Borrowing against your contributions is just one of the services available to eligible members of The New York State & Local Retirement System (NYSLRS). But what happens if you have an outstanding loan, go off the payroll and your automatic loan payments are discontinued before the loan is paid off?
The answer is….it depends. If you leave your job because you’re retiring, then your benefit will be permanently reduced – you can’t pay off your loan once you’re retired. However, if you leave work for any other reason, you are required to make direct payment at least quarterly and complete repayment within five years from the date the loan was issued. If you fail to meet either of these conditions, your loan will default.
What Happens If My Loan Defaults?
If your loan defaults:
- We must report your outstanding balance, minus any previously taxed amount, to the IRS as a distribution to you.
- You must include the loan on your federal income tax return for the year it defaults. (If it was taxable prior to default, you will not be re-taxed on that portion of the loan.)
- If you’re under age 59½, you will be subject to an additional 10 percent penalty on the taxable portion of the loan. (There are no New York State or local taxes due on the distribution.)
- You still owe the balance to the Retirement System and the loan continues to accrue interest and insurance charges until it’s paid in full.
- We cannot issue a new loan until the defaulted loan has been repaid.
Take the Proper Precautions
If you leave public employment, contact us as soon as possible. We’ll tell you the exact amount you need to repay to avoid defaulting. When making a payment, be sure to write “loan payment” on your check and include your member registration number so we can apply it to the correct account. Mail payments to us at the following address:
New York State and Local Retirement System
Attention: Loan Unit
110 State Street
Albany, NY 12244
For more information about loans, you can contact us via this email form: https://nysosc9.osc.state.ny.us/product/ccsub.nsf/fsWeb?OpenFrameset. One of our representatives will respond back to you within 3 to 5 business days.
If you haven’t filed your tax returns, here’s some useful information that may help you:
The W-4P Form
Your retirement benefit from the New York State & Local Retirement System (NYSLRS) isn’t subject to New York State income tax, but it is subject to federal income tax. The W-4P form determines withholdings from your pension payments.
NYSLRS takes care of your estimated tax payment requirement by withholding money from your pension based on your W-4P. If you’re receiving a NYSLRS pension, you need to file a W-4P to determine how much to withhold.
Significance of the W-4P
If you don’t have enough withheld from your retirement income during the year, you could find yourself owing the Internal Revenue Service (IRS) extra in interest and penalties when you file your tax return.
Changing Your W-4P
You can submit a new W-4P form whenever you want as your life circumstances change. Don’t know how much you want withheld from your pension? Our Withholding Tax Calculator can help you figure out the amount. If you need to update your withholding status, you can send us an updated W-4P form. Make sure you check out our W-4P tutorial if you have questions about filling out the form.
Other Tax Information Resources
If you have questions about your 1099-R tax form – the form that reports your pension distributions from us – our 1099-R tutorial can help.
If you are a retiree receiving regular monthly pension checks from NYSLRS, you may also want to read our Frequently Asked Questions dealing with taxes and your retirement benefit.
And if you ever have any other retirement-related questions that we can assist you with, please don’t hesitate to contact us via this email form: https://nysosc9.osc.state.ny.us/product/ccsub.nsf/fsWeb?OpenFrameset. One of our representatives will respond back to you within 3 to 5 business days.
When you join the New York State and Local Retirement System (NYSLRS), you’re assigned a tier based on the date of your membership. There are six tiers in the Employees’ Retirement System (ERS) and five in the Police and Fire Retirement System (PFRS). Each tier has a different benefit structure established by New York State legislation. Our series, NYSLRS – One Tier at a Time, walks through each tier to give you a quick look at the benefits in both ERS and PFRS.
Today’s post looks at Tier 5 in the Employees’ Retirement System. ERS Tier 5 has one of the shortest windows for membership in NYSLRS, representing members who joined from January 1, 2010 to March 31, 2012. ERS Tier 5 members currently make up 9.4 percent of NYSLRS’ total membership, totaling 57,229 members.
Check out the graphic below for the basic retirement information for Tier 5 members.
Where to Find ERS Tier 5 Information
If you’re an ERS Tier 5 member, please find your retirement plan publication from the list below for more details about your benefits:
Please visit our publications page for special plans under miscellaneous titles.
Stay tuned for more NYSLRS – One Tier at a Time posts. Next time, we’ll take a look at another PFRS tier. Want to learn more about the different NYSLRS retirement tiers? Check out some earlier posts in the series:
You probably know that members of the New York State & Local Retirement System (NYSLRS) become eligible for a death benefit after one year of service. However, if you’re a New York State employee (meaning that you work for the State of New York), your beneficiary can also receive a death benefit from the Survivor’s Benefit Program for State employees.
Eligibility Requirements for the Survivor’s Benefit Program
You don’t have to enroll in the program; your beneficiary is eligible to receive this benefit if, at the time of your death:
- You were a full-time employee or officer of New York State
- Your regularly scheduled work week equaled 20 or more hours (or your annual salary was at least 1,000 hours times the State minimum wage) and
- Your salary was paid directly from State funds
There are also other eligibility requirements for the Survivor’s Benefit Program.
How Much Your Beneficiary Will Receive
This program supplements NYSLRS’ ordinary death benefit payment if that payment
is less than one-half of your annual salary, or if you don’t qualify for any ordinary death benefit payment.
The maximum amount payable to your beneficiary is $10,000; the minimum amount is $2,000. Both amounts include the ordinary death benefit paid by NYSLRS plus your survivor benefit. If your beneficiary is eligible to receive a NYSLRS ordinary death benefit of more than $10,000, this program will not provide any additional benefit.
Also, if NYSLRS pays an accidental death benefit, a $2,000 survivor’s benefit will also be paid to your beneficiary.
If you have questions about the Survivor’s Benefit Program for New York State employees, read our publication, The Survivor’s Benefit Program for New York State Employees. If you have questions about any other retirement-related matters, please contact us.