As a NYSLRS member, if you have contributions on file with us, you may be able to take out a loan against them. However, you need to be cautious about this decision. If you retire with an outstanding loan balance, you cannot pay off your loan after you retire. In order to recover the funds that weren’t paid back before you retired, your pension benefit will be permanently reduced.
The amount of your pension reduction is based on three things:
- Your age at retirement
- Your loan balance at retirement
- The type of your retirement (regular service or disability)
Outstanding Loan Balances & Permanent Pension Reductions for 2016
The permanent reduction you receive will be based on your retirement date. So, if you had retired in 2015 with an outstanding loan balance, the permanent reduction would be different than if you retire in 2016. Here are some loan reduction examples if you retire in 2016 with an outstanding loan:
How to Avoid a Permanent Pension Benefit Reduction
To avoid a permanent reduction, you can increase the amount of your loan payments so your loan is paid in full before you retire. Though loans are repaid through regular payroll deductions, you can make additional payments or pay your loan in full at any time. There are no prepayment penalties. You can also pay off your loan in a lump sum when you retire (before your effective date of retirement). If you wish to pay off your loan, we will tell you what the payoff will be at that time.
Make your check or money order payable to NYSLRS, write “loan payment” and your retirement registration number or the last four digits of your Social Security number on your check, and include your contact information in your cover letter to us. We will apply the payment to your loan and send you an acknowledgment letter. Payments should be mailed to:
NYSLRS Attn: Accounts Receivable Unit 110 State Street Albany, NY 12244
If you have any questions about loans or reductions, please visit our Loans page.
What’s Annually mean Monthly or Yearly?
Annually means yearly.
I was found medically unfit to return to duty and terminated on May 10, 2019 with 24.50 yrs of service. I’ve applied and am waiting a decision on a disability retirement. Can I payoff my loan balance in full now before I’m approved for disability retirement?
Under current State Law, an ERS member may repay a NYSLRS loan in full at any time, even after they retire. PFRS member may repay their loans any time before their NYSLRS retirement date. For more information, please visit our Loans page.
To get the account-specific information, please email our customer service representatives using the secure email form on our website (http://www.emailNYSLRS.com). One of our representatives will review your account and respond to your questions. Filling out the secure form allows us to safely contact you about your personal account information.
I took a loan put before i lost my job. I was taxed by the irs for 500.00. I had no income and have been collecting disability for 10 years.
How can my loan be minus by 28,000.
Afterall this is monies that i paid from my earnings every two weeks.
Unfortunately, the NYSLRS social media team does not have access to your personal account information.
To get the account-specific information you need, please email our customer service representatives using our secure email form. One of our representatives will review your account and respond to your questions. Filling out the secure form allows us to safely contact you about your personal account information.
Since an outstanding loan balance permanently reduces a member’s retirement benefit, why is it taxable by the IRS (1099R)? The money appears to be already absorbed through the reduction in payments.
IRS regulation makes some or all of an outstanding loan balance taxable at retirement, and the taxes go to the IRS, not NYSLRS. For more information, you may want to consult a tax advisor or visit the Retirement Plan Loans section of the IRS website.
Why is it a permanent once the loan is paid off.
Retirees cannot have loans, so if a member has an outstanding loan balance at retirement, the balance must be paid before we can finalize the pension benefit. If the member doesn’t send a payment to pay the loan in full, the balance is paid by a permanent reduction in the pension. The amount of the reduction is calculated to pay the outstanding balance over the member’s lifetime and is based on actuarial tables.
Can we make payments even if we don’t work for the state anymore.
If you’re off the payroll but haven’t retired yet, you can mail payments directly to us at:
New York State and Local Retirement System
Attn: Accounts Receivable Unit
110 State Street
Albany, NY 12244
Write “loan payment” on the check and include your registration number or the last four digits of your Social Security number for identification purposes.
If you’ve already retired, it isn’t possible to pay off your loan. Any loan balances at retirement will permanently reduce your retirement benefit. On the infographic in the blog post above, you can see the retirement loan reduction amounts for 2016.