2023 New York Laws › RSS - Retirement and Social Security › Article 15 - Coordinated Retirement Plan › 613-B - Loans to Members of Certain Retirement Systems.

§  613-b.  Loans  to members of certain retirement systems. a. For the
  purposes of this section, the term "retirement board" or  "board"  shall
  mean  the  head  of the retirement system as defined in subdivision f of
  section six hundred one of this article.
b. 1. A member of the New York state and local  employees'  retirement
  system,  the  New York city employees' retirement system or the New York
  city board of education 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 (including interest credited at the rate set forth
  in subdivision  c  of  such  section  six  hundred  thirteen  compounded
  annually) and not less than one thousand dollars.
2.  A  member  of  the  New York state and local employees' retirement
  system who first joins such  system  on  or  after  January  first,  two
  thousand eighteen 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 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 such section six hundred  thirteen  compounded
  annually); or (ii) fifty thousand dollars, whichever is less.
c. 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 (a) two percent of
  the member's contract salary, and (b) 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 d 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.
d. The rate of interest payable  upon  loans  made  pursuant  to  this
  section  shall:  (1)  for  members  of  the  New  York  state  and local
  employees' retirement syatem, be one percent  less  than  the  valuation
  rate of interest adopted 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; (2) for members of the New  York  city
  employees'  retirement  system,  be  one  percent  less than the regular
  interest  rate  established  pursuant  to  subdivision  (c)  of  section
  13-101.12  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;
  and (3) for members of the New York city board of  education  retirement
  system,  be  one percent less than the regular interest rate established
  pursuant to subparagraph four of paragraph (b) of subdivision sixteen of

  section twenty-five hundred seventy-five of the education law  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
  or loans made or renegotiated after the  date  of  such  change  in  the
  interest rate.
e.  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.
f.  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, or such other date
  fixed by the retirement board as is appropriate, 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,  or  such  other
  appropriate date, 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.
g. Such a retirement board is authorized  to  establish  such  special
  funds  as may be necessary to carry out the provisions of subdivisions e
  and f of this section.
h. 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 d 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.
i.  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.  A  retiree  of  the New York city
  employees' retirement system, board of education  retirement  system  of
  the  city  of  New  York,  or  the  New  York state and local employees'
  retirement system whose benefit  has  been  so  reduced  may  repay  the
  outstanding  balance of the loan at any time. Benefits payable after the
  repayment of the loan shall not be subject to  the  actuarial  reduction
  required by this subdivision.
j.  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.
k. Such a retirement board shall discharge any evidence of a loan to a
  member  pursuant to this section upon the satisfaction of the obligation
  of the member thereunder.
l. The retirement board 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.