§ 115C-341. Annuity contracts. - North Carolina Statutes

§ 115C‑341. Annuity contracts.

Notwithstanding the provisions of this Chapter for the adoption ofState and local salary schedules for the pay of teachers, principals,superintendents, and other school employees, local boards of education mayenter into annual contracts with any employee of such board which provide for areduction in salary below the total established compensation or salary schedulefor a term of one year.  The local board of education shall use the fundsderived from the reduction in the salary of the employee to purchase anonforfeitable annuity contract for the benefit of said employee.  An employeewho has agreed to a salary reduction for this purpose shall not have the rightto receive the amount of the salary reduction in cash or in any other wayexcept the annuity contract. Funds used by the local boards of education forthe purchase of an annuity contract shall not be in lieu of any amount earnedby the employee before his election for a salary reduction has becomeeffective.

The agreement for salary reductions referred to herein shall beeffected under any necessary regulations and procedures adopted by the StateBoard of Education and on forms prepared by the State Board of Education.

Notwithstanding any other provisions of this section, the amount bywhich the salary of any employee is reduced pursuant to this section shall beincluded in computing and making payroll deductions for social security andretirement system purposes, and in computing and providing matching funds forretirement system purposes.

In lieu of the annuity contracts provided for under this section,interests in custodial accounts pursuant to Section 401(f), Section 403(b)(7),and related sections of the Internal Revenue Code of 1986 as amended may bepurchased for the benefit of qualified employees under this section with thefunds derived from the reduction in the salaries of such employees. (1963, c. 582; 1981, c. 423, s. 1; 1989, c. 526, s.1.)