2023 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.