Repaying Your NYSLRS Loan after Retirement

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Chapter 426 of the laws of 2018 allows Employees’ Retirement System (ERS) retirees who retired with an outstanding loan to repay that loan and increase their pension.

Retirees cannot take a new loan from NYSLRS. If you are not yet retired, visit our Loans — Member page for information about taking a NYSLRS loan.


How Much Do I Need to pay?

If you retired with an outstanding loan, your pension was reduced each month, but that monthly reduction does not go toward repaying your outstanding loan balance. In order to pay back your loans, you must pay the full balance of the loan that was due when you retired in a one-time, lump sum payment — you cannot make partial payments.


How Much Will My Pension Increase If I Repay the Loan?

When you retired, you received a letter from NYSLRS that provided your total outstanding loan balance. If you don’t have the letter, you can contact us to find out how much you would have to repay and how much your pension would increase.

The letter you received at retirement also showed the amount of the monthly reduction. (Contact us if you need that information.) Your monthly pension will be increased to the amount you would have received if you had not retired with an outstanding loan. The pension increase will not be retroactive to your retirement date; it will only apply to pension payments going forward after your loan is paid in full.

It may take some time to process your loan payment and adjust your pension amount. Once your pension amount is recalculated, your pension will be increased as of the first of the month after we received your loan payment.


How Will My Taxes Be Affected?

If you retired with an outstanding loan, it is likely that some or all of it was reported as taxable income to the Internal Revenue Service (IRS). Repaying your loan will not change the taxable income reported to the IRS for that loan.

However, the repaid loan amount increases your after-tax contributions (Investment in Contract). As a result, the taxable amount of your pension will be reduced in the years after the loan is repaid.


How Do I Pay Back the Loan?

If you decide to repay your loan, you can contact us to request a payoff letter and a payment form to send back with your payment. You can pay by check or money order, made out to the New York State and Local Retirement System. Please write your Retirement number, your NYSLRS ID or the last four digits of your Social Security number, along with the words “Loan Repayment,” on your check or money order. Mail it to:

NYSLRS
Accounts Receivable
110 State Street
Albany, NY 12244

 


(Rev. 10/19)

 

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