Retirement Online is the fastest and easiest way to apply for a loan with NYSLRS. You can see how much you are eligible to borrow, what the repayment amount would be and if your loan will be taxable. You can also find your current loan balance on any existing loans and manage your loan payments. Sign in to your Retirement Online account, then look under ‘My Account Summary’ to see the available self-service loan features.
Read the loan requirements below carefully before you apply. You may want to consult a tax advisor or accountant before applying for a loan from NYSLRS.
Before You Borrow
Loan Eligibility Requirements
You may borrow against your retirement contributions if you:
- Are a member of the Employees’ Retirement System (ERS) or the Police and Fire Retirement System (PFRS);
- Have the required minimum amount of contributions in your account (see chart below);
- Have at least one year of service credit; and
- Actively work for New York State or a participating employer (if you are on leave without pay, you are not actively employed).
For loan eligibility or application status questions, you can:
- Sign in to your Retirement Online account. Once you are eligible for a NYSLRS loan, you can find out your specific borrowing limit and other important loan information through Retirement Online.
- Email us using our secure contact form.
- Call our automated phone service at 866-805-0990 (press 2 for members, then follow the prompts).
| How much you can borrow | The minimum loan is $1,000. If you joined NYSLRS before January 1, 2018: You may borrow up to 75 percent of your contribution balance or $50,000, whichever is less. However, your loan may be taxable if it is for more than 50 percent of your contribution balance. You must have an account balance of at least $1,334 to borrow $1,000. If you joined NYSLRS on or after January 1, 2018: You may borrow up to 50 percent of your contribution balance or $50,000, whichever is less. You must have an account balance of at least $2,000 to borrow $1,000. |
|---|---|
| Repayment period | Within five years |
| Service charge per loan | $45 |
| Current interest rate | 5 percent |
| Minimum payroll deduction | At least 2 percent of your salary before taxes or deductions and an amount sufficient to repay the loan in full within five years from the date it was issued. |
| Frequency of loan applications | You can only take a loan once every 12 months. Paper applications submitted sooner than two weeks before you are eligible will be rejected. |
| Insurance | After 30 days, your loan is insured in case you die before retiring. We include premiums for this coverage in your payments. |
| How much you can borrow | The minimum loan is $25. You can borrow up to 75 percent of your contribution balance, or $50,000, whichever is less. However, your loan may be taxable if it is for more than 50 percent of your contribution balance. |
|---|---|
| Repayment period | Within five years |
| Service charge per loan | None |
| Current interest rate | 5 percent |
| Minimum payroll deduction | $3 if paid weekly, $5 if paid biweekly or semimonthly, $10 if paid monthly. |
| Frequency of loan applications | 90 days |
| Insurance | After 30 days, your loan is insured in case you die before retiring. We deduct premiums for this coverage annually from your retirement contributions. |
Applying for a NYSLRS Loan
Retirement Online is the fastest, most convenient way to receive a loan from NYSLRS. To apply:
- Sign in to your Retirement Online account.
- Scroll down to ‘My Account Summary.’
- Click the green “Apply for a Loan” button.
Note: You can print, complete and mail in a paper loan application, but it must be notarized and paper applications take longer to process.
Loan checks are mailed out from NYSLRS once a week. To check the status of your loan application:
- Sign in to your Retirement Online account.
- Scroll down to ‘My Cases.’
- If your case status says “Closed” before close of business on Wednesday, your check will be in the mail that Friday.
You will also receive a confirmation letter when your loan case has been completed. You can find it in your Retirement Online account under “View Documents.”
Multiple Loans vs. Refinanced Loans
If you are applying for a loan and you already have an existing loan (or loans), you'll choose one of two options:
- Multiple loans: With multiple loans, you are taking a new loan, and each of your outstanding loans has a separate five-year due date and minimum payment. The minimum payments for each of your loans are added together for one total minimum payment. This combined minimum payment amount is higher than the minimum would be if you choose a refinanced loan, but with multiple loans, as each loan is paid off, your total minimum payment goes down.
- Refinance your existing loan: Refinancing your loan adds your new loan amount to your existing balance and consolidates the entire amount as one loan instead of taking separate loans. Minimum payment amounts for refinanced loans are lower than the minimum for multiple loans because when you refinance, we combine your existing loan balance with your new loan and spread out the repayment over a new five-year term. However, this increases the portion of your loan that may be considered a taxable distribution, and federal withholding can significantly reduce the loan amount that you receive.
A NYSLRS Loan May Have Federal Tax Consequences
The Internal Revenue Service (IRS) may consider all or part of a NYSLRS loan taxable as a “deemed distribution from a qualified plan.” In other words, you may have to claim all or part of your loan as taxable income when you file your taxes the next year. Also, if you take a taxable loan before you turn 59½, the IRS will charge an additional 10 percent tax penalty, unless an exception applies.
When you apply using Retirement Online, you will see the dollar amount that will be considered a taxable distribution, if any, before you submit your application.
If you take a taxable loan, NYSLRS will mail you a 1099-R tax form to file with your federal income tax return for the year you took the taxable loan.*
NYSLRS loans are exempt from New York State and local taxes.
Report Existing Loans from Other Retirement Plans
When applying for a NYSLRS loan, you must report any existing loans you have with a deferred compensation plan or tax-sheltered annuity through your employer. The IRS requires us to include the balances from these loans when determining the taxable amount, if any, of a NYSLRS loan. Whether you apply using Retirement Online or by mail, you must complete this section of the application or we will reject it.
Tax Withholding and Citizenship
If you take a taxable loan, the IRS requires NYSLRS to withhold a percentage of your taxable amount from your loan (if you are a U.S. citizen or resident alien living in the United States, you can elect not to have taxes withheld when you apply).
The amount of federal taxes we’ll withhold depends on your citizenship status, so the loan application asks if you are a U.S. citizen, resident alien or non-resident alien.
| U.S. citizens and resident aliens: | Non-resident aliens: | |
|---|---|---|
Percent NYSLRS will withhold if you take a taxable loan:
| If you have a U.S. address — optional 10 percent or zero. If you have a non-U.S. address — mandatory 10 percent. | 30 percent unless there is a tax treaty between the U.S. and your home country which provides an exemption or reduced rate.
|
The amount that NYSLRS withholds for federal income tax is the minimum that the IRS requires us to withhold. It may not be the total tax that you will owe the IRS for taking a taxable loan. Please refer to IRS Publication 505, Tax Withholding and Estimated Tax, or contact your tax advisor for additional information. All non-resident aliens must also complete a W-8BEN form. If we don't receive a completed form, your application will be rejected.
Repaying Your Loan
Once you submit a loan application and we issue a check, you cannot return an uncashed check and the loan fee is nonrefundable.
Members must repay loans through payroll deductions. When you apply, you choose a payment amount and we instruct your employer to deduct that amount from your earnings.
You are responsible for the repayment of your loan. If your employer does not take payments, or does not send them to us on time, NYSLRS will send you a letter notifying you that if payment is not received, you will be at risk of defaulting on your loan. If you receive one of these letters, you must make a payment in order to avoid defaulting. The minimum amount and due date will be in the letter.
If you choose to repay the minimum amount, your payroll deduction may be increased periodically to ensure your loan will be repaid within the required five-year repayment term. Your payment can increase if several pay periods elapse between the date your loan is issued and when your payroll deductions begin (or if your employer does not send your payments to us on time). Generally, your payment increase will be small, but if you miss a number of loan payments (for example, if you go on leave without pay and you don’t make up the missed payments), your increase could be more significant.
Change Your Payroll Deductions or Make Lump Sum Payments
You can increase your payroll deduction amount, make additional payments or pay your loan in full at any time with no prepayment penalties.
Retirement Online is the easiest way to manage your loan payments. Sign in to your account and select “Manage my Loans.” Then, you can:
- Check your payoff balance;
- Make a one-time payment;
- Review your payment history;
- Change your payment amount; or
- Use a calculator to estimate a payment amount based on a payoff date or estimate a payoff date based on a payment amount.
You can check your loan balance by calling our automated phone service at 866-805-0990 (press 2 for members, then follow the prompts).
You can also increase your payroll deduction amount or make additional payments by mail.
To change your payroll deduction amount, you can complete and submit a Loan Payment Change form (RS5521). Or you can mail a letter with your name, NYSLRS ID (or last four digits of your Social Security number), current payment amount, new payment amount and your signature to the address below, to the attention of the Loans Unit.
To make extra payments, you can mail a check or money order payable to the New York State and Local Retirement System, with “loan payment” and your NYSLRS ID (or last four digits of your Social Security number) written on the payment. Mail it to the address below, to the attention of Accounts Receivable.
NYSLRS
110 State Street
Albany, NY 12244
Paying Off Your NYSLRS Loan
NYSLRS will tell your employer when to stop payroll deductions. Generally, if you repay your loan through regular payroll deductions, your employer will be notified before your loan is paid off. If you pay off your loan in a lump-sum payment, either through Retirement Online or by check or money order, be aware that it can take several pay periods for your employer to stop payroll deductions. Retirement Online is the fastest and easiest way to check your loan payoff amount and pay off your loan.
If you have only one outstanding NYSLRS loan and you overpay on that loan, you will be refunded the amount overpaid. Generally, the refund will come from your employer, either as a separate check or as part of your regular paycheck. If you have multiple loans and you overpay on some but not all of the loans, we will apply the amount overpaid to the balance of your remaining outstanding loans.
Retiring With an Outstanding Loan
If you retire with an outstanding loan, your pension will be reduced. The pension reduction amounts are provided when you apply using Retirement Online, and they are listed on the loan applications on our Forms page.
In most cases, you will also need to report at least some portion of the loan balance as ordinary income (subject to federal income tax) to the Internal Revenue Service (IRS). If you retire before age 59½, the IRS will charge an additional 10 percent penalty, unless an exception applies. You will receive a 1099-R to file with your taxes.* You must include the loan on your federal income tax return for the year the tax form is issued.
If you are nearing retirement, be sure to check your loan balance. If you are not on track to repay your loan before you retire, you can increase your loan payments, make additional lump sum payments or both (see Change Your Payroll Deductions or Make Lump Sum Payments.)
ERS members can repay their loan after retiring. If you choose to pay back your loan after you retire, you must pay back the full amount of the outstanding balance that was due when you retired in one lump-sum payment. Following your full repayment, your pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to your date of retirement. For details, including tax information, visit Repaying Your NYSLRS Loan after Retirement.
What Happens If You Go Off Payroll?
Loan payments are made by payroll deductions, so if you go off payroll (for example, a furlough, leave of absence or termination), to avoid your loan going into default, you must make minimum payments at least quarterly and repay the loan within five years. Contact us as soon as you leave public employment so we can tell you the exact amount you need to pay. If you are in danger of defaulting on your loan, we will notify you so be sure to keep your contact information up to date. Retirement Online is the easiest way to make loan payments if you are off payroll (see Make Lump Sum Payments information above) and update your contact information.
If you are on an authorized leave of absence with your employer, the IRS allows for the suspension of loan payments for up to one year from the date your leave began or until you return to payroll, whichever occurs first. In order to receive this deferment, you must have your employer send a fax to us (518-486-9877), on their letterhead, indicating the date your leave began and when they expect it to end.
Please be aware, if you defer your loan payments while on an authorized leave of absence, your minimum payment will be recalculated to ensure your loan is paid off within five years. Your payment will likely increase when the period of deferment ends.
What Happens If You Default On Your Loan?
You must make payments at least quarterly and pay your loan back within five years. Your loan will default if either condition is not met.
If you default on your loan:
- We’re required by law to report your outstanding loan balance to the IRS as a taxable distribution to you.
- You will receive a 1099-R to file with your taxes.* You must include the loan on your federal income tax return for the year the loan defaults.
- If you are younger than 59½ in the year the loan defaults, the IRS will charge an additional 10 percent penalty on the taxable portion of the loan, unless an exception applies.
- You still owe NYSLRS the amount of the outstanding loan. The outstanding loan balance will continue to accrue both interest and insurance charges until it is paid in full or you retire or withdraw your NYSLRS membership, whichever occurs first.
- We can’t issue a new loan until you repay the defaulted loan.
- Defaulted loans do not appear on your credit history.
Loan Payment Deferment for Active Military Personnel
If you’re on active military duty, you may be able to defer your payments.
What you should know:
- You must resume payments after your active duty ends.
- Interest continues to accrue on your loan balance while you’re on active duty. The interest rate is 6 percent for Tier 3, 4, 5 or 6 members whose loans were approved prior to active military service.
- We extend the five-year repayment period by the length of time you are on active duty.
To apply for a deferment, email your request using our secure contact form and attach a copy of your orders. You can also fax your request to 518-486-9877 or mail your request to:
NYSLRS
Loan Unit
110 State Street
Albany, NY 12244
When you return from active duty, please send us a copy of your release papers or DD-214.
*Most members who take a taxable loan, retire with a taxable loan or default on their loan will receive a 1099-R form to file with your federal taxes. Some members will receive a 1042-S form instead.
Rev. 12/23