Tag Archives: ERS

Requesting Additional Service Credit

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Service credit is a major factor in calculating your NYSLRS pension. You earn one year of service credit for each year of full-time employment with a participating employer. (Read about how you earn service credit when you work part-time or how school employees earn service credit). You may also be able to request additional service credit if you worked for your current or another public employer before joining NYSLRS, or if you served in the U.S. Armed Forces and received an honorable discharge from active military duty. In most cases, you have to purchase additional service credit, but it will usually increase your pension.*

You should request additional service credit as early in your career as possible, and you must do so before retirement. The sooner you purchase your credit, the less it will generally cost.

*There are certain situations where additional service credit may not increase your pension. For example, special retirement plans for police officers and firefighters allow retirement after 20 or 25 years of service regardless of age, but not all types of public employment count toward the 20 or 25 years in these plans. Contact us if you have questions.

How to Request Additional Service Credit

You can request additional service credit in Retirement Online.

  • Sign in to Retirement Online.
  • Look under My Account Summary.
  • Click Manage My Service Credit Purchases button.
  • Click Request Additional Service Credit link.

Service Credit for Previous Public Employment

Additional service credit includes work for an employer who later joined NYSLRS or for public employment before you became a NYSLRS member.

Example:
You worked at the town library while going to school and, as a part-time employee, you chose not to join NYSLRS. When you graduated and took a full-time job at the Town Supervisor’s office, you were required to join NYSLRS. You can request credit for the part-time service at the library.

When you apply:

  • Enter the name of the employer and the approximate dates you worked there.
  • Upload any proof you may have of your previous service. We will also reach out to your former employer, but you can expedite the process by providing payroll records such as W-2 forms or pay stubs when you submit your request.

You must have two years of service credit before additional service can be credited to you.

Military Service Credit

If you served in the U.S. armed forces, you may be eligible to purchase credit toward your retirement for your military service, regardless of whether your military service was before or after you joined NYSLRS.

There are different sections of the law that allow credit for military service. The amount of military service credit you can receive, and the cost (if any), will vary depending on which section of the law allows the credit. Reserve and National Guard service may qualify if it’s considered active duty.

When applying online:

  • Enter the branch of military in the field for employer and the dates of your service.
  • Upload a copy of your Certificate of Release or Discharge from Active Duty (DD-214) or an official document showing the dates of active duty service, the branch of military and the type of discharge (to receive credit for military service, you must have received an honorable discharge).

For certain military service, you must have five years of service credit before you can apply. 

Reinstating or Transferring Membership

There may be other ways to increase your retirement service credit. If you had a previous membership in a New York State public retirement system and it was terminated, you may be able to reinstate your membership. If you still have an active membership in another public retirement system in New York State but you are no longer working for the employer that participates in that retirement system, you may be able to transfer your membership to NYSLRS.

For More Information

For more information, visit our Get Credit for All Your Public Service page or read our publication, Service Credit for Tiers 2 through 6 (VO1854).

Taxes and Your NYSLRS Loan

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If you’re thinking about borrowing against your retirement contributions, it’s important to understand whether your NYSLRS loan will be subject to taxes before you apply. Once you submit a loan application and we issue a check, you cannot return an uncashed check, and the loan fee is nonrefundable.

Determining the Taxability of Your NYSLRS Loan

When you apply for a NYSLRS loan, all your existing NYSLRS loans and any loans against other retirement plans will be used in calculating the taxability of a new NYSLRS loan. If you participate in another retirement plan offered through your employer, you must disclose existing loans and the contribution balances for the following types of plans:

  • Deferred compensation plan (457)
  • Tax sheltered annuity plan (403-b)
  • Qualified annuity plan (403-a)
  • Qualified trust (401)

If You Have Existing NYSLRS Loans

If you have one or more NYSLRS loans and are considering another loan, you’ll have two options:

  1. Multiple loans. With multiple loans, you would take out a new loan in addition to your existing loan(s). Each loan would have separate 5-year terms and minimum payments. The minimum payments for all your loans would be combined into one total repayment amount, which would be higher than the minimum payment for a refinanced loan. However, your total minimum payment would decrease as you pay off each loan.
  2. Refinance your existing loan. With refinancing, your new loan would be consolidated with the balance of your existing loan(s) into a single loan for the entire amount. The total loan amount would be spread over a new 5-year term with one minimum payment, which would be lower than the total minimum payment for multiple loans. However, refinancing would increase how much of your loan is considered a taxable distribution, which would either subject the loan to federal taxes or significantly reduce the amount of the loan to avoid any tax implications.

Understanding the Impact on Your Taxes

While a NYSLRS loan is exempt from New York State and local income taxes, it may be subject to federal taxes. If your loan exceeds certain limits, the Internal Revenue Service (IRS) will consider all or part of it as a “deemed distribution from a qualified retirement plan.” In other words, you will have to claim all or part of your loan as taxable income when you file your taxes the next year.

NYSLRS is also required to withhold a percentage of the loan for federal taxes, which will reduce the amount you receive. The tax withholding depends on your citizenship, so the loan application asks if you are a U.S. citizen, resident alien or non-resident alien. However, the amount withheld may not cover the total amount you will owe the IRS. For example, if you take a taxable loan before you turn 59½, the IRS may charge an additional 10 percent tax penalty.

If you take a taxable loan, we’ll mail a 1099-R by January 31 of the following year to file with your taxes.

Remember: Even if a portion of your loan goes to the IRS, you’ll still have to repay the entire amount, plus interest, to NYSLRS.

We recommend that you speak to a tax advisor or a NYSLRS customer service representative before taking a taxable loan. For more information about taking a loan from NYSLRS, visit our Loans: Applying and Repaying page.

Ready to Apply for a NYSLRS Loan?

Taxes and Your NYSLRS LoanRetirement Online is the fastest and most convenient way to apply for a NYSLRS loan. When you use Retirement Online, NYSLRS receives your application immediately and can process your loan more quickly. Retirement Online will also let you know how much you can borrow, your repayment options and whether your loan is taxable.

If you don’t 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.

Applying for a NYSLRS Loan in Retirement Online

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If you are eligible to borrow against your retirement contributions, Retirement Online is the fastest and most convenient way to apply for a NYSLRS loan.

Eligibility is based on your tier. Generally, you’ll need to be on the payroll of a participating employer, have at least one year of service credit and have the required minimum contributions in your account. (Note: Retirees are not eligible for NYSLRS loans.)

Applying for a NYSLRS Loan in Retirement Online

Retirement Online is the Fastest Way to Apply

When you use Retirement Online, NYSLRS receives your application immediately and can process your loan more quickly.

To get started:

If you don’t 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.

As you work your way through the online application, you’ll see:

  • How much you are eligible to borrow with or without tax implications;
  • The minimum repayment amount; and
  • The expected payoff date.

For Tier 3–6 members, there’s a service charge of $45, which is deducted from your loan check when it is issued.

The current interest rate, which is fixed for the term of your loan, is 5 percent.

NYSLRS loans are exempt from New York State and local income taxes. However, a NYSLRS loan would be subject to federal taxes if it exceeds certain limits. Retirement Online will show you the maximum you can borrow without tax implications.

If you apply for a loan and already have one or more existing loans, you’ll have two options:

  1. Multiple loans. With multiple loans, you would take out a new loan in addition to your existing loan(s). Each loan would have separate 5-year terms and minimum payments. The minimum payments for all your loans would be combined into one total repayment amount, which would be higher than the minimum payment for a refinanced loan. However, your total minimum payment would decrease as you pay off each loan.
  2. Refinance your existing loan. With refinancing, your new loan would be consolidated with the balance of your existing loan(s) into a single loan for the entire amount. The total loan amount would be spread over a new 5-year term with one minimum payment, which would be lower than the total minimum payment for multiple loans. However, refinancing would increase how much of your loan is considered a taxable distribution. To avoid any tax implications when refinancing, the amount of your new loan would be significantly less than taking out multiple loans.

When Will I Receive My Loan Check?

NYSLRS mails loan checks once a week. To check the status of your loan application:

If your case status is Closed before close of business on Wednesday, your check will be in the mail that Friday.

You will also receive a confirmation letter when your loan case is complete. In your Retirement Online account, click the Find Documents link to search for correspondence.

Repaying Your NYSLRS Loan

Loan payments are deducted from your paycheck. After you receive your loan check, you should review your pay stub to confirm that your employer has started payroll deductions and is deducting the correct repayment amount.

If you choose to repay the minimum amount, the payment may increase periodically to ensure you repay the loan within the required 5-year period.

You can increase your payroll deduction amount, make additional payments or pay your loan in full at any time with no prepayment penalties. Repaying your loan sooner will reduce the total amount of interest you’ll pay on the loan. 

Retirement Online is the fastest and most convenient way to manage your loan payments.

If you go off payroll, you must continue to make loan payments directly to NYSLRS and pay off your loan within the 5-year period. Otherwise, you will default on your loan. For more information, read our blog post about making loan payments if you leave public employment.

Retiring With an Outstanding NYSLRS Loan

If you retire with an outstanding loan, your pension will be permanently reduced. In most cases, you’ll need to report at least some portion of the loan balance as income to the Internal Revenue Service (IRS). If you retire before age 59½, the IRS may also charge an additional 10 percent penalty.

If you are close to retirement, use Retirement Online to check your loan balance and make sure you’re on track to repay your loan before you retire.

Note: Employees’ Retirement System (ERS) members can repay their loan after retiring. If you choose to pay back your loan after you retire, you must pay the full amount of the outstanding balance that was due when you retired in a single lump sum payment. Following full repayment, the reduction would be removed, and your pension benefit would increase going forward—the adjustment would not be retroactive to your date of retirement.

For More Information

For more information about NYSLRS loans, visit our Loans: Applying and Repaying page.

Estimate Your Pension in Retirement Online

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Most NYSLRS members can create their own pension estimates in minutes using Retirement Online. Your estimate will be based on the most up-to-date account information we have on file for you. You can enter different retirement dates and beneficiaries to see how those choices would affect your benefit. When you’re done, print your pension estimate or save it for future reference.

Estimate Your Pension in Retirement Online

How to Create a Pension Estimate

To get started:

  • Sign in to Retirement Online.
  • Look under My Account Summary.
  • Click Estimate My Pension Benefit button.
  • Enter Retirement Date or Your Age at Retirement.

You can fine tune your estimate with:

If you enter your beneficiary’s birthdate, you’ll see the estimated monthly amounts for the pension payment options that provide a lifetime benefit for a single beneficiary and the pension payment options that provide a limited benefit for multiple beneficiaries.

Remember, the amounts are estimates, not a guarantee of what you’ll receive when you retire.

Most Tier 2 through 6 members (more than 90 percent of all NYSLRS members) can use the Retirement Online pension calculator. However, some members may not be able to—for example, members who recently transferred to NYSLRS and some PFRS members. The system will let you know if your estimate cannot be completed. In that case, please send us a message using our secure contact form (select Estimates from the Topic dropdown).

Do More With Retirement Online

In Retirement Online, you can view your account details—date of membership, tier, retirement plan, estimated total service credit and more. Check out what else members can do in Retirement Online.

If you don’t have an account, learn more about Retirement Online and click Register Now. If you need help with Retirement Online, read our Retirement Online Tools and Tips blog post.

Your Death Benefit Beneficiaries

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NYSLRS retirement plans provide death benefits for beneficiaries of eligible members who die before retiring.

It’s important to name beneficiaries and review them periodically. Life circumstances change and a beneficiary you named before might not be one you would choose today. For instance, you may have a new partner or you may have children now. And NYSLRS can only pay a death benefit to the beneficiaries you’ve named.

If you are retired or planning to retire soon, read our blog post, Can You Change Your Beneficiary After You Retire?

2 Types of Beneficiaries

  • Your primary beneficiary will receive your death benefit. You can list more than one primary beneficiary. If you do, they will share the benefit equally. Or, you can choose different percentages for each beneficiary, which must total 100 percent. (Example: John Doe, 50 percent; Jane Doe, 25 percent; and Mary Doe, 25 percent.)
  • A contingent beneficiary will only receive a benefit if all your primary beneficiaries die before you do. If you list multiple contingent beneficiaries, they will share the benefit equally unless you choose different percentages.

Special Beneficiary Designations

Your beneficiary doesn’t have to be a person. You can name your estate, a trust or a charity as your beneficiary.

Special Designations for Your NYSLRS Death Benefit Beneficiaries
  • Estate. When you die, your estate is the money and property you owned. Your death benefit will be given to the executor of your estate to be distributed according to the terms of your will. You can name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as the primary beneficiary, do not name a contingent beneficiary.
  • Trust. You can name a trust as a primary or contingent beneficiary if you have a trust agreement or provided for a trust in your will. The trust itself would be your beneficiary, not the individuals for whom you established the trust. (Speak with your attorney if you’re thinking about making your trust a beneficiary.)
  • Entity. You can also name any charitable, civic, religious, educational or health-related organization as a beneficiary.
  • Minor children. If your beneficiary is under the age of 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may instead choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Custodians can be designated in Retirement Online, or you can contact us for more information and the appropriate form before making this type of designation.

For more information, read our publication, Life Changes: Why Should I Designate a Beneficiary?

Keep Your Beneficiaries Up to Date with Retirement Online

You can change your beneficiaries at any time. In addition to adding or removing them to reflect your current wishes, you should review the contact information for your named beneficiaries so we can find them when needed.

The fastest way to view or update your beneficiaries is in Retirement Online.

Your NYSLRS Pension—A Defined Benefit Plan

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As a NYSLRS member, you are enrolled in a defined benefit plan, also known as a traditional pension plan.

If you are vested and retire from NYSLRS, you will receive a monthly pension payment for the rest of your life. Your pension will be calculated using a preset formula based on your earnings and years of service—it will not be based on the individual contributions you paid into the system.

Member contributions support the benefits earned by current and future retirees and are an important asset of the Common Retirement Fund.

Defined benefit plans are supported by contributions from both members and employers. With defined benefit plans, retirement assets are pooled and the investment risk is shared. These plans are usually administered by professional managers, whose long-term investment strategies help to reduce the impact of market turmoil. NYSLRS employs an experienced group of investment managers.

The New York State Common Retirement Fund, which holds and invests the assets of NYSLRS, is one of the largest public pension plans in the United States, providing retirement security for over 1.2 million NYSLRS members, retirees and beneficiaries. The Fund has consistently been ranked as one of the best managed and best funded plans in the nation.

understand your defined benefit plan

Defined Contribution Plans—And Their Risks

Defined benefit plans are often confused with 401(k)-style retirement savings plans, which are known as defined contribution plans.

With a defined contribution plan, the employee, the employer or both contribute to an individual retirement account for the employee, and the money in the account is invested. In most cases, the employee decides how and where the money is invested (or the plan may offer pre-packaged investment options). At retirement, the employee will be able to draw from the accumulated value of contributions and investment returns, minus any fees.

The amount of money the employee has at retirement often relies on the investment returns of the individual account. So, market downturns, especially near retirement, can negatively affect the value of the benefit. Employees depending on defined contribution plans run the risk of outliving their savings.

NYSLRS’ Defined Benefit Plans

We administer nearly 300 retirement plan combinations. NYSLRS retirement plans:

  • Provide a guaranteed benefit for life.
  • Offer a pension based on final average earnings and years of service.
  • Provide a right to pension benefits (vesting) with five years of service credit.
  • Build a cost-of-living adjustment (COLA) into pensions to help offset the effect of inflation.
  • Include disability retirement and death benefits.

We strongly encourage you to review your retirement plan publication for a complete description of your benefits. Visit our Find Your NYSLRS Retirement Plan Publication page and follow the steps listed.

Know Your Benefits: Death Benefits

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NYSLRS membership provides more than just retirement benefits. For most members, if you die while in active service, your beneficiary may be eligible to receive a death benefit. Here is an overview of member death benefits. If you are retired, visit our Death Benefit page for retirees to learn about your available benefits.

death benefits

Types of Death Benefits

Most members who die while they’re still working will leave their beneficiaries what’s called an “ordinary death benefit.” This is a lump sum payment that’s usually equal to one year of your earnings per year of service, up to a maximum of three years. 

Generally, to leave your beneficiaries this death benefit, you must have at least one year of service credit and your death must occur while you are on the public payroll.

Some members who die because of an on-the-job accident (not due to their own willful negligence) may leave their beneficiary an accidental death benefit. The accidental death benefit is a pension payable to your spouse. Other beneficiaries, as specified by law, may be eligible if there is no spouse.

  • For Employees’ Retirement System (ERS) Tier 4, 5 and 6 members, the benefit would be 50 percent of your earnings from your last year of service.
  • For most other members, the benefit would be 50 percent of your final average earnings (less any workers’ compensation benefit).

There is no minimum service credit requirement to leave an accidental death benefit.

The specific death benefits that may be available to your beneficiaries depend on your tier and retirement plan. Find Your NYSLRS Retirement Plan Publication and check it for specific benefit amount and eligibility information.

Review and Update Your Beneficiaries

You should periodically review your beneficiary designations. Life circumstances sometimes change, and the beneficiary you may have named before might not be the one you would choose today. You should also make sure your beneficiary’s contact information is up to date so we can find them when needed.

Retirement Online is the best way to manage your beneficiary information. Sign in to Retirement Online today and click “View and Update My Beneficiaries” to review your named beneficiaries, and update them if needed.

Reporting a Death

NYSLRS cannot pay out death benefits until after we are notified of a member’s death and have a certified copy of the death certificate. The fastest way for survivors to report a member’s death to NYSLRS is using our online form on our website. Survivors can also upload a copy of the certified death certificate, which enables us to start reaching out to the beneficiary. It’s important to talk with your family about your benefits and how to report your death to NYSLRS.

Payment of Death Benefits

NYSLRS will reach out to your beneficiaries on file and send them the application and instructions for receiving benefits. NYSLRS can pay death benefits once it receives the required documentation.

How Full-Time and Part-Time Service Credit Works

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Service credit plays a vital part in your pension calculation and your eligibility for other NYSLRS benefits. As a NYSLRS member, you earn service credit by working for an employer who participates in the Retirement System. Your paid public employment is creditable. You would not, however, earn credit for any period when you are not receiving a salary, such as an unpaid leave of absence. You would earn credit for both full-time and part-time employment, but if you work part-time, the service you earn is pro-rated.

Earning Service Credit When You Work Full Time

When you work on a full-time, continuous basis throughout your career, we’ll calculate your total service credit from your date of employment up until the date you leave paid employment. Most full-time workers earn a year of service credit for working 260 workdays a year. For a full-time, 12-month employee, 260 workdays equal a full year. (If you work in an educational setting, you can read about earning service credit in our blog post, How School Employees Earn NYSLRS Service Credit.)

Earning Service Credit When You Work Part Time

Your service credit is prorated if you work part time. Part-time employment is credited as the lesser of:

the number of days worked ÷ 260 days

or

your reported annual salary ÷ (the State’s hourly minimum wage × 2,000)

You can think of it like this: let’s say you work 130 days in a year. If a year’s worth of service credit is earned for working 260 days full time, you’d earn half a year (0.5) of service credit for your part-time work.

How Part-Time Service Credit Works

Check Your Service Credit in Retirement Online

Retirement Online is the fastest way to check your current total estimated service credit. Once you sign in, go to the ‘My Account Summary’ section of your Account Homepage and look under “Account Information.”

You can also use Retirement Online to request credit for public employment from before you joined NYSLRS. If you’re eligible to purchase previous service credit, it’s a good idea to file your request as early in your career as possible because:

  • Records we need to verify your service will be more readily available.
  • If there is a cost, it will be less expensive than if you wait to purchase credit before retirement.
  • Your retirement benefit will be processed more quickly if your service credit request has been reviewed or processed prior to retirement.

For more information, please read our publication Service Credit for Tiers 2 through 6. You may also wish to refer to your specific retirement plan booklet, available on our Publications page.