Effective October 1, 2000, until you either accrue ten years of service credit or have been a member of the Retirement System for ten years after your date of membership, you are required to contribute 3 percent of your gross earnings toward your retirement benefits. If you are employed by more than one participating employer, once you join the Retirement System, all salary and service earned in connection with all employment must be reported to this System, even if your membership is only mandatory with one.
Under Internal Revenue Code Section 414(h) (as of July 1, 1989), your required 3 percent contributions are tax-deferred until they are distributed to you. These contributions are reportable for federal income tax only when you withdraw or retire from the Retirement System. Therefore, your 3 percent contributions 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 Employees’ Retirement System, and used in the calculation of all benefits paid by the Retirement System; and
- Calculated on your full gross salary, before any salary reductions for any other tax-deferred plan.