New York Laws
Article 11 - State Teachers' Retirement System for Public School Teachers
512-B - Loans.

§ 512-b. Loans. 1. Any member in active service or on leave of absence
who has credit for at least one year of member service may borrow from
his accumulated contributions in the retirement system once during each
six month period an amount of not less than three hundred dollars
providing the retirement board shall approve such loan. The total of any
such loans shall not exceed seventy-five per centum of his accumulated
contributions.

2. Repayment. An amount so borrowed, together with interest on any
unpaid balance thereof, shall be repaid in equal installments which
shall be made by the borrower directly to the retirement board or, with
the consent of the employer, through regular payroll deduction. The
state comptroller is authorized to provide through regular payroll
deduction for such repayment of loans made by employees of the state of
New York. Such installments shall be in such amount as the retirement
board shall approve; however, they shall be at least (a) two percent of
the member's contract salary, and (b) sufficient to pay the interest on
the unpaid balances thereof. In the event that a member is on leave of
absence without pay or is not regularly employed by an employer subject
to the provisions of this article, any such outstanding loan shall be
repaid in such installments of principal and interest as the retirement
board shall determine. In the event of default the retirement board
shall be authorized to collect such payments due from the employer of
such member through payroll deduction and such member shall forfeit all
future entitlement to borrow from the retirement system until the unpaid
balance of the loan outstanding at the time of default is fully paid.
The retirement board, at any time, may accept payments on account of any
loan in addition to the installments fixed for repayment thereof. All
payments of principal and interest at the minimum rate permitted
pursuant to subdivision three of this section made by the member shall
be credited to his accumulated contributions. Any additional interest
paid by the member shall be credited to the pension accumulation fund.

3. Interest. The rate of interest payable upon loans made pursuant to
this section shall be set by the retirement board. The retirement board
shall have power, from time to time and at any time, to decrease such
rate to not less than that currently being credited on the member's
accumulated contributions or to increase the same to not more than six
per centum per annum. Any such decrease or increase shall apply, from
the effective date thereof, to unpaid balances of loans outstanding on
such date and to new loans made thereafter.

4. Service Charge. A uniform service charge payable upon loans made
pursuant to this section shall be set by the retirement board in an
amount sufficient to cover the cost to the retirement system of
administering the loans. Such charge shall be deducted from the member's
accumulated contributions when the loan is made or in equal annual
installments over the period the loan is outstanding.

5. Insurance. Each loan made pursuant to this section shall be insured
against the death of the member in an amount equal to the amount of the
loan outstanding at any given time; with the exception that until thirty
days have elapsed after the making thereof no part of the loans shall be
insured. Such insurance shall be provided by the retirement board
through the retirement system. Upon the death of the member the amount
of insurance so payable shall be credited to his accumulated
contributions. The premium payable by the member for such insurance
shall be set by the retirement board at a rate of not to exceed one per
centum of the amount loaned.

A premium of one per centum per annum of the amount loaned, prorated
to July first next, shall be deducted from the accumulated contributions
of the member when the loan is made. Thereafter, a premium of one per

centum per annum of the present value of the outstanding loan as of July
first shall be deducted from the accumulated contributions of the member
each succeeding year until such loan is repaid or the member is retired.

The retirement board in its discretion on any July first may increase
or reduce the premium, modify the terms or conditions of coverage, or
discontinue the insurance of loans. In no event shall this subdivision
impose any obligation upon the retirement board to continue to insure
loans of members upon the terms and conditions herein provided or upon
any other terms or conditions.

6. Special Funds. The retirement board is authorized to establish such
funds as may be necessary to carry out the provisions of subdivisions
four and five of this section.

7. Withdrawals and retirements when loan is outstanding. Whenever a
member becomes entitled to the return of his accumulated contributions
because of withdrawal from the system or because of having become
eligible for a death benefit or a retirement allowance or because of an
election to withdraw his accumulated contributions pursuant to
subdivision six of section five hundred sixteen of this article the
amount of any loan outstanding on such date shall be construed to have
been already returned to such member and the accumulated contributions
to which he shall then be entitled shall be the net amount of such
contributions together with interest thereon standing to his credit in
the annuity savings fund on such date.

8. Rules and Regulations. The retirement board is authorized to adopt
such rules and regulations as it finds to be necessary in administering
the provisions of this section. Anything in this section
notwithstanding, the retirement board is authorized to adopt rules and
regulations permitting a loan at any time prior to retirement to a
teacher who is not in active service or on leave of absence, provided
such loan would otherwise be permitted under this section and under
applicable provisions of the Internal Revenue Code relating to loans
from pension plans.

9. The retirement board shall have the power to discharge any evidence
of a loan to a member pursuant to this section upon the satisfaction of
the obligation of the member thereunder.

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