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.)

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:

• Sign in to Retirement Online.
• Look under My Account Summary.
• Click Apply for a Loan button.

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:

• Sign in to Retirement Online.
• Look under My Cases.

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.

• Sign in to Retirement Online.
• Look under My Account Summary.
• Click Manage My Loans button.

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.