2023 New York Laws › EDN - Education › Title 1 - General Provisions › Article 11 - State Teachers' Retirement System for Public School Teachers › 512-B - Loans.

§ 512-b. Loans. 1. Any member in active service or on leave of absence
  who  has  credit for at least one year of member service may borrow from
  his accumulated contributions in the retirement system once during  each
  six  month  period  an  amount  of  not  less than three hundred dollars
  providing the retirement board shall approve such loan. The total of any
  such loans shall not exceed seventy-five per centum of  his  accumulated
  contributions.
2.  Repayment.  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, with
  the consent of the employer,  through  regular  payroll  deduction.  The
  state  comptroller  is  authorized  to  provide  through regular payroll
  deduction for such repayment of loans made by employees of the state  of
  New  York.  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 pay the interest on
  the unpaid balances thereof. In the event that a member is on  leave  of
  absence  without pay or is not regularly employed by an employer subject
  to the provisions of this article, any such outstanding  loan  shall  be
  repaid  in such installments of principal and interest as the retirement
  board shall determine. In the event  of  default  the  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.
  The 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  minimum  rate permitted
  pursuant to subdivision three of this section made by the  member  shall
  be  credited  to  his accumulated contributions. Any additional interest
  paid by the member shall be credited to the pension accumulation fund.
3. Interest. The rate of interest payable upon loans made pursuant  to
  this  section shall be set by the retirement board. The retirement board
  shall have power, from time to time and at any time,  to  decrease  such
  rate  to  not  less  than  that currently being credited on the member's
  accumulated contributions or to increase the same to not more  than  six
  per  centum  per  annum. Any such decrease or increase shall apply, from
  the effective date thereof, to unpaid balances of loans  outstanding  on
  such date and to new loans made thereafter.
4.  Service  Charge.  A uniform 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 deducted from the member's
  accumulated contributions when the loan  is  made  or  in  equal  annual
  installments over the period the loan is outstanding.
5. Insurance. 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   accumulated
  contributions.  The  premium  payable  by  the member for such insurance
  shall be set by the retirement board at a rate of not to exceed one  per
  centum of the amount loaned.
A  premium  of one per centum per annum of the amount loaned, prorated
  to July first next, shall be deducted from the accumulated contributions
  of the member when the loan is made. Thereafter, a premium  of  one  per

  centum per annum of the present value of the outstanding loan as of July
  first shall be deducted from the accumulated contributions of the member
  each succeeding year until such loan is repaid or the member is retired.
The  retirement board in its discretion on any July first may 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.
6. Special Funds. The retirement board is authorized to establish such
  funds as may be necessary to carry out the  provisions  of  subdivisions
  four and five of this section.
7.  Withdrawals  and  retirements when loan is outstanding. Whenever a
  member becomes entitled to the return of his  accumulated  contributions
  because  of  withdrawal  from  the  system  or  because of having become
  eligible for a death benefit or a retirement allowance or because of  an
  election   to   withdraw   his  accumulated  contributions  pursuant  to
  subdivision six of section five hundred  sixteen  of  this  article  the
  amount  of  any loan outstanding on such date shall be construed to have
  been already returned to such member and the  accumulated  contributions
  to  which  he  shall  then  be  entitled shall be the net amount of such
  contributions together with interest thereon standing to his  credit  in
  the annuity savings fund on such date.
8.  Rules and Regulations. The 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 is authorized to adopt  rules  and
  regulations  permitting  a  loan  at  any  time prior to retirement to a
  teacher who is not in active service or on leave  of  absence,  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.
9. The retirement board shall have the power to discharge any evidence
  of  a loan to a member pursuant to this section upon the satisfaction of
  the obligation of the member thereunder.