For information about how much your NYSLRS employees contribute (both mandatory and voluntary contributions), please see our Member Contributions page.
Required contributions are:
- All contributions made by Tier 1 and 2 members participating in a contributory plan;
- Contributions for military service credit, where applicable;
- Contributions mandated by the Coordinated-Escalator (CO-ESC) Retirement Plan for Tier 3 members (RSSL Article 14); the Coordinated Retirement Plan for Tier 4 and 5 members (RSSL Article 15); or Police and Fire Retirement Provisions for Tier 5 PFRS members (RSSL Article 22).
- Contributions mandated by the Coordinated Retirement Plan for Tier 6 members (RSSL Article 15, as modified by Chapter 18 of the Laws of 2012).
Federal Tax Treatment of Member Contributions
ERS Tiers 3 through 6
Member contributions are treated as employer contributions under Section 414(h) of the Internal Revenue Code (IRC). Federal income tax on these contributions is deferred until they are distributed.
These contributions are considered wages for Social Security purposes, are subject to New York State and local income tax and are credited to the member’s account, accruing interest.
You are required to report the total gross salary to NYSLRS.
Additional information and details that may affect your present or future payroll processing for Section 414(h):
- Participation is mandatory for all employers, for ERS members in Tiers 3 through 6, and is not available to all Tier 1 and 2 members.
- Contributions are not reportable as wages for federal income tax purposes.
- Contributions are reportable as wages for New York State and local income tax purposes and for Social Security purposes.
- Contributions are reportable as wages to NYSLRS.
- Contributions are calculated on the full gross salary.
- All ERS Tier 3, 4, 5 and 6 normal contributions deducted on or after July 1, 1989, are 414(h) contributions.
- Contribution records must be maintained by the participating employer.
If you have any questions about Section 414(h) contributions or reporting, email our Employer Reporting staff.
PFRS Tiers 3, 5 and 6 (Article 14, 15 and 22 Benefits)
On or after October 1, 2013, in accordance with IRC Section 414(h), the 3 percent contributions (for Tier 3 and 5 members) and appropriate mandatory contributions for Tier 6 members are to be deducted before taxes. For federal income tax purposes, these contributions will be treated the same as those made by ERS Tier 3, 4, 5 and 6 members. Prior to October 1, 2013, mandatory contributions for these PFRS members were deducted after taxes. IRC Section 414(h) does not apply to PFRS contributions made prior to October 1, 2013, and is not retroactive.
Members who joined on or after April 1, 1996: Internal Revenue Code Section 401(a)(17) limits the amount of earnings that qualified pension plans, including NYSLRS, may use in calculating benefits. Do not take contributions from earnings that exceed the limit. This excludes earnings over:
- $285,000 from April 1, 2020 – March 31, 2021;
- $290,000 from April 1, 2021 – March 31, 2022; and
- $305,000 from April 1, 2022 – March 31, 2023.
The amount is set by federal law and is periodically adjusted for inflation.
Tiers 3 and 4 Members: The 3 percent salary contributions for Tier 3 and 4 members stopped when they reached ten years of membership or ten years of service credit, whichever occurred first. (Note: Tier 5 began in January 2010, so Tier 3 and 4 members are now past their cessation dates.)
Tier 6 Members: Do not take contributions from earnings that exceed the Governor’s salary (see earnings limitations).