NY Ret & SS L § 613-A (2021)
2021 New York Laws RSS - Retirement and Social Security Article 15 - Coordinated Retirement Plan 613-A - Loans to Members of a Teachers' Retirement System.

§  613-a.  Loans to members of a teachers' retirement system.  a. 1. A   member of a teachers' retirement system in active service who has credit   for at least one year of member service may borrow, no  more  than  once   during  each  twelve-month  period, an amount not exceeding seventy-five   percent of the total contributions made pursuant to section six  hundred   thirteen  of  this  article (including interest credited at the rate set   forth in subdivision  c  of  section  six  hundred  thirteen  compounded   annually) and not less than one thousand dollars.2.  A  member  of  the  New York state teachers' retirement system who   first joins such system on or after July first, two thousand  twenty-two   in  active  service  and  who has credit for at least one year of member   service may borrow, no more than once during each  twelve-month  period,   an  amount, not less than one thousand dollars and which would not cause   the balance  owed  pursuant  to  this  section,  including  any  amounts   borrowed  then  outstanding, to exceed (i) fifty percent of the member's   total contributions made pursuant to section  six  hundred  thirteen  of   this  article  (including  interest  credited  at  the rate set forth in   subdivision c of  this  section  compounded  annually);  or  (ii)  fifty   thousand dollars, whichever is less.b. An amount so borrowed, together with interest on any unpaid balance   thereof,  shall  be  repaid in equal installments which shall be made by   the borrower directly to the retirement board or through regular payroll   deduction. Such installments shall be in such amount as  the  retirement   board  shall approve; however, they shall be at least (i) two percent of   the member's contract salary, and (ii) sufficient to  repay  the  amount   borrowed,  together  with  interest  on unpaid balances thereof within a   period not in excess of  five  years.  In  the  event  of  default  such   retirement  board  shall be authorized to collect such payments due from   the employer of such member through payroll deduction  and  such  member   shall  forfeit  all  future  entitlement  to  borrow from the retirement   system until the unpaid balance of the loan outstanding at the  time  of   default  is  fully  paid. Such retirement board, at any time, may accept   payments on account of any loan in addition to  the  installments  fixed   for  repayment  thereof.  All payments of principal and interest, at the   lower of the rates set forth in either  subdivision  c  of  section  six   hundred  thirteen of this article or subdivision c of this section, made   by the member shall be credited to his or her account  as  principal  or   interest.  Any  additional interest paid by the member shall be credited   to the appropriate fund of the retirement system.c. The rate of interest payable  upon  loans  made  pursuant  to  this   section  shall:  (i)  for  members  of  the  New  York  state  teachers'   retirement system, be one percent less than regular interest pursuant to   paragraph (b) of subdivision nine of section five  hundred  one  of  the   education  law, however in no event shall the rate be less than the rate   set forth in subdivision c of  section  six  hundred  thirteen  of  this   article;  (ii)  for  members  of  the New York city teachers' retirement   system, be one percent less than the regular interest  rate  established   pursuant to paragraph (d) of subdivision twenty-two of section 13-501 of   the administrative code of the city of New York for such system, however   in  no  event  shall  the  rate  be  less  than  the  rate  set forth in   subdivision c of section six hundred thirteen of this article.  Whenever   there  is  a change in the interest rate it shall be applicable to loans   made or renegotiated after the date of such change in the interest rate.d. A service charge payable upon loans made pursuant to  this  section   shall  be  set  by the retirement board in an amount sufficient to cover   the cost to the retirement  system  of  administering  the  loans.  Such   charge  shall  be paid to the retirement system when the loan is made or   in equal installments over the  period  the  loan  is  outstanding.  The    amount  of  the  service charge shall be credited to the fund from which   administrative expenses are paid.e.  Each  loan  made pursuant to this section shall be insured against   the death of the member in an amount equal to the  amount  of  the  loan   outstanding at any given time; with the exception that until thirty days   have  elapsed  after  the  making thereof, no part of the loans shall be   insured. Such insurance  shall  be  provided  by  the  retirement  board   through  the retirement system. Upon the death of the member, the amount   of insurance so payable shall be credited to his  or  her  account.  The   premium  payable  by  the  member for such insurance shall be set by the   retirement board at a rate not to  exceed  one  percent  of  the  amount   loaned.Such premium shall be prorated to July first next and shall be paid to   the retirement system in equal installments over the period of the loan.   Thereafter, a premium not to exceed one percent per annum of the present   value of the outstanding loan as of July first shall be paid in the same   manner  each  succeeding year until such loan is repaid or the member is   retired.The retirement board shall, at least  annually,  review  such  premium   rate, and may, in its discretion, increase or reduce the premium, modify   the  terms  or  conditions  of coverage, or discontinue the insurance of   loans.  In no event shall this subdivision impose  any  obligation  upon   the  retirement  board  to  continue to insure loans of members upon the   terms and  conditions  herein  provided  or  upon  any  other  terms  or   conditions.f. Such a retirement board is authorized to establish special funds as   may  be necessary to carry out the provisions of subdivisions d and e of   this section.g. Whenever a member of such a retirement system, for whom a  loan  is   outstanding,  becomes entitled to the return of his or her contributions   because of withdrawal from such system or because of death,  the  amount   of  any  loan  outstanding  on  such  date including accrued interest as   provided in subdivision c of this section shall be construed to  already   have  been  returned  to  such member and the refund of contributions to   which he shall then  be  entitled  shall  be  the  net  amount  of  such   contributions  together  with interest thereon pursuant to subdivision c   of section six hundred thirteen of this article.h. Notwithstanding the provisions of  subdivision  b  of  section  six   hundred  twelve  of this article, whenever a member of such a retirement   system,  for  whom  a  loan  is  outstanding,  retires,  the  retirement   allowance  payable  without  optional modification shall be reduced by a   life annuity which is  actuarially  equivalent  to  the  amount  of  the   outstanding  loan  (all  outstanding  loans  shall  continue  to  accrue   interest charges until retirement), such life annuity  being  calculated   utilizing  the interest rate on thirty-year United States treasury bonds   as of January first of the  calendar  year  of  the  effective  date  of   retirement  and the mortality tables for options available under section   six hundred ten of this article. Notwithstanding the preceding sentence,   in  the  case  of  the  New  York  state  teachers'  retirement  system,   commencing  January  first,  two thousand four, the interest rate on ten   year United States treasury obligations  as  of  January  first  of  the   calendar  year  of  the  effective  date  of  retirement  shall be used.   Notwithstanding the preceding sentence, in the  case  of  the  New  York   state   teachers'  retirement  system,  commencing  January  first,  two   thousand sixteen, the average annual interest rate on  ten  year  United   States  treasury  obligations for the days during the calendar year that   precedes the calendar year in which  the  retirement  becomes  effective   shall be used. i.  Such  a  retirement  board  is  authorized to adopt such rules and   regulations as it finds to be necessary in administering the  provisions   of   this   section.  Anything  in  this  section  notwithstanding,  the   retirement board of the New York state teachers'  retirement  system  is   authorized  to adopt rules and regulations permitting a loan at any time   prior to retirement to a member who is not in active  service,  provided   such  loan  would  otherwise  be  permitted under this section and under   applicable provisions of the Internal Revenue  Code  relating  to  loans   from pension plans.j.  Such  a retirement board shall discharge any evidence of a loan to   member pursuant  to  this  subdivision  upon  the  satisfaction  of  the   obligation of the member thereunder.k.  The  retirement  system  shall  have no right to bring suit in any   court against any member to enforce the amount due  under  this  section   and  the  retirement  system's  sole  remedy  upon  death, retirement or   withdrawal shall be to offset the amount outstanding including  interest   from  the  member's account or other benefits payable to or on behalf of   the member as provided in this section.