When you apply for a NYSLRS loan, you choose a repayment amount and your employer deducts your payments from your earnings. If you leave public employment or go off payroll before retiring (for example, a furlough, leave of absence or termination), you’ll need to make loan payments directly to NYSLRS at least quarterly and repay the loan within five years to avoid defaulting.
(Note: If you are planning to retire soon and you have an outstanding NYSLRS loan, it’s important to understand the implications of retiring with an outstanding loan.)
Making Loan Payments
If you leave public employment, contact us as soon as possible so we can tell you the amount you’ll need to repay each quarter. You are responsible for the repayment of your loan.
Use Retirement Online
Even if you go off the public payroll, Retirement Online is the fastest and most convenient way to manage your loan payments. You can make additional payments or pay your loan in full at any time with no prepayment penalties.
- Sign in to Retirement Online.
- Look under My Account Summary.
- Click Manage My Loans button.
If you don’t already have an account or for help signing in to an existing account, check out our Retirement Online tools and tips for step-by-step instructions to register, reset your password, unlock your account and more.
Pay by Check or Money Order
Make your check or money order payable to the New York State and Local Retirement System and write “loan payment” and your NYSLRS ID on your check so we can ensure it’s applied to the correct account.
Mail payments to:
NYSLRS
Attn: Accounts Receivable
110 State Street
Albany, NY 12244-0001
Defaulting on Your Loan
If you fail to make quarterly payments or you do not repay your loan within five years, your loan will go into default.
If you default on your loan:
- We’re required by law to report your outstanding loan balance to the Internal Revenue Service (IRS) as a taxable distribution to you.
- You must include the loan on your federal income tax return for the year the loan defaults. We’ll mail a 1099-R by January 31 of the following year to file with your taxes.
- If you are younger than 59½ in the year the loan defaults, the IRS may charge an additional 10 percent tax penalty.
- You still owe NYSLRS the amount of the outstanding loan, which will continue to accrue both interest and insurance charges until it is paid in full. If you retire with the outstanding loan, your pension will be reduced. If you withdraw your NYSLRS membership, we will deduct the outstanding loan balance from the refund of your contributions.
Note: Defaulted loans do not appear on your credit history.
For More Information
For more information about your NYSLRS membership and benefits if you leave public employment before you are eligible to retire, read our blog post, Know Your Benefits: What If I Leave Public Employment.
For more information about NYSLRS loans, visit our Loans: Applying and Repaying page.