If you meet eligibility requirements, you may take a loan from NYSLRS.
Tier 1 and 2 Members
The following rules apply when borrowing against your contributions:
- You must be in active service and have one year of member service credit.
- You repay each outstanding loan through payroll deductions in an amount sufficient to repay the loan and interest within five years.
- You may borrow only once in any 90-day period.
- Prior to retirement, and 30 days after issuance, loans are fully insured in case you die before repaying them.
Note: If you retire with an outstanding loan, the annuity portion of your retirement benefit will be permanently reduced. You cannot pay off your loan once you retire. The amount of your annuity reduction will be based on your age, the loan balance at retirement and type of retirement (service or disability). The loan application provides examples of how much your reduction would be.
How Much You Can Borrow
The minimum loan is $25.
The maximum loan is 75 percent of your annuity savings contribution balance, minus any outstanding loan balance, so you must have an annuity savings balance of at least $33.35. Annuity savings contributions are those you make voluntarily.
Tier 5 and 6 Members
The following rules apply when borrowing against your contributions:
- You must be in active service and have one year of member service credit.
- You repay each outstanding loan through payroll deductions in an amount sufficient to repay the loan, interest and insurance premium within five years. The minimum deduction to repay your outstanding loan balances must be at least 2 percent of your earnings.
- You may borrow only once in any 12-month period.
- Prior to retirement, and 30 days after issuance, loans are fully insured in case you die before repaying them.
Note: If you retire with an outstanding loan, your retirement benefit will be permanently reduced. You cannot pay off your loan once you retire. The amount of your pension reduction will be based on your age, the loan balance at retirement, and type of retirement (service or disability).
How Much You Can Borrow
The minimum loan is $1,000.
If you joined NYSLRS before January 1, 2018, the maximum loan is 75 percent of your contribution balance, minus any outstanding loan balance, so you must have an account balance of at least $1,334.
If you joined on or after January 1, 2018, the total maximum loan (including all of your outstanding loan balances) is either 50 percent of your contribution balance or $50,000 (whichever is less), so you must have an account balance of at least $2,000.
Benefit Reduction Examples
Here are examples of how your service retirement benefit will be permanently reduced by an outstanding loan balance at retirement. The approximate reductions are for calendar year 2017. The amount of the reduction changes annually.
| At Age | Outstanding Loan Balance | Annual Pension Reduction |
|---|---|---|
| 45 | $5,000 | $219 |
| $10,000 | $439 | |
| 55 | $5,000 | $255 |
| $10,000 | $510 | |
| 65 | $5,000 | $319 |
| $10,000 | $637 |
All Tiers — Your Loan May Be Federally Taxable
Before you apply, you should be aware of the federal tax laws pertaining to NYSLRS loans. Your loan will be taxable if:
- The loan amount exceeds federal limits (federal tax information is available on the loan application).
- You have a loan with a deferred compensation (457) or tax-sheltered annuity (403-b) plan through your current employer that causes your loan to exceed the federal limits for nontaxable loans. Exceeding these limits could result in significant tax consequences for you.
- You do not make the required payments on your loan at least once every three months or do not complete payment within five years from the date the loan was issued.
- You retire or withdraw from NYSLRS and have one or more outstanding loan balances.
If your loan is taxable, or becomes taxable as described above, you must include it on your federal income tax return for the year the loan is granted or becomes taxable. If you are under age 59½ at the time, you may be required to pay a 10 percent penalty tax in addition to any ordinary federal income tax you owe. Please consider consulting a tax advisor before applying for a taxable loan from NYSLRS.
To Apply
Online: Sign in to Retirement Online, our self-service tool that gives you secure access to your retirement account information. It is the fastest, most convenient way to apply for a loan. You can also see how much you are eligible to borrow, what the repayment amount would be and if your loan will be taxable.
By Mail: Print a loan application from our Forms page and mail your completed application to NYSLRS. Applying by mail adds processing time to your loan.
If you already have an outstanding loan with NYSLRS and want to take another loan: Sign in to your Retirement Online account to see if your loan will be taxable and to help you determine if refinancing your current loan or carrying multiple loans would be better for you.
With multiple loans, each loan has a separate five-year due date and minimum payment. These minimum payments are added together for a total minimum payment. This combined repayment amount for multiple loans is higher than the single amount for a refinanced loan, but with multiple loans, as each loan is paid off, the total minimum payment goes down.
With a refinanced loan, you add the new loan amount to your existing balance and refinance the entire amount as one new loan. The minimum repayment amount for a refinanced loan is lower because repayment of the total amount is spread out over another five years. The taxable amount of a refinanced loan is always higher (unless the entire loan is nontaxable), so federal withholding can significantly reduce the loan amount payable to you.
You can also contact our Call Center at 1-866-805-0990 (518-474-7736 in the Albany, NY area) and connect with our automated information line. Once you access the loan menu, you can receive specific information relating to your account for multiple and refinanced loans, or you can speak directly to a customer service representative.
Page updated 1/18