A member is not prohibited from taking a loan from NYSLRS, unless the DRO on file specifically prohibits loans. If the member has an outstanding loan balance at retirement, the pension will be reduced for each loan, taking into consideration the member’s age at retirement and whether they retired under a service or disability benefit. Please see the Tiers 3, 4, 5 & 6 Loan Application (RS5025-A) for approximate annual reductions. Unless the DRO provides the ex-spouse with a share of the pension calculated without reference to any outstanding loans, the ex-spouse’s share will also be reduced. NYSLRS cannot apply a hypothetical loan reduction based on loans existing at the time of commencement of the divorce action, or any other date before retirement.
NYSLRS may not be able to provide an ex-spouse with their full equitable share of the pension if the reduction for a member’s outstanding loan at retirement is exceptionally large. Under these circumstances, a previously accepted DRO may be rejected at retirement due to insufficient funds for the ex-spouse.