Tag Archives: New York State & Local Retirement System

NYSLRS Loans and Retirement Online

Planning on taking out a NYSLRS loan? Applying online offers speed and convenience.

NYSLRS loan eligibility is based on your tier, but generally, you’ll need to be on the payroll of a participating employer, have at least one year of service and have a certain amount of contributions in your account. Retirement Online will provide the eligibility information you need as you step through the application process. (Note: retirees are not eligible for NYSLRS loans.)

Use Retirement Online to apply for a NYSLRS loan

Getting Started

Retirement Online is the fastest way to apply for a NYSLRS loan. It’s also an easy way to check your current loan balance, the amount you are eligible to borrow and more.

­­If you don’t already have an account, go to the Sign In page and click “Sign Up” under the “Customer Sign In” button. (Need help with Retirement OnlineSee this post for handy tips.)

The Application Process

Once you’ve signed in, scroll down to ‘My Account Summary.’ Under ‘I want to…’ click the green “Apply for a Loan” button and follow the prompts.

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

  • How much you can borrow;
  • The minimum repayment amount;
  • The expected payoff date; and
  • How much you can borrow without tax implications.

A service charge of $45 will be deducted from your loan check when it is issued. The current interest rate is 5 percent. The interest rate will remain fixed for the term of your loan.

NYSLRS loans are exempt from New York State and local income taxes. But the Internal Revenue Service (IRS) may consider all or part of a NYSLRS loan taxable in some cases – for instance, if you borrow above certain limits. The Retirement Online loan application will show you the maximum amount you can borrow without tax implications. 

If you already have a loan and you want to take another loan, you can either take multiple loans or refinance your existing loan. Taking a new loan (the multiple-loan option) minimizes your potential tax consequences. Your minimum payment will be higher, but you will pay off your loans faster than you would by refinancing. Refinancing adds the new loan amount to your existing balance and spreads the entire balance over a new five-year term. Your payment will be lower but your tax consequences may be significantly higher.

Repaying Your NYSLRS Loan

Loan payments will be deducted from your paycheck. You can choose the minimum payroll deduction, which would pay off your loan in five years, or you can pay more to pay off your loan sooner. The payment calculator in Retirement Online will provide your expected payoff date if you enter an amount higher than the minimum.

Retiring With an Outstanding NYSLRS Loan

If you retire with an outstanding loan, your pension will be reduced. You will also need to report at least a portion of the loan balance as ordinary income (subject to federal income tax) to the IRS. If you retire before age 59½, the IRS may charge an additional 10 percent penalty. If you are nearing retirement, be sure to check your loan balance. If you are not on track to repay your loan before you retire, you can increase your loan payments, make additional lump sum payments or both.

Note: Employees’ Retirement System (ERS) members may repay their loan after retiring, but they must pay the full amount (that is, the amount that was due on their retirement date) in a single lump-sum payment. Following your full repayment, your pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to your date of retirement. 

More Information

For more information about NYSLRS loans, visit our Loans page. If you need help with the Retirement Online loan application, click “Help” at the top of your account page, then click next to ‘Requesting a Loan’ and select the step-by-step guide that best fits your situation.

Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates

New legislation temporarily changes how Tier 6 contribution rates will be calculated.

Usually, Tier 6 contribution rates are calculated using a member’s base pay, which includes regular earnings, holiday pay and longevity pay. Overtime pay (up to a certain limit) is also included in the calculation of the contribution rate.

The new legislation removes overtime pay from the Tier 6 contribution rate calculation, if it was earned from April 1, 2020 through March 31, 2022. The earnings for this time period were used to determine contribution rates that you were set to pay from April 1, 2022 through March 31, 2024.

Removing overtime earnings may result in a change in a Tier 6 member’s contribution rates effective April 1, 2022 through March 31, 2024. Although Tier 6 contribution percentage rates for those years will be calculated only on annual base wages, Tier 6 members must pay the applicable contribution rate on all of their pensionable earnings in those years. This video helps explain how your contribution rate is determined.

Note: Tier 6 members are those who joined NYSLRS on or after April 1, 2012.

Overtime Pay Temporarily Excluded From Tier 6 Contribution Rates

When Will Rates be Recalculated?

We will work with employers to review your past earnings to determine whether your rate should be lowered.

Tier 6 is now the largest tier in NYSLRS. With more than 325,000 Tier 6 members, it will take some time to collect detailed earnings information from employers and change rates. Once information for all Tier 6 members is received and processed, if your rate should be lower, you will receive a credit of overpaid contributions through your employer that will be retroactive to April 1, 2022.

Who is Affected by the Rate Change?

Tier 6 members who make mandatory contributions toward their retirement and earned overtime from April 1, 2020 through March 31, 2022 may have their contribution rates lowered.

The rate decrease will not apply to:

  • Members who are already paying the minimum rate of 3 percent;
  • Members who did not earn overtime during the COVID pandemic; and
  • Members who joined NYSLRS on or after April 1, 2020. Your rates are based on an estimated wage provided by your employer when you were enrolled into NYSLRS rather than your actual earnings.

More About Tier 6 Contribution Rates

Most NYSLRS members contribute a percentage of their earnings to help fund pension benefits. For Tier 6 members, that percentage, or contribution rate, is based on earnings and can vary from year to year. The minimum rate is 3 percent and the maximum rate is 6 percent.

For more information about how Tier 6 contribution rates are calculated, read our blog post, How Your Tier 6 Contribution Rate Can Change.

Federal Withholding and Your Pension

Getting hit every year with a larger than expected federal tax bill? Or maybe you received a hefty refund. Either way, it might be time to look at how much federal tax withholding is taken out of your NYSLRS pension. If you’re not sure whether you need to adjust your federal withholding, you can check with your tax preparer or you can use this Internal Revenue Service Withholding Calculator. Remember, this is only for federal income tax. New York State doesn’t tax your NYSLRS pension and we can’t withhold state income taxes.

Understanding Your Federal Withholding

You can adjust the amount we withhold from your retirement benefit at any time. Just follow these step-by-step instructions.

  1. Print our NYSLRS Form W-4P (Withholding Certificate for Pension or Annuity Payments) from our website. (This is a fillable form, so you can type in the information before you print it out.)
  2. Fill in the top of the form with your name, address, Social Security number and NYSLRS ID.
  3. Complete the form.
    • Complete Section 1 if you do not wish to have any federal income tax withheld.
    • Complete Section 2 to have NYSLRS withhold based on current Internal Revenue Service (IRS) tax tables, your marital status and the number of federal allowances (exemptions) you claim. You can use our tax withholding calculator to estimate how much would be withheld from your pension payment every month.
    • Complete Section 3 if you completed Section 2 and also want an additional amount withheld.
  4. If you completed the form by typing in your information, print the form.
  5. Date and sign the form.
  6. Mail your form to:
    NYSLRS
    110 State Street
    Albany, NY 12244-0001

You can sign in to Retirement Online to view your current federal withholding information, including your withholding status, number of exemptions and any additional tax being withheld. You’ll also find your NYSLRS ID on your Retirement Online account page. Visit our Taxes and Your Pension page for more information.

Becoming Vested

Becoming vested is a crucial milestone in your NYSLRS membership.

You become vested after you earn enough years of service credit. Once you’re vested, you have earned the right to receive a retirement benefit, even if you leave public employment before retirement.

New Legislation Changes Vesting Requirements for Tier 5 and 6 Members

As of April 9, 2022, Tier 5 and 6 members only need five years of service credit to be vested. This affects members of both the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS). Previously, Tier 5 and 6 members needed 10 years of service to be eligible for a service retirement benefit (the new legislation does not change eligibility for disability retirement benefits that are established by your retirement plan).

Becoming Vested - New Legislation Changes Requirements for Tier 5 and 6 Members

You can sign in to your Retirement Online account to view your total estimated service credit. Over the next few months, we will update members’ accounts to reflect any changes to vesting status as a result of these new vesting requirements. If your total estimated service credit in Retirement Online is more than five years, rest assured, you are considered vested and your vesting status will be changed to “Yes.” This will be done by NYSLRS and there is no need to contact us.

In addition, we are working to update the pension estimate tool in Retirement Online. Until vesting status updates are made to the tool, pension estimates produced in Retirement Online will not accurately reflect the vesting status of members impacted by the new legislation.

Effective immediately, if you are a Tier 5 or 6 member with five or more years of service and you meet the minimum age requirements for your retirement plan, you can apply for a service retirement benefit if you wish. We are updating our online services to enable Tier 5 and 6 members to apply for retirement through Retirement Online. In the meantime, you may file for retirement using our paper application. If you have between five and 10 years of service credit and you have questions about filing for retirement, please contact us.

This legislation did not change Tier 5 or 6 benefit rules such as how long you must contribute, your pension benefit calculation, your full retirement age, reductions to retire early or the cost to purchase previous service. However, additional new legislation may affect contribution rates for some Tier 6 members. Information about this legislation will be posted on our blog when it becomes available.

Tier 5 and 6 members who left public employment with five or more years of service and did not withdraw their membership are now considered to be vested.

Tier 5 and 6 members who leave public employment with more than five years of service but less than 10 years, as of April 9, 2022, now have the option to either apply for a retirement benefit once you reach retirement age or withdraw your contributions. You cannot withdraw your contributions once you have 10 years of service. As a reminder, once you withdraw your contributions, you end your membership with NYSLRS and are no longer eligible for a retirement benefit.

If you were a Tier 5 or 6 member and have been off the payroll for more than seven years prior to April 9, 2022, your membership is considered withdrawn and terminated. You would need to return to payroll and reinstate your withdrawn membership in order to be eligible for five-year vesting.

All Members — When Will I Be Vested?

NYSLRS members in Tier 2, 3, 4, 5 and 6 need five years of service credit to be vested.

If you work part-time, it will take you longer to become vested. For example, if you work half-time, you earn six months of credit toward vesting for each year on the job.

If you purchase credit for previous service or military service, that credit can be used toward vesting.

What You Need to Do

Vesting is automatic. You do not need to file any paperwork to become vested. To find out if you’re vested, you can sign in to your Retirement Online account and find your total estimated service credit in the ‘My Account Summary’ section. Again, if your total estimated service credit in Retirement Online is listed as more than five years, you are considered vested.

Vested members will need to apply for a service retirement benefit in order to receive a pension. Applications must be submitted within 15 – 90 days before the date you wish to retire (you must be eligible to retire on the date you choose).

Most NYSLRS members are eligible to collect a pension as early as age 55, but, depending on your tier and retirement plan, benefits may be reduced if you retire before your full retirement age.

You can estimate your pension benefit based on the salary and service information we have on file for you. From your Retirement Online account, under ‘My Account Summary’ click “Estimate my Pension Benefit.”

NYSLRS – One Tier at a Time: PFRS Tier 5

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 PFRS Tier 5. Anyone who joined PFRS from January 9, 2010 through March 31, 2012 is in Tier 5. There were 1,967 PFRS Tier 5 members as of March 31, 2021, making up 5.6 percent of PFRS membership.

About Special Plans

Under a regular plan, you need to reach certain age and service requirements to receive your NYSLRS pension. If you’re covered by a special plan, there is no age requirement, and you can receive your pension after completing 20 or 25 years of service.

Nearly 80 percent of PFRS members are in plans covered under Sections 384, 384-d, 384-e or 384-f of the Retirement and Social Security Law. Read our Police and Fire Retirement System blog post for information about different PFRS plans.

Check out the graphic below for the basic retirement information for PFRS Tier 5.

PFRS Tier 5

If you’re a PFRS Tier 5 member, you can find detailed information about your benefits in the retirement plan booklets listed below:

For special plans under miscellaneous titles, please visit our Publications page.

Check out other posts in the PFRS series:

A Short To-Do List for After You Retire

There are a few things you should do regarding your NYSLRS benefits after you retire. This way, wherever your retirement takes you, we can continue to provide you with the benefits and services available to our retirees.

A Short To-Do List for After You Retire

Sign Up for Retirement Online

If you don’t already have a Retirement Online account, this is a great time to sign up. Retirement Online provides a secure and convenient way to check important NYSLRS information, like the deductions from your latest payment and a summary of your benefits. You can also view or update beneficiary information and generate pension income verification letters right from your computer. We’ll be adding additional online features for retirees in the near future, so stay tuned.

Have New Contact Information? Let Us Know

If you move after you retire, let NYSLRS know your new address so you can be sure to get important communications about your benefits.

The Post Office usually won’t forward pension checks to another address. If you haven’t already, you can sign up for our direct deposit program. It’s the safe, hassle-free way to receive your monthly benefit. But there are other things you’ll want to receive from us after you retire, such as:

  • Your 1099-R form. Your pension isn’t taxed by New York State, but it is subject to federal income tax.
  • Your Retiree Annual Statement. It’s a helpful reference that spells out the benefits, credits and deductions you receive each year.
  • Any official notifications such as a net change in your benefits.
  • Your Retiree Notes newsletter.

There are several ways to update your address. The fastest way is through Retirement Online. Or, you can complete our secure contact form for street addresses within the United States. Be sure to fill out the entire contact form and provide both your old and new addresses.

You can also complete a Change of Address Form (RS5512) and mail it to:

NYSLRS
110 State Street
Albany, NY 12244-0001

You should also make sure we have your current email address. Having an email address on file means we can contact you quickly if we need to notify you about an update to your NYSLRS benefits. If you haven’t updated your email address with NYSLRS, update it in Retirement Online, send it to us using the secure email form or send it to us with your Change of Address Form (RS5512).

Keep Your Beneficiary Information Current

Reviewing your beneficiary designations periodically is important. By keeping them up to date, you ensure that any post-retirement death benefit will be distributed to your loved ones according to your wishes. You can use Retirement Online to change your death benefit beneficiaries at any time, or contact our Call Center and we will send you the necessary form.

Read Our Guide for Retirees

Check out our publication, Life Changes: A Guide for Retirees (VO1705), for information about other benefits you may be entitled to and the services we offer after you retire.

Know Your Benefits: Death Benefits

If you die while still on the job, 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 available benefits.)

Know your 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. The benefit is a lump sum payment usually equal to one year of your earnings per year of service, up to a maximum of three years, but the calculation of the death benefit can be different if you’re in a special retirement plan. Please visit our Death Benefits page to see which calculation applies to you. Generally, to qualify for the ordinary benefit, you must have at least one year of service credit and your death must occur while you are on the public payroll. Check your retirement plan booklet for other qualifying circumstances.

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. If paid to a surviving spouse or dependent parent, the benefit is a lifetime pension. For Employees’ Retirement System (ERS) Tier 4, 5 and 6 members, the benefit is 50 percent of your earnings from your last year of service. For a majority of other members, the benefit is 50 percent of your final average earnings (less any workers’ compensation benefit). There is no minimum service credit requirement to qualify for the accidental benefit.

Death benefits vary by tier and retirement plan, so check your retirement plan for specific benefit and eligibility information and contact us if you have questions.

Reporting a Death

NYSLRS cannot pay out any death benefits until after we are notified of a member’s death and have a certified copy of the member’s death certificate. That’s why it’s so important to talk with your family now about your benefits and how to report your death to NYSLRS. Survivors can report a member’s death using our online form.

Update Your Beneficiaries

In most cases (unless beneficiaries are determined by law, as in the case of accidental death benefits), your death benefit will be paid to the last beneficiaries you designated, so it’s important to be sure yours are up to date. Your beneficiaries are listed in your Retirement Online account and on your Member Annual Statement. You can update your beneficiary information using Retirement Online.

Retirement Planning: Questions to Ask Yourself

retirement planning - things to think aboutAfter months or years of retirement planning, you’re probably looking forward to the day when you apply for your NYSLRS pension. But before you retire, there are a few questions you should ask yourself. After all, by filing for retirement, you’re making critical decisions about your financial future. And once you’ve retired, some of those decisions will be irrevocable. Whether your planned retirement date is just around the corner or a few years off, asking these questions now could help you avoid costly mistakes.

Do I have all the service credit I think I have?

Under some retirement plans, service milestones (20 years, 30 years, reaching full retirement age) can have a big impact on the amount of your benefit. If you’re aiming for one of these milestones, but retire just short of reaching it, your pension will be less than you might be expecting. To make sure you have enough service credit on your planned retirement date, sign in to Retirement Online to check the most up-to-date estimate of your total service credit.

Do I have previous service credit I want to purchase?

You may be able to buy credit for previous public employment or military service, which in most cases would increase your pension.  

If you are planning to purchase service credit, including military service, you should do that as soon as possible, especially since you can’t purchase service credit after you retire. You can apply for additional credit in Retirement Online or by submitting a Request to Purchase Service Credit form (RS5042). You may also wish to read our publication Service Credit for Tier 2 Through 6.

Do I have a balance on a NYSLRS loan?

If you have an outstanding balance on a NYSLRS loan, you should pay it off before you retire. If you retire with an outstanding loan, your pension will be permanently reduced.

While Employees’ Retirement System members may repay their loan after retiring, they must pay back the full amount of the outstanding balance that was due at retirement in one lump-sum payment. Once the loan has been repaid, their pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to their date of retirement.

You can use your Retirement Online account to check your loan balance, make a lump-sum payment or increase your payment amount. For more information, visit our Loans page.

Retirement Planning Resources

The more you know about retirement and the retirement process, the better off you’ll be. Here are some resources that can help with your retirement planning:

How Full-Time and Part-Time Service Credit Works

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.

NYSLRS – One Tier at a Time: PFRS Tier 6

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). Your tier determines such things as your eligibility for benefits, the calculation of those benefits, death benefit coverage and whether you need to contribute toward your benefits.

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 PFRS Tier 6. Anyone who joined PFRS on or after April 1, 2012 is in Tier 6. Tier 6 members currently make up almost 40 percent of PFRS membership, totaling 13,956 members, making it the second largest tier in PFRS.

About Regular Plans and Special Plans

Under a regular plan, you need to reach certain age and service requirements to receive your NYSLRS pension. If you’re covered by a special plan, there is no age requirement, and you can receive your pension after completing 20 or 25 years of service.

Nearly 80 percent of PFRS members are in plans covered under Sections 384, 384-d, 384-e or 384-f of the Retirement and Social Security Law. Read our Police and Fire Retirement System blog post for information about different PFRS plans.

Check out the graphic below for the basic retirement information for PFRS Tier 6 members.

PFRS Tier 6

Where to Find PFRS Tier 6 Information

If you’re a PFRS Tier 6 member, please find your retirement plan publication from the list below for more details about your benefits. If you’re not sure what retirement plan you’re in, you can find that information in the My Account Summary section of your Retirement Online account. You can also check your Member Annual Statement, ask your employer or email us using our secure contact form.

For special plans under miscellaneous titles, please visit our Publications page. Check out other posts in the PFRS series: