2023 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.