NY Ret & SS L § 517-B (2021)
2021 New York Laws RSS - Retirement and Social Security Article 14 - Coordinated-Escalator Retirement Plan 517-B - Loans to Members of a Teachers' Retirement System.

§  517-b.  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 five hundred   seventeen of this article (including interest credited at the  rate  set   forth  in  subdivision  c  of  section five hundred seventeen 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 five hundred seventeen 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 five   hundred seventeen 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 five  hundred  seventeen  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  five  hundred  seventeen  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 five hundred seventeen of this article.h. Notwithstanding the provisions of section five hundred  sixteen  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 five hundred fourteen 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.