340 Jay Street, Bklyn, NY
Mezzanine level
30-30 47th Avenue, 10th Fl.
Long Island City, NY 11101
Upload Documents at
www.mynycers.org
(347) 643-3000
M - F, 8am to 5pm
www.nycers.org
Forms, Brochures,
Fact Sheets at
Loans
March 2022
Tier 3, 4 and 6 Members
Loans Brochure #911 – Page 1
Tier Information
Employees who joined NYCERS between July 27, 1976 and
March 31, 2012 are members of Tier 4, except members of the
Uniformed Force of the NYC Department of Correction, who are
Tier 3 members; and Investigators employed in District Attorneys’
ofces, who are Tier 2 members.
Employees who join on or after April 1, 2012 are in a Tier 6 plan
or a Tier 3 22-Year plan. Tier 6 plan members may borrow against
their pension account, while Tier 3 22-Year plan members may not.
Access Your Loan Information on the Web!
The easiest way to access personalized information about a loan
is to create a MyNYCERS account at www.nycers.org. With a
registered MyNYCERS account, you can access your personal
account information in a safe and secure manner, le forms
online, and more. The Loan Information page in MyNYCERS will
display any outstanding loan balance, indicate your eligibility to
take a loan, and indicate how much you may borrow. In addition,
you can pay off an outstanding loan balance electronically with a
credit/debit card or E-check. Simply click “Make a Payment” in the
menu and follow the steps to process your electronic payment.
Eligibility
To qualify to take out a loan, you must:
• Complete one year of NYCERS membership, AND
• Have a minimum of $1,334 in your NYCERS retirement
account, AND
• Be in active payroll status, AND
• Not be in default on a current loan from NYCERS, AND
• Not be retired
The Amount You Can Borrow
The amount you can borrow is based on member contributions in
your account, including interest your contributions have earned,
minus any outstanding loan(s).
Tier 3 and Tier 4 members are required to contribute 3% of
total wages, including overtime, into their Member Contribution
Accumulation Fund (MCAF) until the anniversary date of their tenth
year of membership or the date they attain ten years of Credited
Service (whichever is earlier). These contributions are called
Basic Member Contributions (BMCs). Tier 6 plan members must
contribute BMCs of 3% - 6% of wages until they separate from
City service or until they retire. Please see your Plan brochure
for your contribution rates.
Members of some special retirement plans are also required
to make Additional Member Contributions (AMCs), which are
deposited into their Retirement Reserve Fund (RRF) account.
A loan cannot exceed 75% of the contributions, with interest,
last posted to your MCAF account. In addition, some members
are able to borrow 75% of all or part of the amount in their RRF
account. Neither of these types of loans reduces the actual amount
contained within these accounts.
You may not borrow less than $1,000, and you can obtain only
one loan in any 12-month period. This restriction is governed by
law and NYCERS is not permitted to make exceptions, even in
emergency situations.
How to File an Application and Receive
the Money
There are three ways to apply for a loan: online, by mail, or in
person.
Online:
Registered MyNYCERS accountholders can apply for a loan
online. You can explore different loan options before settling on
a loan amount and choosing which repayment option best ts
your needs. Members must sign a tax authorization letter before
a taxable loan can be processed, which can be completed using
an electronic signature at the end of the online application.
If you apply online, you may elect to receive the funds by check
(usually within 10 business days) or by Direct Deposit (also called
Electronic Fund Transfer, or EFT) to either a checking or savings
account within 3 business days. NYCERS strongly recommends
EFT because:
• It is SAFE - eliminates the risk of your loan check being lost
or stolen
• It is FAST - no waiting for the check to clear your bank – the
funds are immediately available
• It is EASY - no more trips to the bank – no more waiting in
line to deposit the check
NYCERS
340 Jay Street, Bklyn, NY
Mezzanine level
30-30 47th Avenue, 10th Fl.
Long Island City, NY 11101
Upload Documents at
www.mynycers.org
(347) 643-3000
M - F, 8am to 5pm
www.nycers.org
Forms, Brochures,
Fact Sheets at
March 2022
Loans – Tier 3, 4 and 6
If you currently use Direct Deposit with your employer and/
or NYCERS, that banking information will be displayed as an
option for depositing the loan funds. You can also have your loan
deposited into a new bank account. Your bank information will be
veried by GIACT, NYCERS’ third-party verication service. GIACT
cannot verify certain accounts, such as credit union accounts. If
you would like to have your check deposited into a credit union
account, please select Mail now and then submit paper Form
#310 with your direct deposit information.
By mail:
An original (i.e., not a copy or a fax) Loan Application Form #302
can be mailed to NYCERS at 30-30 47th Avenue, 10th Floor,
Long Island City, NY 11101. If you apply by mail and your loan is
taxable, a tax authorization letter will be mailed to you. You must
sign and return the tax authorization letter in order to receive the
funds. If you do not return the tax authorization letter within 30
days from the date on the letter, your Loan Application will be
canceled. If your Loan Application is canceled and you are out
of City service, you will not be eligible to apply for a new loan.
In person:
You may drop off your notarized Loan Application Form #302 in
person at the drop box located outside of NYCERS’ Ofces at
340 Jay Street, Brooklyn, NY 11201.
Repayment
The current interest rate on a Tier 3, 4 and 6 loan is 6.2% – 6%
basic interest rate plus 0.2% mandatory loan insurance premium.
All loans except non-performing loans are fully insured 30 days
after being issued. This means that if a member dies in active
service 30 days after the issuance of a new loan, the beneciary
would receive the full amount of any benet payable, not reduced
by any outstanding balance of the loan unless the loan is in default.
As long as you are in active payroll status, all loans must be
repaid through payroll deductions. The entire loan can also be
paid off in one lump sum, either by check or electronic payment
through your MyNYCERS account. Partial lump-sum payments
are acceptable by check or online, but the repayment amount
per paycheck doesn’t change; the loan is just repaid sooner. You
must pay at least 2% of your gross salary per pay period and the
payments must be sufcient to repay the amount borrowed, plus
interest, within ve years. See the Non-Payment Section of this
brochure for information on how to repay your loan if you leave
City service or go off payroll for any length of time.
If you want to pay more than the minimum amount, you may
choose on the loan application to deduct a specic dollar amount
per pay period or enter a denite number of pay periods in which
to repay your loan. Below are examples of repayment schedules
for bi-weekly payrolls only:
Deductions for repayment of your loan should begin in the rst or
second pay period after your loan application has been processed.
If loan payments are not deducted from your paycheck following
the second pay period after your loan has been processed, notify
NYCERS immediately. If you do not notify NYCERS, interest will
continue to accrue on your outstanding balance.
If you wish to change the amount of your repayment, you have
two options:
• Change of Repayment: You may change the amount of your
repayment only once in any 12-month period at a one-time
service fee of $40.00 (money order only). The fee increase
is effective July 1, 2020. To change the loan repayment, you
must submit NYCERS Change of Repayment Form #309,
available at www.nycers.org. Forms can also be requested
by phone by calling NYCERS’ Call Center at (347) 643-3000.
• Renegotiated Loan: When you are eligible for another loan,
you may change your loan repayment schedule by borrowing
additional amounts and changing the repayment schedule based
on the new consolidated loan. If you renegotiate a loan to be
repaid beyond its original 5-year repayment schedule, there
will be tax consequences. Please refer to the Taxes section
of this brochure for more information.
If you are called to Active Military Duty, the obligation to repay
your loan will be suspended and extended for the same amount of
time that you are on Military Duty (for up to the original ve-year
limitation specied by IRS regulations). However, interest continues
to accrue at 6% plus the 0.2% mandatory loan insurance premium.
Loan
Amount
Number of Payments
130
For 5 years
104
For 4 years
78
For 3 years
52
For 2 years
26
For 1 year
$40,000 $358 $435 $563 $819 N/A*
16,000 143 174 225 328 635
8,000 72 87 113 164 318
2,000 18 22 28 41 79
(When using this chart, please combine the new requested amount as
well as any outstanding loan you may have.)
*Payment plan cannot exceed $999.99 per paycheck.
Loans Brochure #911 – Page 2
340 Jay Street, Bklyn, NY
Mezzanine level
30-30 47th Avenue, 10th Fl.
Long Island City, NY 11101
Upload Documents at
www.mynycers.org
(347) 643-3000
M - F, 8am to 5pm
www.nycers.org
Forms, Brochures,
Fact Sheets at
March 2022
Loans – Tier 3, 4 and 6
Fees
• There is a $40.00 service fee for each loan, which is
automatically deducted from the loan check.
• There is a $40.00 service fee when ling Form #309 for a
Change of Repayment on or after July 1, 2020; this fee must
be paid by money order.
• Those who are no longer on payroll may switch to direct
payment; there is a $5.00 per-payment fee for each direct
payment.
• There is a $20.00 service fee for personal checks that are
returned uncollected.
Non-Payment
If you fail to make a payment on an outstanding loan for over 90 days
for any reason, the loan is in default - it is a Non-Performing Loan.
Once a loan goes into default status, possible penalties include:
• Your Non-Performing Loan becomes taxable. NYCERS will
report the taxable portion of the loan in default for Federal
income tax purposes as a taxable distribution. There is an
additional 10% tax penalty if you are under age 59½ and
have a Non-Performing Loan.
• You will be ineligible to take out another loan until you have
paid your outstanding loan balance in full.
• Your Non-Performing Loan will no longer be insured against
your death, and if a beneciary is due to receive a benet,
the amount of that benet will be reduced by the amount of
the outstanding loan.
If you are on an approved leave of absence and your loan is in
default, please submit a letter from your employer stating that you
were on an “approved leave of absence.” This letter will cover
your loan only for one year, after which you are responsible for
making monthly payments until you return to payroll. The letter
must include the exact start and end dates of your approved
leave of absence.
Taxes
Active Members – If subject to tax, a loan is counted as ordinary
income for Federal income tax purposes. In addition, if you are
under the age of 59½, you will incur a 10% early distribution
penalty tax assessed by the Internal Revenue Service.
Tiers 3, 4 and 6 loans are subject to taxation if the total outstanding
loan is both:
1. Greater than $10,000, AND
2. More than 50% of the member’s non-forfeitable
accrued vested benet.
When borrowing results in a consolidated loan amount greater
than $50,000, the amount greater than $50,000 is subject to
Federal income tax.
Under IRS regulations, effective January 1, 2004, newly
consolidated loans may be subject to taxation. As always, the
balance of an existing loan can be consolidated with a new loan,
creating a revised ve-year repayment schedule. After January
1, 2004, however, consolidated loans with a repayment schedule
beyond the original ve-year repayment date will most likely
create a signicant tax consequence. Please note that under
IRS regulations, a loan from NYCERS or a loan from your 457
or 403(b) Deferred Compensation Plan account are considered
to be loans from the “same employer” and are subject to all IRS
rules concerning loans.
If all or any part of your next pension loan is subject to Federal
taxes, NYCERS will offer you three loan processing methods
(Renance, Original Terms, and New Loan) to help you make an
informed decision about the tax consequences. When you apply
for a loan, you will be provided with a tax authorization letter that
will outline the three methods. You must select how you want
the loan to be distributed and return the tax authorization letter
to NYCERS before your loan application can be processed. If
you apply online and select a taxable loan option, you can fulll
this requirement by electronic signature at the end of the online
application. If you receive your tax authorization letter in the mail
and do not complete and return it within 30 days from the date
on the letter, your Loan Application will be canceled. If your Loan
Application is canceled and you are out of City service, you will
not be eligible to apply for a new loan.
Three Loan Processing Methods:
Renance: You have an outstanding loan that has not yet been
paid in full. If your new loan is approved, NYCERS will consolidate
the existing balance with the new amount, and a new repayment
schedule (not to exceed ve years) will be implemented. This
method may result in the highest tax consequence.
Original Terms: You have an existing loan that has not yet
been paid in full. If your new loan is approved, the amount of
the new loan will be added to the existing balance; however, the
consolidated amount will be paid within the original repayment
schedule (not to exceed ve years) that was associated with the
existing loan amount.
New Loan: You are applying for a loan for the rst time, or you
have paid off a prior loan in full. If you have a loan that has not
yet been paid in full, you must pay the balance before applying
for a new loan. No loan repayment schedule can be greater than
ve years.
As an active employee, you are not eligible to roll over the taxable
portion of your loan into an IRA or any other tax-deferred plan.
Loans Brochure #911 – Page 3
340 Jay Street, Bklyn, NY
Mezzanine level
30-30 47th Avenue, 10th Fl.
Long Island City, NY 11101
Upload Documents at
www.mynycers.org
(347) 643-3000
M - F, 8am to 5pm
www.nycers.org
Forms, Brochures,
Fact Sheets at
March 2022
Loans – Tier 3, 4 and 6
Vesting
If you have vested and left City service but are not yet eligible to
collect your retirement benet, you must continue to make loan
payments. If you do not, interest will continue to accrue on the
outstanding loan balance, which will reduce any future retirement
benet you are entitled to.
To repay a loan after you go off payroll, you may elect to:
• Pay off your entire loan at any time. Lump-sum repayment can
be made by bank check, money order, or electronically through
your MyNYCERS account. If you have led a retirement
application but your case has not been “nalized,” a lump-
sum payment (partial or full) will be accepted.
• Make direct monthly repayments. There is a $5 per-payment
fee charged for each direct payment you make.
Note: If you are on union leave, you must repay your loan by direct
payment, but the $5 per-payment fee is waived.
Partial repayment once you are off payroll is recommended in the
following circumstances:
• If you have led for retirement, but you have not yet selected
a retirement benet option. Contact NYCERS to nd out how
your outstanding loan will affect your retirement benet and
its tax consequences, or refer to the Loan Reduction chart
on this page to estimate the reduction in your benet.
• If you transferred between City agencies and there have been
no deductions in your paycheck for loan repayments since the
transfer, contact NYCERS to arrange to make direct partial
payments. If you do not, compound interest will continue to
accrue on the loan.
Taxes at Retirement
Internal Revenue Service regulations require NYCERS to treat
pension loans as a retirement distribution if they are taken at,
or near, the time of retirement. However, you may roll over the
taxable portion of your loan to an IRA or Employer Plan. If you
choose not to roll over the taxable amount, NYCERS is required
to withhold 20% Federal tax before issuing the check. If you have
not yet reached the age of 55 and you choose not to roll over
the taxable distribution, you will also be subject to an additional
IRS 10% early distribution penalty tax when you le your taxes
for that calendar year.
If you elect to roll over the eligible distribution, it is your responsibility
to ensure that the institution you name will be able to receive this
direct rollover from NYCERS.
The taxable portion of any prior loan balance is also available for
rollover at retirement. However, you must accomplish this rollover
on your own because the distribution was previously given to you.
You will receive a post-retirement rollover letter approximately
30 days after you have retired explaining the exact amount that
is eligible for rollover. You will have until the due date of your
tax return for the year in which you received the rollover letter
to roll over the taxable portion of the outstanding loan balance
to an eligible retirement plan. If you do not roll over the taxable
portion by the due date of your tax return for the year in which
you received the letter, the taxable portion must be reported to
the IRS as income.
Before you le for retirement, contact NYCERS to learn about the
tax and retirement benet consequences of an unpaid loan and
about your repayment options.
Outstanding Loan at Retirement
Once you le for retirement, your loan deductions will end after
your last paycheck. However, you may repay all or part of your
loan balance up until you le your option election and your full
benet is nalized. Any payments you make during this time will
decrease your loan balance at retirement. Once your full retirement
benet is processed, the outstanding loan balance at retirement
will permanently reduce your retirement benet only if you never
pay back your loan (this permanent reduction is known as the
actuarial reduction). Please note: The actuarial reduction is not a
loan payment, therefore your outstanding loan balance at retirement
will not decrease. The actuarial reduction to your benet is for the
lifetime of your benet until the loan balance is paid off in full. See
Chapter 511 below. The amount of the reduction depends on
your age at retirement and the size of the loan. The chart below
illustrates the benet reduction, in dollars, for every $1,000 of an
outstanding loan (based on a table of factors used for Calendar
Year 2022 retirements).
Under Chapter 511, retirees are permitted to repay the total amount
of the outstanding loan at any time after retirement. By doing so, you
will increase future monthly pension checks as of the date NYCERS
receives your payment in full, for the amount of the loan balance at
retirement. Thus, your retirement benet will revert to what it would
have been had it never been reduced by the actuarial reduction.
Outstanding Loan Reduction Amounts Based on
2022 Loan Factors*
Age
Annual Reduction
per $1,000 of Loan
Age
Annual Reduction
per $1,000 of Loan
2022 Non-
Uniformed
2022
Uniformed
2022 Non-
Uniformed
2022
Uniformed
55 $45.24 $46.02 63 $55.37 $56.45
57 47.40 48.24 70 69.40 70.94
62 53.86 54.89 75 85.50 87.63
* Please note that the examples shown above reect Service Retirement
only. If you retired under Disability, these numbers would change and your
reduction may be greater.
Loans Brochure #911 – Page 4
