Tier 5 and the State Police Retirement Plan
Benefits of members in the State Police Retirement Plan (Section 381-b of the Retirement and Social Security Law) are not affected by Tier 5, except in the instances outlined below. Members in this plan who have 20 years of creditable service may still retire at any age with unreduced benefits. Disability and death benefits are also not changed by Tier 5.
There are five tiers in the Police and Fire Retirement System (PFRS). PFRS members in the State Police Retirement Plan who joined January 9, 2010 through March 31, 2012 are in Tier 5.
Tier 5 State Police members must contribute 3 percent of their earnings for all their years of public service. Effective October 1, 2013, these mandatory contributions are covered under Internal Revenue Code Section 414(h) and are reportable for federal income tax only when members withdraw or retire from the Retirement System. Therefore, the 3 percent contributions made by these members on or after October 1, 2013* are:
- Not reported as wages for federal income tax;
- Reported as wages for New York State and local income taxes;
- Reported as wages for Social Security;
- Reported as wages to the New York State and Local Retirement System, and used in the calculation of all benefits paid by the Retirement System; and
- Calculated on the member’s full gross reportable earnings, before any salary reductions for any other tax-deferred plan.
*IRC Section 414(h) does not apply to PFRS member contributions made prior to October 1, 2013 and is not retroactive.
Tier 5 State Police members must have ten years of service credit to be vested and eligible for retirement benefits.
Overtime pay in excess of 15 percent of a member’s regular annual wages is not included in the definition of wages. Employers should not report to the Retirement System any overtime pay in excess of this cap as it cannot be used in a member's final average salary calculation.