Special 20- and 25-Year Plans

For PFRS Tier 2, 3 (Article 11), 5 and 6 Members, (Sections 384, 384-d and 384-e)

Borrowing Against Your Contributions

Special 20- and 25-Year Plans
For PFRS Tier 2, 3 (Article 11), 5 and 6 Members
(Sections 384, 384-d and 384-e)

If you meet eligibility requirements, you may take a loan from NYSLRS.

Tier 2 and 3 (Article 11) Members

The following rules apply when borrowing against your contributions:

  • You must be in active service and have at least one year of member service credit.
  • You must repay each outstanding loan in an amount sufficient to repay the loan and interest within five years. Loans are repaid through payroll deductions.
  • You may borrow only once in any 90-day period.
  • Prior to retirement, and 30 days after issuance, loans are fully insured in case you die before repaying them.

How Much You Can Borrow

The minimum loan is $25.

The maximum loan is 75 percent of your annuity savings contribution balance, minus any outstanding loan balance, so you must have an annuity savings balance of at least $33.35. Annuity savings contributions are those you make voluntarily.

Tier 5 and 6 Members

The following rules apply when borrowing against your contributions:

  • You must be in active service and have at least one year of member service credit.
  • You must repay each outstanding loan in an amount sufficient to repay the loan, interest and insurance premium within five years. The minimum deduction to repay your outstanding loan balances must be at least 2 percent of your earnings. Loans are repaid through payroll deductions.
  • You may borrow only once in any 12-month period.
  • There is a service charge of $45, which will be deducted from your loan when it is issued.
  • Prior to retirement, and 30 days after issuance, loans are fully insured in case you die before repaying them.

How Much You Can Borrow

The minimum is $1,000.

If you joined NYSLRS before January 1, 2018, the maximum loan is 75 percent of your contribution balance, minus any outstanding loan balance, so you must have an account balance of at least $1,334.

If you joined on or after January 1, 2018, the total maximum loan (including all of your outstanding loan balances) is either 50 percent of your contribution balance or $50,000 (whichever is less), so you must have an account balance of at least $2,000.

All Tiers — Your Loan May Be Federally Taxable

Before you apply, you should be aware of the federal tax laws pertaining to NYSLRS loans. Your loan will be taxable if:

  • The loan amount exceeds federal limits (federal tax information is available on the loan application).
  • You have a loan with a deferred compensation (457) or tax-sheltered annuity (403-b) plan through your current employer that causes your loans in total to exceed the federal limits for nontaxable loans. Exceeding these limits could result in significant tax consequences for you.
  • You do not make the required payments on your loan at least once every three months or do not complete payment within five years from the date the loan was issued.
  • You retire or withdraw from NYSLRS and have one or more outstanding loan balances.

If your loan is taxable, or becomes taxable as described above, you must include it on your federal income tax return for the year the loan is granted or becomes taxable. If you are under age 59½ at the time, you may be required to pay a 10 percent penalty tax in addition to any ordinary federal income tax you owe. Please consider consulting a tax advisor before applying for a taxable loan from NYSLRS.

To Apply

Online: Retirement Online is the fastest, most convenient way to apply for a loan. You can see how much you are eligible to borrow, what the repayment amount would be, if your loan will be taxable and more. Sign in to your Retirement Online account, then look under “My Account Summary” to see the available self-service loan features.

By Mail: Print a loan application from our Forms page and mail your completed and notarized application to NYSLRS. Applying by mail adds processing time to your loan, as compared to applying online.

If you already have an outstanding loan with NYSLRS and want to take another loan:  Sign in to your Retirement Online account to see if your loan will be taxable and to help you determine if refinancing your current loan or carrying multiple loans would be better for you.

With multiple loans, each loan has a separate five-year due date and minimum payment. These minimum payments are added together for a total minimum payment. This combined repayment amount for multiple loans is higher than the single amount for a refinanced loan, but with multiple loans, as each loan is paid off, the total minimum payment goes down.

With a refinanced loan, you add the new loan amount to your existing balance and refinance the entire amount as one new loan. The minimum repayment amount for a refinanced loan is lower because repayment of the total amount is spread out over another five years. The taxable amount of a refinanced loan is always higher (unless the entire loan is nontaxable), so federal withholding can significantly reduce the loan amount payable to you.

For more information about NYSLRS loans and the application process, please visit our Loans page.