list shall update the list be updated annually. Before finalizing
an initial list or an updated list, the State Treasurer Board of Directors must
do all of the following before a company is included on the list:
a. Provide 90 days' written notice of the State Treasurer's intent to
include the company on the list. The notice shall inform the company
that inclusion on the list would make the company ineligible for State
investment and may affect the company's ability to conduct other
business with the State and its subdivisions. The notice shall specify
that the company may be removed from the list if it ceases its
investment activities in Iran.
b. The State Treasurer shall provide Provide a company with an
opportunity to comment in writing that it is not engaged in investment
activities in Iran. If the company demonstrat es to the State Treasurer
Board of Directors of the Investment Authority that the company is
not engaged in investment activities in Iran, the company shall not be
included on the list.
(2) Investments prohibited. – Neither the The North Carolina Retirement Systems
nor Systems, the Investment Authority, and the State Treasurer may not invest
funds with a company that is identified on a list created pursuant to
subdivision (1) of this section as a company engaging in investment activities
in Iran.
(3) Existing investments. – Any existing investment with a company that is
identified on a list created pursuant to subdivision (1) of this section as a
company engaging in investment activities in Iran must be divested within
180 days of being placed on the list created pursuant to subdivision (1) of this
section.

House Bill 1126 Session Law 2026-50 Page 21
(4) Fiduciary duties. – Nothing in the policy or in this Article shall require the
North Carolina Retirement Systems Systems, the Investment Authority, or the
State Treasurer to take action unless it is determined by the State Treasurer,
Board of Directors of the Investment Authority, in good faith, that the action
is consistent with the fiduciary responsibilities of the Retirement Systems and
the State Treasurer.Investment Authority.
(5) Exceptions. – Notwithstanding the policy, an investment may be made in a
company engaged in investment activities in Iran if:if both of the following
are true:
a. The company is eligible to contract with the State under the exception
in G.S. 147-86.61.
b. The State Treasurer Board of Directors of the Investment Authority
makes a good -faith determination, on a case -by-case basis, that the
investments are necessary to perform its functions."
SECTION 3.2.(c) G.S. 147-86.60(a) reads as rewritten:
"(a) A company that is identified on a list created by the State Treasurer pursuant to
G.S. 147-86.58 as a company engaging in investment activities in Iran is ineligible to contract
with the State or any political subdivision of the State."
SECTION 3.2.(d) G.S. 147-86.61(b) reads as rewritten:
"(b) Companies engaged in substantial positive action. – Notwithstanding any other
provision of this Article, a company engaged in investment activities in Iran may not be placed
on the list developed pursuant to G.S. 147-86.58(1) if the State Treasurer Investment Authority
determines, using U.S. government statements and any other credible information available to
the public, that the company's investment activities in Iran were made before O ctober 1, 2015,
the investment activities in Iran have not been expanded or renewed after October 1, 2015, and
the company has adopted, publicized, and is implementing a detailed plan to cease the investment
activities in Iran and to refrain from engaging in any new investments in Iran. The State Treasurer
Investment Authority shall develop and make publically publicly available a "Substantial
Positive Action Exception List" of these companies. The State Treasurer Investment Authority
shall update the list annually. Once a person has not engaged in investment activities in Iran
within the previous five years, the State Treasurer Investment Authority shall remove that person
from the list created pursuant to G.S. 147-86.58."
SECTION 3.2.(e) G.S. 147-86.80 reads as rewritten:
"§ 147-86.80. Definitions.
The following definitions apply in this Article:
…
(3a) Investment Authority. – The North Carolina Investment Authority established
under Part 4 of Article 6 of this Chapter.
(4) Restricted company. – A company that appears on the list of companies that
are engaged in a boycott of Israel developed by the State Treasurer under
G.S. 147-86.81(a)(1).
…."
SECTION 3.2.(f) G.S. 147-86.81 reads as rewritten:
"§ 147-86.81. Prohibitions on State investment.
(a) No more than 30 days after October 1, 2017, the State Treasurer The Board of
Directors of the Investment Authority shall adopt a policy prohibiting the North Carolina
Retirement Systems Systems, the Investment Authority, or the Department of State Treasurer
from investing in any company engaged in a boycott of Israel. At a minimum, the policy shall
provide for the following:
(1) List of restricted companies. – Within 120 days of adoption of the policy, the
State Treasurer Board of Directors of the Investment Authority shall develop

Page 22 Session Law 2026-50 House Bill 1126
and make publicly available a list of companies it determines to be engaged
in a boycott of Israel. In the development of this list, the State Treasurer
Investment Authority shall use any other state lists of restri cted companies
pursuant to similar laws and any federal information or guidance on
companies that boycott Israel and any other credible information provided by
nonprofit organizations, research firms, and governmental entities, and
generally publicly avail able information. The State Treasurer Investment
Authority shall make every effort to avoid erroneously including a company
on the list. Before finalizing an initial or updated list, the State Treasurer
Board of Directors must do all of the following before a company is included
on the list:
a. Provide 90 days' written notice of the State Treasurer's intent to
include the company on the list. The notice shall inform the company
that inclusion on the list would make the company ineligible for State
investment, may result in the company becoming subject to divestment
by the North Carolina Retirement Systems, and may affect the
company's ability to conduct business with the State and its
subdivisions. The notice shall specify that the company may be
removed fro m the list if the company ceases its engagement in a
boycott of Israel.
b. The State Treasurer shall provide Provide a company with an
opportunity to comment in writing that the company is not engaged in
a boycott of Israel or has ceased its boycott of Israel. If the company
demonstrates to the State Treasurer Board of Directors of the
Investment Authority that the compa ny has not been engaged in a
boycott of Israel, the company shall not be placed on the list. If a
company had been engaged in a boycott of Israel but has ceased the
boycott, it must submit a written certification to the State Treasurer
Investment Authority that the company will not reengage in a boycott
of Israel for the duration of any business with the State. The State
Treasurer Investment Authority shall keep all written certifications
from restricted and previously restricted companies.
(2) Identification of investments. – Upon completion of the initial list of restricted
companies created pursuant to subdivision (1) of this subsection, the State
Treasurer Investment Authority shall identify any restricted companies in
which the North Carolina Retirement Systems has investments.
(3) Review of restricted companies list. – The State Treasurer Board of Directors
of the Investment Authority shall review the list of restricted companies
created pursuant to subdivision (1) of this subsection on an annual basis. This
updated list shall be made publicly available and any updates shall be
distributed to the North Carolina Retirement Systems.
(4) Investments prohibited. – Neither the The North Carolina Retirement Systems
nor Systems, the Investment Authority, and the State Treasurer may not invest
funds with a company that is identified on a list created pursuant to
subdivision (1) of this section as a company engaging in restricted investment
activities.
(5) Existing investments. – Any existing investment with a com pany that is
identified on a list created pursuant to subdivision (1) of this section as a
company engaging in restricted activities must be divested within 180 days of
the adoption of the list.

House Bill 1126 Session Law 2026-50 Page 23
(b) Nothing in the policy or in this Article shall require th e North Carolina Retirement
Systems or Systems, the Investment Authority, or the State Treasurer to take action unless it is
determined by the State Treasurer, Board of Directors of the Investment Authority in good faith,
that the action is consistent with the fiduciary responsibilities of the Retirement Systems and the
State Treasurer.Investment Authority."
SECTION 3.2.(g) The policies previously adopted by the State Treasurer under
G.S. 147-86.58 and G.S. 147-86.81 shall remain in effect until the applicable policy is adopted
by the Board of Directors of the North Carolina Investment Authority under G.S. 147-86.58 and
G.S. 147-86.81, as amended by this section.

EXCLUDE NCIA EMPLOYEE PERFORMANCE -RELATED BON USES FROM
COMPENSATION CALCULATIONS/TECHNICAL CLEAN-UP OF DEFINITION
SECTION 3.3.(a) G.S. 135-1(7a) reads as rewritten:
"(7a) a."Compensation" shall mean all salaries and wages prior to any reduction
pursuant to sections 125, 401(k), 403(b), 414(h)(2), an d 457 of the Internal
Revenue Code, not including any terminal payments for unused sick leave,
derived from public funds which are earned by a member of the Retirement
System for service as an employee or teacher in the unit of the Retirement
System for which he the employee is performing full-time work. In addition
to the foregoing, "compensation" All of the following shall apply:
a. The term "compensation" shall include:include all of the following:
1. Performance-based compensation (regardless regardless of
whether paid in a lump sum, in periodic installments, or on a
monthly basis);basis.
2. Conversion of additional benefits to salary (additional benefits
salary, such as health, life, or disability plans), plans, so long
as the benefits are oth er than mandated by State law or
regulation;rule.
3. Payment of tax consequences for benefits provided by the
employer, so long as they constitute an adjustment or increase
in salary and not a "reimbursement of expenses";expenses."
4. Payout of vacation leave so long as such payouts are permitted
by applicable law and regulation;rule.
5. Employee contributions to eligible deferred compensation
plans; andplans.
6. Effective July 1, 2009, payment of military differential wages.
7. All special pay contribution of annual leave made to a 401(a)
Special Pay Plan for the benefit of an employee.
b. "Compensation" shall not include any payment, as determined by the
Board of Trustees, for the reimbursement of expenses or payments for
housing or any other allowances whether or not classified as salary and
wages. "Compensation" includes all special pay contribution of annual
leave made to a 401(a) Special Pay Plan for the benefit of an employee.
Notwithstanding any other provision of this Chapter, Chapter to the
contrary, the term "compensation" shall not include:include any of the
following:
1. Supplement/allowance provided to employee to purchase
additional benefits such as health, life, or disability
plans;plans.
2. Travel supplement/allowance (nonaccountable and other
nonaccountable allowance plans);plans.

Page 24 Session Law 2026-50 House Bill 1126
2a. Any payment, as determined by the Board of Trustees, for the
reimbursement of expenses or payments for housing or any
other allowances , whether or not classified as salary and
wages.
3. Employer contributions to eligible deferred compensation
plans;plans.
4. Employer-provided fringe benefits (additional benefits,
including additional benefits such as health, life, or disability
plans);plans.
5. Reimbursement of uninsured medical expenses;expenses.
6. Reimbursement of business expenses;expenses.
7. Reimbursement of moving expenses;expenses.
8. Reimbursement/payment of personal expenses;expenses.
9. Incentive payments for early retirement;retirement.
10. Bonuses paid incident to retirement;retirement.
10a. Local supplementation as authorized under G.S. 7A-300.1 for
Judicial Department employees;employees.
11. Contract buyout/severance payments; andpayments.
12. Payouts for unused sick leave.
13. Performance-related bonuses paid to employees of the
Investment Authority in accordance with G.S. 147-71.2(d).
…."
SECTION 3.3.(b) G.S. 128-21(7a) reads as rewritten:
"(7a) a. "Compensation" shall mean all salaries and wages prior to any
reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457
of the Internal Revenue Code, not including any terminal payments for
unused sick leave, derived from public funds which are earned by a
member of the Retirement System for service as an employee in the
unit of the Retirement System for which he the employee is performing
full-time work. In addition to the foregoing, "compensation" shall
include:All of the following shall apply:
a. The term "compensation" shall include all of the following:
1. Performance-based compensation (regardless regardless of
whether paid in a lump sum, periodic installments, or on a
monthly basis);basis.
2. Conversion of additional benefits to salary (additional benefits
salary, such as health, life, or disability plans), plans, so long
as the benefits are other than mandated by State law or
regulation;rule.
3. Payment of tax consequences for benefits provided by the
employer so long as they constitute an adjustment or increase
in salary and not a "reimbursement of expenses";expenses."
4. Payout of vacation leave so long as such payouts are permitted
by applicable law and regulation;rule.
5. Employee contributions to eligible deferred compensation
plans; andplans.
6. Effective July 1, 2009, payment of military differential wages.
b. "Compensation" shall not include any payment, as determined by the
Board of Trustees, for the reimbursement of expenses or payments for
housing or any other allowances whether or not classified as salary and
wages. Notwithstanding any other provision of this Chapter, Chapter

House Bill 1126 Session Law 2026-50 Page 25
to the contrary, the term "compensation" shall not include:include any
of the following:
1. Supplement/allowance provided to employee to purchase
additional benefits such as health, life, or disability
plans;plans.
2. Travel supplement/allowance (nonaccountable and other
nonaccountable allowance plans);plans.
2a. Any payment, as determined by the Board of Trustees, for the
reimbursement of expenses or payments for housing or other
allowances, whether or not classified as salary and wages.
3. Employer contributions to eligible deferred compensation
plans;plans.
4. Employer-provided fringe benefits (additional benefits,
including additional benefits such as health, life, or disability
plans);plans.
5. Reimbursement of uninsured medical expenses;expenses.
6. Reimbursement of business expenses;expenses.
7. Reimbursement of moving expenses;expenses.
8. Reimbursement/payment of personal expenses;expenses.
9. Incentive payments for early retirement;retirement.
10. Bonuses paid incident to retirement;retirement.
11. Contract buyout/severance payments; andpayments.
12. Payouts for unused sick leave.
…."
SECTION 3.3.(c) This section is effective retroactively to July 1, 2025, and applies
to any performance-related bonuses paid to employees of the Investment Authority in accordance
with G.S. 147-71.2(d) on or after that date.

PART IV. TECHNICAL AND CLARIFYING CHANGES

REMOVE REFERENCES TO OBSOLETE BENEFITS AND FUNDS/OTHER
TECHNICAL CLEAN-UP OF RELATED STATUTES
SECTION 4.1.(a) G.S. 135-5(m1) reads as rewritten:
"(m1) Special Retirement Allowance for Law Enforcement Officers. – Upon retirement, a
member who is a law enforcement officer vested as of June 30, 2010, may elect to transfer any
portion of his the member's eligible accumulated contributions, not including any Roth after-tax
contributions and the earnings thereon, from the Supplemental Retirement Income Plan of North
Carolina to this Retirement System and receive, in addition to his the member's basic service,
service or early or disability retirement allowance, a special retirement allowance which that shall
be based upon his the member's eligible accumulated account balance at the date of the transfer
of the assets to this System. For the purpose of determining the special retirement allowance, the
following shall apply:
(1) The Board of Trustees shall adopt straight life annuity factors o n the basis of
mortality tables, such other tables as may be necessary necessary, and the
interest assumption rate recommended by the actuary based upon actual
experience including an assumed annual post -retirement allowance increase
of four percent (4%).
(2) The Board of Trustees shall modify such the straight life annuity factors every
five years, as shall be deemed necessary, based upon the five year experience
study as required by G.S. 135-6(n). Provided, however, a member,

Page 26 Session Law 2026-50 House Bill 1126
(3) A member who transfers his eligible accumulated contributions from the
Supplemental Retirement Income Plan of North Carolina, Carolina shall be
taxed for North Carolina State Income tax purposes on the special retirement
allowance the same as if that special retirement allowance had been paid
directly by the Supplemental Retirement Income Plan of North Carolina. The
Teachers' and State Employees' Retirement System shall be responsible to
determine the taxable amount, if any, and report accordingly.
(4) For transfers of eligible a ccumulated contributions from the Supplemental
Retirement Income Plan of North Carolina that are made on or after July 1,
2022, if, subsequent to the member's election, the Board of Trustees
determines that (i) the member was ineligible for the election or (ii) the
election was impermissible for any reason under federal or State law, then no
special retirement allowance shall be paid to the member pursuant to this
subsection; the member shall return to the Retirement System any amount
already paid from the Retirement System as a special retirement allowance;
and the Retirement System shall return the transfer amount to the source of
the transfer, including any earnings adjustment that may be required under
federal law or Internal Revenue Service guidance. If the Retirement System is
unable to return the amount to the account from which it originated, the
member may designate another eligible account under the transferor plan or
receive a lump sum distribution paid directly to the member if the member
would otherwise be eligible for a distribution under the transferor plan at such
time."
SECTION 4.1.(b) G.S. 135-5(m2) reads as rewritten:
"(m2) Special Retirement Allowance. – At any time coincident with or following retirement,
a member may make a one -time, irrevocable election to transfer any portion of the member's
eligible accumulated contributions, not including any Roth after -tax contributions and the
earnings thereon, from the Supplemental Retirement Income Plan of North Carolina or the North
Carolina Public Employee Deferred Compensation Plan to this Retirement System and receive,
in addition to the member's basic service, service or early or disability retirement allowance, a
special retirement allowance which that shall be based upon the member's transferred balance.
All of the following shall apply to transfers made under this subsection:
(1) For transfers made on or after July 1, 2022, if, subsequent to the member's
election, the Board of Trustees determines that (i) the member was ineligible
for the election or (ii) the election was impermissible for any reason under
federal or State law, then no special retirement allowance shall be paid to the
member pursuant to this subsection; the member shall return to the Retirement
System any amount already paid from the Retirement System as a special
retirement allowance; and the Retirement System shall return the transfer
amount to the source of the transfer, including any earnings adjustment that
may be required under fed eral law or Internal Revenue Service guidance. If
the Retirement System is unable to return the amount to the account from
which it originated, the member may designate another eligible account under
the transferor plan or receive a lump sum distribution p aid directly to the
member if the member would otherwise be eligible for a distribution under
the transferor plan at such time.
(2) A member who became a member of the Supplemental Retirement Income
Plan prior to retirement and who remains a member of the Supplemental
Retirement Income Plan may make a one-time, irrevocable election to transfer
eligible balances, not including any Roth after -tax contributions and the
earnings thereon, from any of the following plans to the Supplemental

House Bill 1126 Session Law 2026-50 Page 27
Retirement Income Plan , subject to the applicable requirements of the
Supplemental Retirement Income Plan, and then through the Supplemental
Retirement Income Plan to this Retirement System: (i) a
a. A plan participating in the North Carolina Public School Teachers' and
Professional Educators' Investment Plan; (ii) a Plan.
b. A plan described in section 403(b) of the Internal Revenue Code; (iii)
a Code.
c. A plan described in section 457(b) of the Internal Revenue Code that
is maintained by a state, political subdivision of a state, or any agency
or instrumentality of a state or political subdivision of a state; (iv) an
state.
d. An individual retirement accou nt or annuity described in section
408(a) or section 408(b) of the Internal Revenue Code that is eligible
to be rolled over and would otherwise be includible in gross income;
or (v) a income.
e. A tax-qualified plan described in section 401(a) or section 4 03(a) of
the Internal Revenue Code. In addition, any
(3) Any transfer under this subsection may be paid in whole or in part with
employer contributions paid directly to this Retirement System at the time of
transfer.
(4) Notwithstanding anything any provision of law to the contrary, a member may
not transfer such any amounts as that will cause the member's retirement
allowance under the System to exceed the amount allowable under
G.S. 135-18.7(b).
(5) The Board of Trustees may establish a minimum amount that must be
transferred if a transfer is elected.
(6) The member may elect a special retirement allowance with no postretirement
increases or a special retirement allowance with annual postretirement
increases equal to the annual increase in the U.S. Cons umer Price Index.
Postretirement increases on any other allowance will not apply to the special
retirement allowance.
(7) The Board of Trustees shall provide educational materials to the members who
apply for the transfer authorized by this section. subsection. Those materials
shall describe the special retirement allowance and shall explain the
relationship between the transferred balance and the monthly benefit and how
the member's heirs may be impacted by the election to make this transfer and
any costs and fees involved.
(8) For the purpose of determining the special retirement allowance, the Board of
Trustees shall adopt straight life annuity factors on the basis of yields on U.S.
Treasury Bonds and mortality and such other tables as may be necessary based
upon actual experience. All of the following apply to the adoption of straight
life annuity factors under this subdivision:
a. A single set of mortality and such other applicable tables will be used
for all members, with factors differing only based on the age of the
member and the election of postretirement increases.
b. The Board of Trustees shall modify the mortality and such other
applicable tables every five years, as shall be deemed necessary, based
upon the five -year experience study as required by G.S. 135-6(n).
Provided, however, a
c. A member who transfers the member's eligible accumulated
contributions from an eligible retirement plan pursuant to this

Page 28 Session Law 2026-50 House Bill 1126
subsection to this Retirement System shall be taxed for North Carolina
State Income Tax purp oses on the special retirement allowance the
same as if that special retirement allowance had been paid directly by
the eligible plan or the plan through which the transfer was made,
whichever is most favorable to the member. The Teachers' and State
Employees' Retirement System shall be responsible to determine the
taxable amount, if any, and report accordingly.
(9) The Supplemental Retirement Board of Trustees established under
G.S. 135-96 may assess a one -time flat administrative fee not to exceed the
actual cost of the administrative expenses relating to these transfers. transfers
under this subsection. An eligible plan shall not assess a fee specifically
relating to a transfer of accumulated contributions authorized under this
subsection. This provision shall subdivision does not prohibit other fees that
may be assessable under the plan.
(10) Each plan, contract, account, or annuity shall fully disclose to any member
participating in a transfer under this subsection any surrender charges or other
fees, and such fees. This required disclosure shall be made contemporaneous
with the initiation of the transfer by the member.
(11) The special retirement allowance shall continue for the life of the member and
the beneficiary designated to receive a monthly survivorship benefit under
Option 2, 3 or 6 as provided in G.S. 135-5(g), if any. The Board of T rustees,
however, shall establish two payment options that guarantee payments as
follows:
(1)a. A member may elect to receive the special retirement allowance for
life but with payments guaranteed for a number of months to be
specified by the Board of Trustees. Under this plan, if the member dies
before the expiration of the specified number of months, the special
retirement allowance will continue to be paid to the member's
designated beneficiary for the life of the beneficiary, if Option 2, 3 or
6 is selected. If the member's designated beneficiary under Option 2,
3 or 6 begins receiving monthly payments and dies before the specified
number of monthly payments have been made in combination to the
member and beneficiary, a one -time payment will be paid to t he
member's legal representatives equal to the initial monthly special
retirement allowance, multiplied by the specified number of months,
less the total of the monthly payments made to the member and
beneficiary. If Option 2, 3 or 6 is not selected, and t he member dies
before the expiration of the specified number of months, the member's
designated beneficiary will receive a one -time payment equal to the
initial monthly special retirement allowance, multiplied by the
specified number of months, less the to tal of the monthly payments
made to the member.
(2)b. A member may elect to receive the special retirement allowance for
life but is guaranteed that the sum of the special allowance payments
will equal the total of the transferred amount. Under this paymen t
option, if the member dies before receiving the total transferred
amount, the special retirement allowance will continue to be paid to
the member's designated beneficiary for the life of the beneficiary, if
Option 2, 3 or 6 is selected. If Option 2, 3 or 6 is not selected, the
member's designated beneficiary or the member's estate shall be paid
any remaining balance of the transferred amount.

House Bill 1126 Session Law 2026-50 Page 29
(12) The General Assembly reserves the right to repeal or amend this subsection,
but such any repeal or amendment shall not affect any person who has already
made the one-time election provided in this subsection."
SECTION 4.1.(c) All of the following are repealed and any inchoate or accrued
rights of any member on January 1, 2027, shall not be diminished:
(1) Subsections (c) through (d4), (j), (s), and (x) of G.S. 135-5.
(2) G.S. 135-10.1(b).
(3) G.S. 135-28.1(e).
SECTION 4.1.(d) G.S. 135-3(a)(7)a. reads as rewritten:
"a. Notwithstanding any other provision of this Chapter, any member who
separates from service prior to the attainment of the age of 60 years
for any reason other than death or retirement for disability as provided
in G.S. 135-5(d), after completing 20 or more years of creditable
service, and who leaves his or her total accumulated contributions in
said the System shall have the right to retire on a deferred retirement
allowance upon attaining the age of 60 years: Provided, that such the
member may retire only upon written application to the Board of
Trustees setting forth at what time, not less than 30 days nor more than
90 days subsequent to the execution and filing thereof, he of the
application, that the member desires to be retired. Such The deferred
retirement allowance shall be computed in accordance with the
provisions of G.S. 135-5(b), subdivisions (1), (2) and (3)."
SECTION 4.1.(e) G.S. 135-3(a)(7)b. reads as rewritten:
"b. In lieu of the benefits provided in paragraph a of this subdivision (7)
any member who separates from service on or after July 1, 1951, and
prior to the attainment of the age of 60 years, for any reason other than
death or retirement for disability as prov ided in G.S. 135-5(d), death,
after completing 30 or more years of creditable service, and who
leaves his or her total accumulated contributions in said the System,
may elect to retire on an early retirement allowance; provided that such
the member may so retire only upon written application to the Board
of Trustees setting forth at what time, not less than 30 days nor more
than 90 days subsequent to the execution and filing thereof, he of the
application, that the member desires to be retired; provided further that
such retired. This required application shall be duly filed within 60
days following the date of such separation. Such separation from
service. This elected early retirement allowance so elected shall be the
actuarial equivalent of the deferred retirement allowance otherwise
payable at the attainment of the age of 60 years upon proper
application therefor."
SECTION 4.1.(f) G.S. 135-3(a)(8)a. reads as rewritten:
"a. Notwithstanding any other provision of this Chapter, any member who
separates from service prior to the attainment of the age of 60 years
for any reason other than death or retirement for disability as provided
in G.S. 135-5(c), after completing 15 or more years of creditable
service, and who leaves his or her total accumulated contributions in
said the System shall have the right to retire on a deferred retirement
allowance upon attaining the age of 60 years; provided that such the
member may retire only upon electronic submission or written
application to the Board of Trustees setting forth at what time, not less
than one day nor more than 120 days subsequent to the execution and

Page 30 Session Law 2026-50 House Bill 1126
filing thereof, he of the application, that the member desires to be
retired; and further provided that in retired. In the case of a member
who so separates f rom service on or after July 1, 1967, or whose
account is active on July 1, 1967, or has not withdrawn his the
member's contributions, the aforestated requirement of 15 or more
years of creditable service shall be reduced to 12 or more years of
creditable service; and further provided that in service. In the case of
a member who so separates from service on or after July 1, 1971, or
whose account is active on July 1, 1971, the aforestated requirement
of 12 or more years of creditable service shall be reduce d to five or
more years of creditable service. Such The deferred retirement
allowance shall be computed in accordance with the service retirement
provisions of this Article pertaining to a member who is not a law
enforcement officer or an eligible former l aw enforcement officer.
Notwithstanding the foregoing, any member whose services as a
teacher or employee are terminated for any reason other than
retirement, who becomes employed by a nonprofit, nonsectarian
private school in North Carolina below the coll ege level within one
year after such the teacher or employee has ceased to be a teacher or
employee, may elect to leave his or her total accumulated contributions
in the Teachers' and State Employees' Retirement System during the
period he the member is in the employment of such that employer;
provided that he the member files notice thereof in writing with the
Board of Trustees of the Retirement System within five years after
separation from service as a public school teacher or State employee;
such the member shall be deemed to have met the requirements of the
above provisions of this subdivision upon attainment of age 60 while
in such employment provided that he the member is otherwise vested."
SECTION 4.1.(g) G.S. 135-3(a)(8)b. reads as rewritten:
"b. In lieu of the benefits provided in paragraph a of this subdivision (8),
any member who separates from service prior to the attainment of the
age of 60 years, for any reason other than death or retirement for
disability as provided in G.S. 135-5(c), death, after completing 20 or
more years of creditable service, and who leaves his or her total
accumulated contributions in said the System, may elect to retire on
an early retirement allowance upon attaining the age of 50 years or at
any time thereafter; provided that such the member may so retire only
upon electronic submission or written application to the Board of
Trustees setting forth at what time, not less than one day nor more than
120 days subsequent to the execution and filing thereof, he of the
application, the member desires to be retired. Such The early
retirement allowance so elected shall be equal to the deferred
retirement allowance otherwise payable at the attainment of the age of
60 years reduced by the percentage thereof indicated below.
…."
SECTION 4.1.(h) G.S. 105-259(b)(39a) reads as rewritten:
"(39a) To furnish the Department of State Treasurer periodically upon request, the
State tax return of a beneficiary, or the wage and income statement of
beneficiary, or the NC -3 information of an em ployer, for the purpose of
substantiating the beneficiary's statement required to be submitted under
G.S. 135-5(e)(4), 135-109, G.S. 135-109 or 128-27(e)(4); G.S. 128-27(e)(4);

House Bill 1126 Session Law 2026-50 Page 31
or for the purpose of assisting a fraud or compliance investigation in
accordance with G.S. 135-1(7b), 135 -1(11b), 135 -6(q), 128 -21(7b),
128-21(11c), and 128-28(r); provided that no federal tax information may be
disclosed under this subdivision unless such a disclosure is permitted by
section 6103 of the Code."
SECTION 4.1.(i) G.S. 128-27(c) reads as rewritten:
"(c) Disability Retirement Benefits. – Upon the application of a member or of his the
member's employer, any member who has had five or more years of creditable service may be
retired by the Board of Trustees, on the first day of any calendar month, not less than one day
nor more than 120 days next following the date of filing such application, on a disability
retirement allowance: Provided, that the medical board, after allowance. All of the following
shall apply to this subsection:
(1) After a medical examination of such member, shall certify that such a member
applying for dis ability retirement under this subsection , the medical board
shall make a certification of all of the following:
a. The member is mentally or physically incapacitated for the further
performance of duty, that such duty.
b. The member 's incapacity was incurred at the time of active
employment and has been continuous thereafter, that such since it was
incurred.
c. The member 's incapacity is likely to be permanent, and that such
permanent.
d. Due to the incapacity, the member should be retired; Provided further
retired.
(2) Notwithstanding sub-subdivision (1)d. of this subsection, the medical board
shall determine if the member is able to engage in gainful employment and, if
so, the member may still be retired and the disability retirement allowance as
a result thereof shall be reduced as in subsection (e) below. Provided further,
that the Medical Board
(3) The medical board shall not certify any member as disabled who:who meets
either of the following criteria:
(1)a. Applies The application for disability retirement is based upon a
mental or physical incapacity which existed when the member first
established membership in the system; orRetirement System.
(2)b. Is The member is in receipt of any payments on account of the same
disability which existed when the member first established
membership in the system.Retirement System.
The Board of Trustees shall require each employee upon enrolling in the retirement system
to provide information on the membership application concerning any mental or physical
incapacities existing at the time the member enrolls.
(4) Notwithstanding the requirement of five or more years of creditable service to
the contrary, a member who is a law enforcement officer, an eligible
firefighter as defined in G.S. 58-86-2, or an eligible rescue squad worker as
defined in G.S. 58-86-2, and becomes incapacitated for duty as the natural and
proximate result of injuries incurred while in the actual performance of his or
her duties, and meets all other requirements for disability retirement benefits,
may be retired by the Board of Trustees on a disability retirement allowance.
(5) Notwithstanding the foregoing t o any provision of this subsection to the
contrary, any beneficiary who commenced retirement with an early or service
retirement benefit has the right, within three years of his the member 's
retirement, to conv ert to an allowance with disability retirement benefits

Page 32 Session Law 2026-50 House Bill 1126
without modification of any election of optional allowance previously made;
provided, the beneficiary would have met all applicable requirements for
disability retirement benefits while still in service as a member. The allowance
on account of disability retirement benefits to the beneficiary shall be
retroactive to the effective date of early or service retirement.
(6) Notwithstanding the foregoing, any provision of this subsection to the
contrary, effective April 1, 1991, the surviving designated beneficiary of a
deceased member who met all other requirements for disability retirement
benefits, except whose death occurred before the first day of the calendar
month in which the member's disability re tirement allowance was to be due
and payable, may elect to receive the reduced retirement allowance provided
by a one hundred percent (100%) joint and survivor payment option in lieu of
a return of accumulated contributions, provided the following conditio ns
apply:
(1)a. At the time of the member's death, one and only one beneficiary is
eligible to receive a return of accumulated contributions,
andcontributions. If multiple beneficiaries are designated and living at
the time of the member's death and any beneficiary elects to renounce
that beneficiary's portion of the member 's accumulated contributions,
the renunciation shall not result in another beneficiary becoming
eligible for benefits under this subdivision.
(2)b. The member had not instructed the Board of Trustees in writing that
he the member did not wish the provision of this subsection to apply."
SECTION 4.1.(j) G.S. 135-4(e) reads as rewritten:
"(e) Creditable service at retirement on which the retirement allowance of a member shall
be based shall consist of the all of the following:
(1) The membership service rendered by the member since he or she last became
a member, and also if member.
(2) If the member has a prior service certificate which is in full force and effect,
the amount of service certified on the prior service certificate; and if
certificate.
(3) If the member has sick leave standing to the member's credit upon retirement
on or after Jul y 1, 1971, one month of credit for each 20 days or portion
thereof, but not less than one hour; hour. All of the following shall apply to
sick leave leave:
a. Sick leave shall not be counted in computing creditable service for the
purpose of determining eligibility for disability retirement or for a
vested deferred allowance.
b. Creditable service for unused sick leave shall be allowed only for sick
leave accrued monthly during employment under a duly adopted sick
leave policy and for which the member may be able to take credits and
be paid for sick leave without restriction. However, in no instance shall
unused sick leave be credited to a member's account at retirement if
the member's last day of actual service is more than five years prior to
the effective date of the member's retirement. Further, any
c. Any agency with a sick leave policy that is more generous than that of
all State agencies subject to the rules of the O ffice of State Human
Resources shall proportionately adjust each of its retiring employees'
sick leave balance to the balance that employee would have had under
the rules of the Office of State Human Resources. Days of sick leave
standing to a member's cre dit at retirement shall be determined by

House Bill 1126 Session Law 2026-50 Page 33
dividing the member's total hours of sick leave at retirement by the
hours per month such the sick leave was awarded under the employer's
duly adopted sick leave policy as the policy applied to the member
when the leave was accrued."
SECTION 4.1.(k) G.S. 128-26(e) reads as rewritten:
"(e) Creditable service at retirement on which the retirement allowance of a member shall
be based shall consist of the all of the following:
(1) The membership service rendered by the member since he or she last became
a member, and also if member.
(2) If the member has a prior service certificate which is in full force and effect,
the amount of the service certified on the prior service certificate; a nd if
certification.
(3) If the member has sick leave standing to the member's credit upon retirement
on or after July 1, 1971, one month of credit for each 20 days or portion
thereof, but not less than one hour; hour. All of the following shall apply to
sick leave leave:
a. Sick leave shall not be counted in computing creditable service for the
purpose of determining eligibility for disability retirement or for a
vested deferred allowance.
b. Creditable service for unused sick leave shall be allowed only for sick
leave accrued monthly during employment under a duly adopted sick
leave policy and for which the member may be able to take credits and
be paid for sick leave without restriction. However, in no instance shall
unused sick leave be credited to a mem ber's account at retirement if
the member's last day of actual service is more than 365 days prior to
the effective date of the member's retirement.
c. Days of sick leave standing to a member's credit at retirement shall be
determined by dividing the membe r's total hours of sick leave at
retirement by the hours per month such the sick leave was awarded
under the employer's duly adopted sick leave policy as the policy
applied to the member when the leave was accrued."
SECTION 4.1.(l) G.S. 135-6(k) reads as rewritten:
"(k) Medical Board. – The Board of Trustees shall designate a Medical Board to be
composed of not less than three nor more than five physicians not eligible to participate in the
Retirement System. The Board of Trustees may structure appointment requirements and term
durations for those Medical Board members. If required, other physicians may be employed to
report on special cases. The Medical Board shall arrange for and pass upon all medical
examinations required under this Chapter, shall invest igate all essential statements and
certificates by or on behalf of a member in connection with an application for disability
retirement, benefits provided under the Disability Income Plan of North Carolina, and shall report
in writing to the Board of Trust ees its conclusion and recommendations upon all the matters
referred to it, except as otherwise provided in this Chapter. A person serving on the Medical
Board is immune individually from civil liability for monetary damages, except to the extent
covered by insurance, for any act or failure to act arising out of that service, unless any of the
following applies:
…."
SECTION 4.1.(m) G.S. 135-48.41(d) reads as rewritten:
"(d) Former employees who are receiving disability retirement benefits under Article 1A
of Chapter 120 of the General Statutes or under Article 4 of this Chapter or disability income
benefits pursuant to under Article 6 of this Chapter 135 of the General Statutes or who are
approved for those benefits but not in receipt of the benefits due to lump-sum payouts of vacation,

Page 34 Session Law 2026-50 House Bill 1126
bonus, and sick leave, provided the former employee has at least five years of contributory
retirement service with an employing unit of a State -supported retirement system, shall be
eligible for the benefit provisions of thi s Plan, as set forth in this Part, on a noncontributory or
partially contributory basis. Such coverage Coverage shall terminate as of the end of the month
in which such the former employee is no longer eligible for disability retirement benefits under
Article 1A of Chapter 120 of the General Statutes or under Article 4 of this Chapter or disability
income benefits pursuant to Article 6 of this Chapter."
SECTION 4.1.(n) All of the following are repealed and any inchoate or accrued
rights of any member on January 1, 2027, shall not be diminished:
(1) G.S. 120-4.11(2).
(2) G.S. 120-4.12(c)(2).
(3) G.S. 120-4.13(a).
(4) Subsections (a) and (b) of G.S. 120-4.15.
SECTION 4.1.(o) All except the catch line and the first sentence of G.S. 135-5(e) is
recodified as subsection (b) of G.S. 120-4.23.
SECTION 4.1.(p) G.S. 120-4.23, as amended by subsection (o) of this section, reads
as rewritten:
"§ 120-4.23. Reexamination for disability retirement allowance.
(a) Any disability retiree who has not reached age 65 sha ll be reexamined pursuant to
G.S. 135-5(e). in accordance with this section. After he a disability retiree reaches age 65, no
further examinations are required.
(b) Once each year during the first five years following retirement of a member on a
disability retirement allowance, and once in every three -year period thereafter, the Board of
Trustees may, and upon the member's application shall, require any disability beneficiary who
has not yet attained the age of 60 years to undergo a medical examination performed at the place
of residence of that beneficiary, or other place mutually agreed upon, by a physician or physicians
designated by the Board of Trustees. Should any disability beneficiary who has not yet attained
the age of 60 years refuse to submit to at least one medical examination in any year required by
this subsection, the beneficiary's allowance may be discontinued until withdrawal of the refusal.
If the refusal continues for one year all the beneficiary's rights in and to the beneficiary's pension
may be revoked by the Board of Trustees. The following provisions apply:
…."
SECTION 4.1.(q) G.S. 135-5(e), as amended by subsection (o) of this section, is
repealed.
SECTION 4.1.(r) This section is effective January 1, 2027.

CONFORM TO ACTUAL PRACTICE/REPORTING OF EARNINGS
SECTION 4.2. G.S. 135-109 reads as rewritten:
"§ 135-109. Reports of earnings.
The Department of State Treasurer and Board of Trustees may require each beneficiary to
annually provide a statement of the beneficiary's monthly income received as compensation for
services, including fees, commissions, or similar items, income received from business, and
benefits received from the Social Security Administration, the federal Veterans Administration,
any other federal agency, under the No rth Carolina Workers' Compensation Act, or under the
provisions of G.S. 127A-108. The benefit payable to a beneficiary who does not or refuses to
provide the information requested within 120 days after such the request may be suspended until
the information so requested is provided, and should such provided. If the refusal or failure to
provide such the requested information continue continues for 180 days after such request the
request, then the right of a beneficiary to a benefit under the Article may be terminated."

House Bill 1126 Session Law 2026-50 Page 35
CLARIFY THE DE MINIMIS CALCULATION/REEMPLOYMENT PRIOR TO
EXPIRATION OF WAITING PERIOD
SECTION 4.3. G.S. 135-3(d)(2) reads as rewritten:
"(2) The member shall make a lump-sum payment to the Retirement System equal
to three times the amount of compensation earned during the six months
immediately following the effective date of retirement. If the member is
unable to make a lump -sum payment, the member can elect to have the
entirety of their the member's net monthly retirement benefit withheld u ntil
the Retirement System has recovered three times the amount of compensation
earned during the six months immediately following the effective date of
retirement."

TECHNICAL CHANGES IMPROVING CONSISTENCY WITH FEDERAL LAW
SECTION 4.4.(a) G.S. 120-4.11 reads as rewritten:
"§ 120-4.11. Membership.
The following members of the General Assembly and former members of the General
Assembly are eligible for membership members in the Retirement System:
…."
SECTION 4.4.(b) G.S. 135-106 reads as rewritten:
"§ 135-106. Long-term disability benefits.
…
(b) After the commencement of benefits under this section, the benefits payable under
the terms of this section during the first 36 months of the long -term disability period shall be
equal to sixty-five percent (65%) of 1/12th of the annual base rate of compensation last payable
to the participant or beneficiary prior to the beginning of the short-term disability period as may
be adjusted for percentage increases as provided under G.S. 135-108, plus sixty -five percent
(65%) of 1/12th of the annual longevity payment to which the participant or beneficiary would
be eligible, to a maximum of three thousand nine hundred dollars ($3,900) per month reduced by
any primary Social Security disability benefits to which the beneficiary may be entitled, effective
as of the first of the month following the month of initial entitlement, and by monthly payments
for Workers' Compensation to which the participant or beneficiary may be entitled. All of the
following apply:
(1) When prima ry Social Security disability benefits are increased by
cost-of-living adjustments, the increased reduction shall be applied in the first
month following the month in which the member becomes entitled to the
increased Social Security benefit.
(2) The monthly benefit shall be further reduced by the amount of any monthly
payments from the federal Department of Veterans Affairs, for payments from
any other federal agency agency, or for any payments made under the
provisions of G.S. 127A-108, to which the participant or beneficiary may be
entitled on account of the same disability. Provided, in any event, the
(3) The benefit payable shall be no less than ten dollars ($10.00) a month.
However, a
(4) A disabled participant may elect to receive any salary continuation as provided
in G.S. 135-104 in lieu of long-term disability benefits; provided such benefits
under this section so long as that election shall not extend the first 36
consecutive calendar months of the long-term disability period. An election to
receive any salary continuation for any part of any given day shall be in lieu
of any long-term benefit payable for that day, provided further, any lump-sum
payout for vacation leave shall be treated as if the beneficiary or participant

Page 36 Session Law 2026-50 House Bill 1126
had exhausted the leave and shall be in lieu of any long-term benefit otherwise
payable. Provided that, in any event, a
(5) A beneficiary's benefit shall be reduced during the first 36 months of the
long-term disability period by an amount, as determined by the Board of
Trustees, equal to a primary Social Security retirement benefit to which the
beneficiary might be entitled, effective as of the first of the month following
the month of initial entitlement.
(b1) After 36 months of long -term disability, disability benefits u nder this section, no
further benefits are payable under the terms of this section unless the member has been approved
and is in receipt of primary Social Security disability benefits. In that case the If the member has
been approved and is in receipt of primary Social Secu rity disability benefits, then all of the
following shall apply:
(1) The benefits payable shall be equal to sixty -five percent (65%) of 1/12th of
the annual base rate of compensation last payable to the participant or
beneficiary prior to the beginning of the short -term disability period as may
be adjusted for percentage increases as provided under G.S. 135-108, plus
sixty-five percent (65%) of 1/12th of the annual longevity payment to which
the participant or beneficiary would be eligibl e, to a maximum of three
thousand nine hundred dollars ($3,900) per month reduced by the primary
Social Security disability benefits to which the beneficiary may be entitled,
effective as of the first of the month following the month of initial entitlement,
and by monthly payments for Workers' Compensation to which the participant
or beneficiary may be entitled.
(2) When primary Social Security disability benefits are increased by
cost-of-living adjustments, the increased reduction shall be applied in the first
month following the month in which the member becomes entitled to the
increased Social Security benefit.
(3) The monthly benefit shall be further reduced by the amount of any monthly
payments from the federal Department of Veterans Affairs, for payments from
any other federal agency, or for any payments made under the provisions of
G.S. 127A-108, to which the participant or beneficiary may be entitled on
account of the same disability. Provided, in any event, the
(4) The benefit payable shall be no less than ten dollars ($10.00) a month.
(b2) Notwithstanding the foregoing, anything in subsection (b) or (b1) of this section, the
long-term disability benefit is payable so long as the beneficiary is disabled and is in receipt of a
primary Social Security disability benefit until the earliest date at which the beneficiary is eligible
for an unreduced service retirement allowance from the Retirement System, at which time the
beneficiary would receive a retirement allowance calculated on the basis of the beneficiary's
average final compensation at the time of disability as adjusted to reflect compensation increases
subsequent to the time of disability and the creditable service accumulated by the beneficiary,
including creditable service while in receipt of benefits under the Plan. In the event If the
beneficiary has not been approved and is not in receipt of a primary Social Security disabil ity
benefit, then the long-term disability benefit shall cease after the first 36 months of the long-term
disability period. When such a long-term disability recipient begins receiving this unreduced
service retirement allowance from the System, that recipient shall not be subject to the six-month
waiting period set forth in G.S. 135-1(20). However, a beneficiary shall be entitled to a
restoration of the long-term disability benefit in the event If the Social Security Administration
grants a retroactive app roval for primary Social Security disability benefits with a benefit
effective an entitlement date within the first 36 months of the long-term disability period. In such
event, period, then the beneficiary's long-term disability benefit shall be restored retroactively to
the date of cessation.

House Bill 1126 Session Law 2026-50 Page 37
…."
SECTION 4.4.(c) G.S. 135-108 reads as rewritten:
"§ 135-108. Post disability benefit adjustments.
The compensation upon which the short -term or long -term disability benefit is calculated
under the provisions of G.S. 135-105(c) or G.S. 135-106(b) G.S. 135-106 may be increased by
any permanent across-the-board salary increase granted to employees of the State by the General
Assembly and the benefits payable to beneficiaries shall be recalculated based upon the increased
compensation, reduced by any percentage increase in Social Security benefits granted by the
Social Security Administration times the amount used in the reduction of benefits for primary
Social Security disability or retirement benefit as provided in G.S. 135-106(b). G.S. 135-106.
The provisions of this section shall be subject to future acts of the General Assembly."

REMOVE NAMED FORMS FROM STATUTORY REFERENCES
SECTION 4.5.(a) The Revisor of Statutes shall replace the phrase "(Form 6 -E or
Form 7 -E)" with the phrase "by electronic submission in a form approved by the Board of
Trustees or by written designation duly acknowledged and filed with the Board of Trustees" in
G.S. 135-5(g) and G.S. 128-27(g).
SECTION 4.5.(b) G.S. 135-10.1(a) reads as rewritten:
"(a) If a member fails to respond within 120 days after preliminary option figures and the
Form 6-E or Form 7-E are form approved by the Board of Trustees to elect the optional allowance
under G.S. 135-5(g) is transmitted to the member, or if a memb er fails to respond within 120
days after the effective date of retirement, whichever is later, then the Form 6 or Form 7 form
approved by the Board of Trustees to elect the optional allowance under G.S. 135-5(g) shall be
null and void."
SECTION 4.5.(c) G.S. 128-32.1(a) reads as rewritten:
"(a) If a member fails to respond within 120 days after preliminary option figures and the
Form 6-E or Form 7-E are form approved by the Board of Trustees to elect the optional allowance
under G.S. 128-27(g) is transmitted to the member, or if a member fails to respond within 120
days after the effective date of retirement, whichever is later, then the Form 6 or Form 7 form
approved by the Board of Trustees to elect the optional allowance under G.S. 128-27(g) shall be
null and void."

REMOVE OBSOLETE FEE CAP LANGUAGE
SECTION 4.6. G.S. 116B-78 reads as rewritten:
"§ 116B -78. Agreement to locate property between property finders and owners or
apparent owners.
…
(b) Criteria for Agreements. – An agreement covered by this section is void and
unenforceable if it does not meet all of the following criteria:
(1) Is in writing and clearly sets forth the nature of the property and the services
to be rendered.
(2) Is signed by the owner, with signature notarized.
(2a) Is signed by a licensed private investigator authorized to bind the property
finder, with signature notarized.
(3) Describes the property, which includes the type of property, the property ID
held by the State Treasurer, and the name of the holder.
(4) States that there may be other claims to the property that may reduce the share
of the owner.
(5) States the value of the property, to the extent known, before and after the fee
or other compensation has been deducted.

Page 38 Session Law 2026-50 House Bill 1126
(6) States clearly the fees and costs for services . Total fees and costs shall be
limited as follows: shall not exceed one thousand dollars ($1,000) or twenty
percent (20%) of the value of the property recovered, whichever is less.
a. For an agreement covered by this section other than one covered by
G.S. 28A-22-11, total fees and costs shall not exceed one thousand
dollars ($1,000) or twenty percent (20%) of the value of the property
recovered, whichever is less.
b. For an agreement subject to G.S. 28A-22-11 by an heir, unknown or
known but unlocated, the primary purpose of which is to locate or
recover, or assist in the recovery, of a share in a decedent's estate, or
surplus funds in a special proceeding, total fees and costs shall not
exceed twenty percent (20%) of the value of the property recovered.
…."

CORRECT STATUTORY CITATION IN THE SCHOOL BUDGET AND FISCAL
CONTROL ACT
SECTION 4.7. G.S. 159-7 reads as rewritten:
"SUBCHAPTER III. BUDGETS AND FISCAL CONTROL.
"Article 3.
"The Local Government Budget and Fiscal Control Act.
"Part 1. Budgets.
"§ 159-7. Short title; definitions; local acts superseded.
…
(d) Except as expressly provided herein, this Article does not apply to school
administrative units. The adoption and administration of budgets for the public school system
and the management of the fisca l affairs of school administrative units are governed by the
School Budget and Fiscal Control Act, Chapter 115, Article 9. Chapter 115C, Artic le 31.
However, this Article and the School Budget and Fiscal Control Act shall be construed together
to the end that the administration of the fiscal affairs of counties and school administrative units
may be most effectively and efficiently administered.
…."

MUNICIPAL INCORPORATIONS SUBCOMMITTEE REFERENCES
SECTION 4.8.(a) G.S. 120-167 reads as rewritten:
"§ 120-167. Additional criteria; population.
The Commission Municipal Incorporations Subcommittee may not make a positive
recommendation unless the proposed municipality has a permanent population of at least 100
and a population density (either permanent or seasonal) of at least 250 persons per square mile."
SECTION 4.8.(b) G.S. 120-170 reads as rewritten:
"§ 120-170. Findings as to services.
The Commission Municipal Incorporations Subcommittee may not make a positive
recommendation unless it finds that the proposed municipality can provide at a reasonable tax
rate the services requested by the petition, and finds that the proposed municipality can provide
at a reasonable tax rate the types of services usually provided by similar municipalities. In making
findings under this section, the Commission Municipal Incorporations Subcommittee shall take
into account municipal services already being provided."
SECTION 4.8.(c) G.S. 120-171 reads as rewritten:
"§ 120-171. Procedures if findings made.
(a) If the Commission Municipal Incorporations Subcommittee finds that it may not
make a positive recommendation because of the provisions of G.S. 120-166 through
G.S. 120-170, it shall make a negative recommendation to the General Assembly. The report to

House Bill 1126 Session Law 2026-50 Page 39
the General Assembly shall list the grounds on which a negative recommendation is made, along
with specific findings. If a negative recommendation is made, the Commission Municipal
Incorporations Subcommittee shall notify the petitioners of the need for a legally suf ficient
description of the proposed municipality if the proposal is to be considered by the General
Assembly. At the request of a majority of the members of the interim board named in the petition,
the Commission Municipal Incorporations Subcommittee may conduct a public hearing and
forward any comments or findings made as a result of that hearing along with the negative
recommendation.
(b) If the Commission Municipal Incorporations Subcommittee determines that it will not
be barred from making a positive recommendation by G.S. 120-166 through G.S. 120-170, it
shall require that petitioners have a legally sufficient description of the proposed municipality
prepared at their expense as a condition of a positive recommendation.
(c) If the Commission Municipal Incorporations Subcommittee determines that it is not
barred from making a positive recommendation, it shall make a positive recommendation to the
General Assembly for incorporation.
(d) The report of the Commission Municipal Incorporations Subcommittee on a petition
shall be in a form determined by the Commission to be useful to the General Assembly."
SECTION 4.8.(d) G.S. 120-172 reads as rewritten:
"§ 120-172. Referendum.
Based on information received at the public hearing, the Commission Municipal
Incorporations Subcommittee may recommend that any incorporation act passed by the General
Assembly shall be submitted to a referendum, except if the petition contained the signatures of
fifty percent (50%) of registered voters the Commission Municipal Incorporations Subcommittee
shall not recommend a referendum."
SECTION 4.8.(e) G.S. 120-173 reads as rewritten:
"§ 120-173. Modification of petition.
With the agreement of the majority of the persons designated by the petition as an interim
governing board, the Commission Municipal Incorporations Subcommitte e may submit to the
General Assembly recommendations based on deletion of areas from the petition, as long as there
are no noncontiguous areas."
SECTION 4.8.(f) G.S. 120-174 reads as rewritten:
"§ 120-174. Deadline for recommendations.
If the petition is timely received under G.S. 120-163(e), the Commission Municipal
Incorporations Subcommittee shall make its recommendation to the General Assembly no later
than 60 days after convening of the next regular session after submission of the petition."

MISCELLANEOUS TECHNICAL CORRECTIONS
SECTION 4.9.(a) G.S. 143-166.60(d)(4) reads as rewritten:
"(4) An accidental A line-of-duty insurance death benefit not to exceed two
thousand one hundred dollars ($2,100) in total on account of the death of a
participant caused by an accident while in the actual performance of duty as
an officer."
SECTION 4.9.(b) The Revisor of Statutes shall replace the reference to "G.S. 135-4"
with "G.S. 135-4.5" in G.S. 135-5(f).
SECTION 4.9.(c) The Revisor of Statutes shall replace the reference to
"G.S. 128-26" with "G.S. 128-26.5" in G.S. 128-27(f).
SECTION 4.9.(d) G.S. 120-4.25 reads as rewritten:
"§ 120-4.25. Return of accumulated contributions.
If a member ceases to be a member of the General Assembly except by death or retirement,
the member shall, upon submission of an application, be paid not earlier than 60 days following
the date of termination of service the sum of the member's accumulated contributions provided

Page 40 Session Law 2026-50 House Bill 1126
the member has not in the meantime returned to service. Upon payment of this sum his or her
sum, the individual's membership in the System ceases. If the individual becomes a member
afterwards, no credit shall be allowed for any service previously rendered rendered, except as
provided in G.S. 120-4.14 and G.S. 120-4.15, and the payment shall be in full and complete
discharge of any rights in or to any benefits otherwise payable under this Article. Upon receipt
of proof satisfactory to the Board of Trustees o f the death, prior to retirement, of a member or
former member, there shall be paid to the person or persons the member or former member
nominated by electronic submission in a form approved by the Board of Trustees or by written
designation duly acknowledged and filed with the Board of Trustees, if the person or persons are
living at the time of the member's death, otherwise to the member's legal representatives, the
amount of the member's accumulated contributions at the time of the member's death, unless the
beneficiary elects to receive the alternate benefit under the provisions of G.S. 120-4.28."
SECTION 4.9.(e) G.S. 120-4.21(b2)(3) reads as rewritten:
"(3) For a member whose retirement date occurs on or after the member's 50th
birthday and before the member's 60th birthday and upon completion of 20
years of creditable service, computation as in subdivision (2) of this
subsection, reduced by the same percentage as provided for under
G.S. 135-5(b21)(2).G.S. 135-5(b21)(2)c.1."
SECTION 4.9.(f) G.S. 147-69.2A(b) reads as rewritten:
"(b) Organization and Reporting Investment Policy. – The Investment Authority shall
develop and adopt an investment policy statement for the Venture Capital Multiplier Fund."
SECTION 4.9.(g) G.S. 128-38.40(a) reads as rewritten:
"(a) Participation and Premiums. – All retired members may elect to participate in the
Death Benefit Plan and therefore become eligible to receive death benefits under the Death
Benefit Plan in accordance with this section. Elections shall be made prior t o death and no later
than 60 calendar days from the effective date of the member's retirement. Elections shall be
received by the Board of Trustees prior to the death of the retired member. Retired members
electing to receive a fully contributory death ben efit under the Death Benefit Plan shall
continuously pay monthly premiums on a fully contributory basis, as determined by the Board
of Trustees, to the North Carolina Teachers' and State Employees' Benefit Trust established under
G.S. 135-7(g). G.S. 135-154. Premium payments shall be made through retirement allowance
deductions or other methods adopted by the Board of Trustees."
SECTION 4.9.(h) G.S. 147-65.1(7)i. reads as rewritten:
"i. The North Carolina Teachers' and State Employees' Benefit Trust,
established under G.S. 135-7(g).G.S. 135-154."

PART V. UNCLAIMED PROPERTY

ALLOW CONTINGENCY FEES FOR VENDOR AUDITORS
SECTION 5.1. G.S. 116B-8 reads as rewritten:
"§ 116B-8. Employment of persons with specialized skills or knowledge.
The Treasurer may employ the services of such independent consultants, real estate managers
and other persons possessing specialized skills or knowledge as the Treasurer deems necessary
or appropriate for the administration of this Chapter, including including enforcement, valuation,
maintenance, upkeep, management, sale and conveyance of property and determination of
sources of unreported abandoned property. The Treasurer may also employ the services of an
attorney to perform a title search or to provide an accurate legal description of real property which
the Treasurer has reason to believe may have escheated. Persons whose services are employed
by the Treasurer pursuant to this section to determine sources and amounts of unreported property
are subject to the same policies, including confidentiality and ethics, as employees of the
Department of State Treasurer assigned to determine sources and amounts of unreported

House Bill 1126 Session Law 2026-50 Page 41
property. If the Treasurer contracts with any other person to conduct an audit under this Chapter,
the audit shall not be performed on a contingent fee basis or any other similar method that may
impair an auditor's independence or the perception of the auditor's independence by the public.
Notwithstanding the preceding sentence, the Treasurer may contract with any other person on a
contingent fee basis to conduct audits of life insurance companies where the audit is being
conducted for the purpose of identifying unclaimed death benefits or to conduct audits of holders
of unredeemed bond funds. Compensation of persons whose services may be employed pursuant
to this section on a contingent fee basis shall be limited to twelve percent (12%) of the final
assessment."

CLARIFY PROPERTY FINDER DEFINITION
SECTION 5.2. G.S. 116B-52 reads as rewritten:
"§ 116B-52. Definitions.
In this Chapter:
…
(11a) "Property finder" means an individual or business entity, incorporated or
otherwise, who, for fee or any other consideration, seeks primarily seeks to
locate, deliver, recover, or assist in the recovery of pr operty that is
distributable to the owner or presumed abandoned.
…."

MODIFY NOTICE REQUIREMENTS
SECTION 5.3.(a) G.S. 116B-59 reads as rewritten:
"§ 116B-59. Notice by holders to apparent owners.
…
(a1) A holder of property that is presumed abandoned and that is either (i) a security or
other equity interest in a business association, including a security entitlement under Article 8 of
Chapter 25 of the General Statutes, that is valued at twenty-five dollars ($25.00) or more or (ii)
property, other than a security or other equity interest in a business association, including a
security entitlement under Article 8 of Chapter 25 of the General Statutes, that is valued at fifty
dollars ($50.00) or more shall send written notice b y first-class mail to the apparent owner not
more than 120 days or less than 60 days before filing the report required by this Article. The
holder shall exercise reasonable care to ascertain that it is sending the written notice to the
apparent owner's cor rect address. A holder may authorize a third party to perform the duties
required by this subsection. Notwithstanding any third -party authorization, the holder bears
responsibility for a failure to comply with this section.
…."
SECTION 5.3.(b) This section becomes effective December 1, 2026.

CLARIFY DUTIES OF A PROPERTY HOLDER SUBJECT TO NORTH CAROLINA
UNCLAIMED PROPERTY ACT
SECTION 5.4.(a) G.S. 116B-60 reads as rewritten:
"§ 116B-60. Report of abandoned property; certification by holders with tax return.
(a) A holder of property presumed abandoned shall file a report in an electronic format
prescribed by the Treasurer concerning the property. Holders shall file an electronic certification
and verification in order to comply with subsection (f) of this section. A holder may authorize a
third party to perform the duties required by this subsection. Notwithstanding any third -party
authorization, the holder bears responsibility for a failure to comply with this section.
(b) For amounts due to the appare nt owner of property of the value of fifty dollars
($50.00) twenty-five dollars ($25.00) or more, the and for property subject to

Page 42 Session Law 2026-50 House Bill 1126
G.S. 116B-53(c)(4), 116B -53(c)(5), and 116 B-53(c)(5a), regardless of the amount, the report
must be verified and must contain the following, if known by the holder:
…
(b1) With the exception of property subject to G.S. 116B-53(c)(4), 116B -53(c)(5), and
116B-53(c)(5a), amounts due an apparent owner less than fifty dollars ($50.00) twenty-five
dollars ($25.00) may be reported in an aggregate amount without furnishing any of the
information required by subsection (b) of this section.
(b2) After submission of the report required by subsection (b) of this section, the Treasurer
may request additional information from the holder to clar ify or obtain additional information
that was previously required to be reported. The holder of the property shall respond to the
request with the requested information, if known, within 30 days of receiving the request.
(c) If a holder of property presume d abandoned is a successor to another person who
previously held the property for the apparent owner or the holder has changed its name while
holding the property, the holder shall file with the report its former names, if any, and the known
names and addresses of all previous holders of the property.
(d) The report must be filed before November 1 of each year and cover the 12 months
next preceding July 1 of that year, but a report with respect to a life insurance company must be
filed before May 1 of each year for the calendar year next preceding.
(e) Before the date for filing the report, the holder of property presumed abandoned may
request the Treasurer to extend the time for filing the report. The Treasurer may grant the
extension for good cause. The ho lder, upon receipt of the extension, may make an interim
payment on the amount the holder estimates will ultimately be due, which terminates the accrual
of additional interest on the amount paid.
(f) The holder of property presumed abandoned shall file wit h the report a certification
and verification that the holder has complied with G.S. 116B-59.
(f1) Any holder who has intangible property due to be reported with a cumulative value
of two hundred fifty dollars ($250.00) or less in a single reporting year s hall not be required to
report the property in that year but shall report the property in any year when the value or
aggregate value exceeds two hundred fifty dollars ($250.00).
(g) Every business association holding property presumed abandoned under this Chapter
shall certify the holding in the income tax return required by Chapter 105 of the General Statutes.
The certification shall be a part of the tax return with which it is filed. If the business association
is not required to file an income tax return under Chapter 105, the certification shall be made in
the form and manner required by the Secretary of Revenue. The information appearing on the
certification is not privileged or confidential, and this information shall be furnished by the
Secretary of Revenue to the Escheat Fund on October 1 of each year, or if this date shall fall on
a weekend or holiday, on the next regular business day."
SECTION 5.4.(b) G.S. 116B-67(b) reads as rewritten:
"§ 116B-67. Claim for property paid or delivered to the Treasurer.
…
(b) At the discretion of the Treasurer, the claim shall be made to the holder or to the
holder's successor. If the holder is satisfied that the claim is valid and that the claimant is the
owner of the property, the successor, or the Treasurer may request the holder to verify whether
or not the claimant is the owner. The holder shall so certify to the holder's decision under oath to
the Treasurer by written statement attested by the holder under oath, or in the case of a
corporation, within 30 days of the Treasurer 's request. The certification by the holder must be
made by two principal officers, or one principal officer and an authorized employee of the
corporation. holder, and shall be binding on the holder. The determination of the holder that the
claimant is the owner shall, in the absence of fraud, be binding upon the Treasurer and upon
receipt of the certificate of the holder to this effect, the Treasurer shall forthwith authorize and
make payment of the claim or return of the property, or if the property has been sold, the amount

House Bill 1126 Session Law 2026-50 Page 43
received from the sale, to the owner, or to the holder in the event the owner has assigned the
claim to the holder and the certificate of the holder is accompanied by an assignment. In the event
the holder rejects the claim, the claimant may appeal to the Treasurer.
If the holder, or the holder's successor, is not available, the owner may file a claim with the
Treasurer on a form prescribed by the Treasurer. In addition to any other information, the claim
shall state the facts surrounding the unavailability of the holder and the lack of a successor."
SECTION 5.4.(c) G.S. 116B-77(b) reads as rewritten:
"§ 116B-77. Interest and penalties; waiver.
…
(b) A holder who willfully fails to report, pay, or deliver property within the time
prescribed by this Chapter, or willfully fails to perform other duties imposed by this Chapter,
including the duties imposed by G.S. 116B-59, shall 116B-60, and 116 B-67, shall pay to the
Treasurer, in addition to interest as provided in sub section (a) of this section, a civil penalty of
one thousand dollars ($1,000) for each day the report, payment, or delivery is withheld, or the
duty is not performed, up to a maximum of twenty -five thousand dollars ($25,000), plus
twenty-five percent (25%) of the value of any property that should have been but was not
reported."
SECTION 5.4.(d) Subsection (a) of this section becomes effective December 1,
2026, and applies to property presumed abandoned on or after that date. The remainder of this
section becomes effective when it becomes law.

PART VI. STATE AND LOCAL GOVERNMENT FINANCE

TOWN OF SPEED/SALES TAX
SECTION 6.1. Notwithstanding G.S. 159-34(h), funds currently being withheld by
the Department of Revenue from the Town of Speed's sales tax distributions under
G.S. 159-34(g) shall be released by the Department to the Town within 45 days after the Local
Government Commission's approval under G.S. 160A-866 of a plan of action to distribute the
Town's assets and liabilities. However, if the cond itions of G.S. 159-34(h) are met before the
Local Government Commission approves a plan of action under G.S. 160A-866, the Department
of Revenue may act under G.S. 159-34(h) to release the funds as required by that section.

TOWN OF SPENCER MOUNTAIN/EXTEND THE SUNSET ON SUSPENSION OF
CHARTER
SECTION 6.2. Section 3 of S.L. 2016-45, as amended by Section 2 of S.L. 2023-49,
reads as rewritten:
"SECTION 3. This act becomes effective July 1, 2016, and expires June 30, 2026.June 30,
2029."

LGC MEETING REQUIREM ENT FLEXIBILITY/SALES TAX WITHHOLDING
APPEALS
SECTION 6.3. G.S. 159-34 reads as rewritten:
"§ 159-34. Annual independent audit; rules and regulations.
…
(f) Upon receiving a notice of noncompliance under subsection (e) of this section, a
county or municipality may notify the secretary in writing that it plans to appeal the action and
the county or municipality will be scheduled to appear before the Commission at its next
regularly scheduled meeting. as soon as practicable after July 1. The written notice shall state the
basis for the appeal and include any evidence to support the appeal. The Commission shall
establish guidelines outlining specific criteria that would warrant a successful appeal. If a county
or municipality appeals prior to the secretary taking action to withhold under subsection (g) of

Page 44 Session Law 2026-50 House Bill 1126
this section, the secretary must delay withholding if the Commission determines that the county
or municipality has provided sufficient evidence that the failure to provide a copy of their annual
audit report is due to circumstances within the guidelines established by the Commission. If the
county or municipality appeals after the secretary takes action to withhold under subsection (g)
of this section, the secretary must notify the Secretary of Revenue to release any funds withheld
under subsection (g) of this section if the Commission determines that the county or municipality
has provided sufficient evidence that the failure to provide a copy of their annual audit report is
due to circumstances within the guidelines established by the Commission.
…."

REMOVE STATE TREASURER AS EX OFFICIO NONVOTING MEMBER OF
BOARD OF DIRECTORS OF NC GLOBAL TRANSPARK AUTHORITY
SECTION 6.4. G.S. 63A-3 reads as rewritten:
"§ 63A-3. Creation of Authority and Board.
…
(b) Board of Directors. – The Authority shall be governed by a Board of Directors. The
Board shall consist of at least the following 20 19 members:
(1) Six members appointed by the Governor. One member shall be representative
of the economic develo pment industry, two members shall be representative
of the commercial real estate development industry, two members shall be
representative of the banking and finance industry, and one member shall be
representative of environmental interests.
(2) Three me mbers appointed by the General Assembly upon the
recommendation of the Speaker of the House of Representatives in
accordance with G.S. 120-121. One member shall be representative of the
aerospace and aviation industry, one member shall be representative of
advanced manufacturing industries, and one member shall be representative
of the logistics and supply chain management industry.
(3) Three members appointed by the General Assembly upon the
recommendation of the President Pro Tempore of the Senate in acco rdance
with G.S. 120-121. One member shall be representative of the aerospace and
aviation industry, one member shall be representative of the emergency
response and disaster relief industries, and one member shall be representative
of the defense and security industry.
(4) The State Treasurer, who shall serve as an ex officio nonvoting member.
(5) The President of the North Carolina System of Community Colleges or the
President's designee, provided that the President of the North Carolina
Community College s may instead appoint to the Board of Directors one
member of the board of trustees of a community college or one president of a
community college. If such an appointment is made, the appointee shall serve
at the pleasure of the President.
(6) The President of The University of North Carolina or the President's designee,
provided that the President of the University of North Carolina may instead
appoint to the Board of Directors one member of the board of trustees of a
constituent institution of The University of North Carolina, or one chancellor
of a constituent institution of The University of North Carolina. If such an
appointment is made, the appointee shall serve at the pleasure of the President.
(7) The Chairman of the State Ports Authority.
(8) One member appointed by the board of county commissioners of any county
in which the cargo airport complex site is located.

House Bill 1126 Session Law 2026-50 Page 45
(9) One member appointed by the city council of the city which is a county seat
of any county in which the cargo airport complex site is located.
(10) The Commissioner of Agriculture or the Commissioner's designee.
(11) The Secretary of the Department of Commerce or the Secretary's designee.
…."

STUDY LOCAL GOVERNMENT BUDGET AND FISCAL CONTROL ACT
SECTION 6.5.(a) Study. – The State and Local Government Finance Division of
the Department of State Treasurer shall study and report on the need to update Article 3 of
Chapter 159 of the General Statutes, The Local Government Budget and Fiscal Control Act. In
making recommendations, the study shall consider all of the following:
(1) Existing statutory complexity and inconsistencies.
(2) The ability for local government to comply with statutory requirements in
light of the shortage of qualified local government finance professionals.
(3) The need for training of local staff and local elected officials.
(4) Enforcement gaps in current statutory language.
(5) How to address the varying financial management challenges faced by
governments of varying sizes.
SECTION 6.5.(b) Consultation. – In conducti ng this study, the Division shall
consult with the North Carolina League of Municipalities, the North Carolina Association of
County Commissioners, the UNC School of Government, the North Carolina Government
Finance Officers Association, and at least two e xecutive branch agencies that interact directly
with local governments on financial matters, of which one must be the Department of
Environmental Quality.
SECTION 6.5.(c) Report. – No later than January 31, 2027, the Division shall submit
an initial report of its findings to the chairs of the House Finance Committee, the Senate Finance
Committee, the House Committee on State and Local Government, and the Senate Committee
on State and Local Government. No later than October 1, 2027, the Division shall submit a final
report of its findings, including any recommendations for statutory changes, to the chairs of the
House Finance Committee, the Senate Finance Committee, the House Committee on State and
Local Government, and the Senate Committee on State and Local Government.

MODIFY GENERAL ASSEMBLY ACTUARIAL NOTE PROCEDURE
SECTION 6.6. G.S. 120-114 reads as rewritten:
"§ 120-114. Actuarial notes; Retirement System cost estimates.
…
(b) The author of each bill or resolution shall present a copy of the bill or resolution, with
his request for an actuarial note, to the Fiscal Research Division which shall have the duty to
prepare said actuarial note as promptly as possible. Actuarial notes shall be prepared and
transmitted to the author or authors no later than two weeks after the request for the actuarial note
is made, unless an extension of time is agreed to by the author or authors as being necessary in
preparation of the note. Any person who signs an actuarial note knowing it to contain false
information shall be fined not more than five hundred dollars ($500.00) or imprisoned not more
than six months, or both.
…
(e) At any time any committee of either house reports any legislative instrument, to which
an actuarial note or notes are attached at the time of commi ttee consideration, with any
amendment of such nature as would substantially affect the cost to or the revenues of any
retirement system, or program of hospital, medical, disability, or related benefits for teachers and
State employees, as stated in the ac tuarial note or notes attached to the measure at the time of
such consideration, it shall be the responsibility of the chairman of the committee reporting such

Page 46 Session Law 2026-50 House Bill 1126
instrument to obtain from the Fiscal Research Division actuary employed by the system or
program an actuarial note of the fiscal and actuarial effect of the change proposed by the
amendment reported. Such actuarial note shall be attached to the report of the committee on the
measure as a supplement thereto. A floor amendment to a bill or resolution to which an actuarial
note was attached at the time of committee consideration of the bill or resolution shall not be in
order, if the amendment affects the costs to or the revenues of a retirement system, or program
of hospital, medical, disability, or rel ated benefits provided for teachers and State employees,
unless the amendment is accompanied by an actuarial note, prepared by the Fiscal Research
Division, actuary employed by the system or program as to the actuarial effect of the amendment.
…
(g) In addition to the other requirements of this section, if a bill or resolution adds or
modifies service purchase provisions, the Fiscal Research Division actuary employed by the
system or program shall obtain provide an estimate of the cost impact of those provisions using
the 30-year United States Treasury constant maturity and cost -of-living adjustment and salary
increase assumptions consistent with that rate as of December of the year of the most recent
actuarial valuation in addition to the cost of the provision using the valuation assumptions."

PART VII. NORTH CAROLINA CAPITAL FACILITIES FINANCE AGENCY

ADD CHARTER SCHOOLS AND RELIGIOUS SCHOOLS AS PARTICIPATING
INSTITUTIONS
SECTION 7.1. G.S. 159D-37 reads as rewritten:
"§ 159D-37. Definitions.
As used or referred to in this Article, the following words and terms have the following
meanings, unless the context clearly indicates otherwise:
…
(4a) "Institution for elementary and secondary education" means a nonprofit
institution within the State of North Carolina authorized by law and engaged
or to be engaged in the providing of kindergarten, elementary, or secondary
education, or any combination of these.these including, without limitation,
charter schools.
…
(6a) "Project" means any one or more build ings, structures, equipment,
improvements, additions, extensions, enlargements, or other facilities
comprising any of the following:
a. Educational facilities used by an institution for higher education or an
institution for elementary and secondary educat ion, including
dormitories and other housing facilities, housing facilities for student
nurses, dining halls and other food preparation and food service
facilities, student unions, administration buildings, academic
buildings, libraries, laboratories, rese arch facilities, classrooms,
athletic facilities, health care facilities, laundry facilities, and other
structures or facilities related to these facilities or required or useful
for the instruction of students, the conducting of research, or the
operation of the institution.
b. Student housing facilities to be owned or operated by an owner or
operator other than an institution for higher education or an institution
for elementary and secondary education.
c. A special purpose project as defined in G.S. 159C-3.
The term "project" includes landscaping, site preparation, furniture,
equipment and machinery, and other similar items necessary or convenient for

House Bill 1126 Session Law 2026-50 Page 47
operation of a particular facility in the manner for which its use is intended.
The term also includes al l appurtenances and incidental facilities, such as
headquarters or office facilities, maintenance, storage, or utility facilities,
parking facilities, and other facilities related to, required, or useful for the
operation of the project or essential or con venient for the orderly conduct of
the facility. The term "project" does not include the cost of items that
customarily result in a current operating charge, such as books, fuel, or
supplies. The term does not include any facility used or to be used for sectarian
instruction or as a place of religious worship nor any facility that is used or to
be used primarily in connection with any part of the program of a school or
department of divinity for any religious denomination.
(6b) "Special purpose institution" means a for-profit or not-for-profit corporation
or corporation, limited liability company, or similar entity that undertakes any
of the activities set forth in sub-subdivisions (6a)b. and (6a)c. subdivision (6a)
of this section.
…."
SECTION 7.2. G.S. 159D-38(a) reads as rewritten:
"§ 159D-38. Capital facilities finance agency.
(a) There is created a body politic and corporate to be known as "North Carolina Capital
Facilities Finance Agency" which shall be constituted a public agency and an instrumentality of
the State for the performance of essential public functions. The agency shall be governed by a
board of directors composed of seven members. Two of the members of the board shall be the
State Treasurer and the State Auditor, both of whom sha ll serve ex officio. The remaining
directors of the agency shall be residents of the State and shall not hold other public office. The
General Assembly upon the recommendation of the President Pro Tempore of the Senate shall
appoint one director in accorda nce with G.S. 120-121, the General Assembly upon the
recommendation of the Speaker of the House of Representatives shall appoint one director in
accordance with G.S. 120-121, and the Governor shall appoint three directors of the agency. The
five appointive directors of the agency shall be appointed for staggered four -year terms, two
being appointed initially for one year by the President of the Senate and the Speaker of the House,
respectively, and one for two years, one for three years and one for four yea rs, respectively, as
designated by the Governor. Each director shall continue in office until a successor is duly
appointed and qualified, except that any person appointed to fill a vacancy shall serve only for
the unexpired term. Any vacancy in a position held by an appointive member shall be filled by a
new appointment made by the officer who originally made the appointment. Any member of the
board of directors is eligible for reappointment. Each appointive member of the board of directors
may be removed by the Governor for misfeasance, malfeasance or neglect of duty after
reasonable notice and a public hearing, unless the notice and hearing are in writing expressly
waived. Each appointive member of the board of directors shall take an oath of office to
administer the duties of office faithfully and impartially and a record of the oath shall be filed in
the office of the Secretary of State. The Governor shall designate from among the members of
the board of directors a chair and a vice -chair, whose terms ex tend to the earlier of either two
years or the date of expiration of their then current terms as members The State Treasurer shall
serve as chair of the board of directors of the agency. The board of directors shall elect and
appoint and prescribe the duti es of a secretary -treasurer and any other officers it considers
necessary or advisable, which officers need not be members of the board of directors."

MODERNIZE PUBLIC HEARING AND NOTICE REQUIREMENTS
SECTION 7.3. G.S. 159D-45 reads as rewritten:
"§ 159D-45. Bonds and notes.
…

Page 48 Session Law 2026-50 House Bill 1126
(f) Before the issuance of bonds pursuant to this Article to finance a project, the Agency
shall hold a public hearing with respect to the proposed project and the issuance of the bonds to
finance the proposed project. The public hearing may be held at any location designated by the
Agency, including at the offices of the Agency in Raleigh, North Carolina. No public hearing
shall be required in connection with the refinancing of any project previously approved by the
Agency.
The public hearing may be conducted by the Agency or by a hearing officer designated by
the Agency to conduct public hearings. Notice of the public hearing must be published at least
once in at least one newspaper of general circulation in the county where the proposed project is
to be located not less than 14 days before the public hearing. The notice must describe generally
the bonds proposed to be issued and the proposed project, including its general location, and any
other information the Agency considers appropriate. A copy of the notice of public hearing must
be mailed to the clerk of the Board of Commissioners of the county in which the proposed project
is to be located and to the governing body of any city or town in which the proposed project is to
be operated.shall be consistent with the requirements for reasonable public notice set forth in 26
U.S.C. § 147(f) and the regulations promulgated pursuant to that section, or any successor federal
provisions or regulations.
…."

PART VIII. EFFECTIVE DATE
SECTION 8.1. Except as otherwise provided, this act is effective when it becomes
law.
In the General Assembly read three times and ratified this the 1st day of July, 2026.

s/ Rachel Hunt
President of the Senate

s/ Destin Hall
Speaker of the House of Representatives

s/ Josh Stein
Governor

Approved 9:48 a.m. this 7th day of July, 2026