TSERS and Social Security in North Carolina: Option 4 leveling and the 2026 earnings limit

1. Do NC teachers pay into Social Security?

No official source we found says in one sentence whether every North Carolina public school teacher pays into Social Security. These official sources bear on the question:

• North Carolina law sets a policy of extending Social Security to public employees, “to provide such protection to employees of the State and local governments on as broad a basis as is permitted under applicable federal law” (G.S. 135-19).
• The Department of Public Instruction’s 2026-27 Allotment Policy Manual lists, among employer benefit costs for school allotments, “Social Security 7.65% for the entire year.”
• NC Retirement Systems offers retiring TSERS members a payment option built around their Social Security benefit at age 62 (Option 4, below).

This guide does not cover charter, lab or regional school positions.

In North Carolina, the TSERS director administers Social Security coverage for government employees. A July 30, 2026 memo from NC Retirement Systems’ executive director says: “Article 2 of Chapter 135 assigns the Director of TSERS responsibility for North Carolina’s administration of governmental Social Security coverage.” For your own earnings record, ask the Social Security Administration (SSA).

2. Getting a TSERS pension and Social Security

Your TSERS pension and your Social Security come from two different systems. NC Retirement Systems says so in its description of Option 4 (section 3): “The Retirement Systems is not paying your Social Security.”

Two federal provisions that reduced some Social Security benefits are gone: the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). The Social Security Fairness Act, approved January 5, 2025, was passed “to repeal the Government pension offset and windfall elimination provisions”. It applies “with respect to monthly insurance benefits payable under title II of the Social Security Act for months after December 2023.”

Before the repeal, the WEP applied to a pension “based in whole or in part upon his or her earnings for service which did not constitute ‘employment’” as the Social Security Act defines it (42 U.S.C. 415(a)(7)(A), 2023 edition). Ask SSA how the repeal applies to your own benefit.

If you start Social Security before full retirement age and keep working, the earnings test in section 4 counts your wages, not your TSERS pension.

3. Option 4: Social Security leveling

TSERS has a payment option tied to Social Security. NC Retirement Systems lists it as “Option 4: Social Security Leveling” and says: “You must be younger than 62 to qualify for this option.” The TSERS statute names it “Option 4. Adjustment of Retirement Allowance for Social Security Benefits.” (G.S. 135-5(g)).

In NC Retirement Systems’ words: “The Retirement Systems is not paying your Social Security. We are paying a higher retirement benefit every month until you reach age 62.” After 62 the TSERS payment drops, and NC Retirement Systems (RSD) says “your reduced retirement payments after age 62, plus your allowance from the Social Security Administration, should be approximately the same amount” as the higher payment before 62.

Two details from the TSERS Employer Manual (2022 edition) matter if you plan to work after you retire:

• The drop at 62 does not wait for you to claim Social Security: “The reduction takes place regardless of whether the member has applied for and is receiving Social Security.” So if you choose Option 4 and put off claiming Social Security, for example while you are still working, your TSERS payment still drops at 62.
• The amounts depend on an SSA estimate of your age-62 benefit. The manual says that estimate “should be requested from SSA within two years of the effective retirement date.”

Whether Option 4 suits you is a question for NC Retirement Systems.

4. The 2026 earnings test before full retirement age

If you start Social Security retirement benefits before full retirement age and also work, SSA may withhold some of your benefits. SSA’s notice for 2026 says: “We withhold Social Security benefits when a beneficiary under the NRA has earnings more than the applicable retirement earnings test exempt amount.” NRA, normal retirement age, is the notice’s term for full retirement age.

SSA’s notice of November 3, 2025 (90 FR 49047) sets these 2026 figures:

• Under full retirement age for all of 2026: “The lower annual exempt amount is $24,480 under the retirement earnings test.” Above it, SSA says “we withhold $1 in benefits for every $2 of earnings over the annual exempt amount.”
• Reaching full retirement age during 2026: “The higher annual exempt amount is $65,160 under the retirement earnings test.” It counts only your earnings in the months before you reach full retirement age, and SSA withholds “$1 in benefits for every $3 of earnings over the annual exempt amount for months before NRA.”
• At full retirement age or older: the test does not apply, because SSA withholds only from “a beneficiary under the NRA”.

When is full retirement age? “The NRA is age 66 for those born in 1943–54. It gradually increases to age 67 for those born in 1960 or later.”

What counts as earnings

SSA’s regulation says earnings “includes the sum of your wages for services rendered in a taxable year, plus your net earnings from self-employment for the taxable year” (20 CFR 404.429(a)). Wages count before deductions: “Wages include the gross amount of your wages rather than the net amount paid after deductions by your employer” (404.429(c)).

Wages from any employer count. SSA’s operating manual includes “Wages from non-covered employment performed in the United States.” (POMS RS 02505.005).

Your TSERS pension is treated differently. SSA’s manual says payments made “on account of retirement” are “excluded from the term ‘wages’ for ET purposes” (POMS RS 02505.045; ET is the earnings test). Read together, SSA’s rules count your paychecks from any job toward the limit, but not your TSERS pension.

If you retire from teaching partway through a year and are under full retirement age, SSA counts the whole year. Its manual says: “If under FRA, count the beneficiary’s earnings for all months of their taxable year”. So school pay you earned before retiring counts toward that year’s annual test. Your first year of benefits may use a monthly test instead (section 5).

TSERS has its own limit, and it works differently

SSA’s test counts wages from every employer. TSERS’s return-to-work rules depend on who you work for. NC Retirement Systems says of those rules: “They pertain only to work performed after retirement for a system employer.” It adds that “a ‘system employer’ includes all North Carolina public school units, State agencies, community colleges, and UNC institutions, among others.”

On private employers, RSD says: “‘Return-to-work’ laws do not apply if you are employed with a private-sector employer and you perform no work for a system employer.” RSD adds: “However, work performed for a system employer can include contractor work on the system employer’s behalf.”

For work for a system employer, RSD’s 2026 limit is whichever is greater: “50% of your gross pre-retirement compensation (excluding terminal payments)” or “$43,300 (2026 amount)”. Our guide to TSERS’s return-to-work rules covers them in full. Confirm your own situation with NC Retirement Systems.

5. Your first year: the monthly test (grace year)

The first year you receive Social Security can work differently. SSA’s regulation says it will not reduce your benefits for any month in which you “(7) Had a non-service month in your grace year”. A non-service month is one in which, while entitled to benefits, you “(ii) Do not perform services for wages greater than the monthly exempt amount set for that month” and do not perform substantial services in self-employment. SSA’s operating manual puts the two conditions together: pay full benefits for any month the beneficiary “neither earns wages higher than the monthly exempt amount nor performs substantial services in self-employment.” (POMS RS 02501.021). The regulation adds one more condition, about work outside the United States.

For 2026, the monthly amount is $2,040 for people under full retirement age all year: “The monthly exempt amounts under the OASDI retirement earnings test for tax years ending in calendar year 2026 will be $2,040”.

The grace year follows your Social Security, not your last school day. The regulation defines it as “the first taxable year in which the beneficiary has a non-service month”, counting from the month the person becomes entitled to a retirement benefit. If you retire from teaching in June and start Social Security in a later year, your grace year comes later too.

After the grace year, the yearly test applies again. SSA’s example says: “However, in the years that follow, up to the year of full retirement age, only the annual earnings test will be applied”. SSA can tell you whether a given year is your grace year, so treat the monthly test as something that may apply to you.

6. What the limit means in tutoring hours

The figures below divide SSA’s 2026 annual limit of $24,480 by an hourly pay rate, for readers under full retirement age for all of 2026. They do not predict the hours you would be offered, and they are not a benefit calculation.

SpecialEdResource’s starting pay is $23/hour, W-2. All tutors can earn a 10% performance bonus in any pay period when they tutor at least 10 hours and turn in session notes on time. In a pay period that earns the bonus, the rate works out to $25.30 an hour.

This section converts only that limit into hours. The $2,040 amount for a grace-year month (section 5) and the $65,160 amount for the year you reach full retirement age (section 4) are given in dollars only.

The right-hand column applies only if every pay period earns the bonus. In a pay period that does not, every hour is paid at $23, so the real figure falls between the two columns.

Available hours depend on student demand and schedule fit.

SSA counts wages from every job, so other work leaves less room under the limit. Nothing here means a particular schedule keeps you under it: SSA applies the test to your actual earnings. For your own figures, ask SSA.