N.Y. Retirement & Social Security Law § 50: Loans

§ 50. Loans. a. The following may borrow from the retirement system:

1. Any member in government service or on leave of absence who has

credit for at least one year of member service, provided the comptroller

shall approve such loan. The total of any such loans shall not exceed

seventy-five per centum of his accumulated contributions.

2. Any member absent on military duty, as defined in section two

hundred forty-three of the military law. The amount of any such loan,

however, shall not exceed the total of his accumulated contributions

less one dollar. Such nominal sum of one dollar shall be left in the

annuity savings fund to his credit as a token of his continuing

membership. Any member who:

(a) While absent on such military duty and prior to October first,

nineteen hundred forty-six, withdrew his accumulated contributions, and

(b) Re-entered into government service within one year after the

termination of such military duty, may redeposit and repay such

withdrawn amount, with interest thereon at the rate of six per centum

per annum to October first, nineteen hundred forty-six, and thereafter

at the general rate or rates fixed by the comptroller pursuant to this

section. In such event such member shall be entitled to the same status,

rights and privileges as if he had left the nominal sum of one dollar in

the annuity savings fund as a token of his continuing membership.

b. Repayment of loans.

1. An amount so borrowed, together with interest on any unpaid

balances thereof, shall be repaid in equal installments which shall be

deducted from the member's compensation. Such additional contributions

shall be in such amount as the comptroller shall approve. They shall,

however, be at least equal to the member's normal contribution to the

retirement system, or ten dollars per month, whichever is lower.

2. In the case of repayment by a member on leave of absence without

pay, however, any such loan shall be repaid in such installments of

principal and interest as the comptroller shall determine.

c. The comptroller, at any time, while the borrowing member is in

government service or on leave of absence therefrom, may accept payments

on account of any loan in addition to the installments fixed for

repayment thereof.

d. The rate of interest payable upon loans made under this section

shall be fixed by the comptroller. He shall have power, from time to

time and at any time, to decrease such rate to not less than regular

interest 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 or loans outstanding on such date and

to new loans made thereafter. The comptroller shall adjust any prepaid

and unearned interest on balances of loans outstanding as of the

effective date of a change in the interest rate.

e. The borrowing member's anuuity savings account shall not be reduced

by the loan obtained but a subsidiary record shall be maintained

reflecting the outstanding balance on such loan, as well as the

allocation of the payroll deductions to principal and interest. Upon the

member's withdrawal of his accumulated contributions or retirement, the

balance due on his loan shall be deducted from the amount to his credit

at such time in the annuity savings fund. Upon the death of the member

prior to the loan being fully insured, that portion thereof which is

uninsured, shall similarly be deducted from the amount to his credit at

the time of his death in the annuity savings fund.

f. In the case of any benefit wherein the amount of pension will be

determined, in part, by the amount of annuity, such annuity shall be

computed upon the basis of accumulated contributions as if there were no

loan or no additional contributions. The resulting retirement allowance

shall then be reduced by the actuarial equivalent of the present value

of any oustanding loan.

g. Insurance of loans. Each loan made pursuant to this section shall

be insured against the death of the member. Such insurance shall be

provided by the comptroller through the retirement system upon the

following basis:

1. Amount of insurance. Each loan made pursuant to this section shall

be insurable in its entirety and shall be insured thirty days after the

making thereof.

2. Premiums. In March of each year, premiums at the rate established

by the directive of the comptroller, in effect during such year, shall

be charged to the member's annuity savings account. In pro-rating

premiums, the major part of a month shall be considered as a whole

month. If the member during this period withdraws his contributions,

dies or retires, the premium to be charged at the time of such

withdrawal, death or retirement shall be based on the number of months

which had elapsed since the beginning of the fiscal year.

3. Loans heretofore made. Each loan made pursuant to law prior to the

effective date of this section as hereby amended, shall be insured from

that date upon the terms and conditions set forth in this section, as

hereby amended. Premiums after such date shall be deducted in accordance

with the provisions of this section.

4. Funds. The comptroller is authorized to establish such funds as may

be necessary to carry out the provisions of this subdivision g.

5. Power of comptroller. The comptroller, in his discretion and at the

end of any fiscal year, may increase or reduce the premium; modify the

terms and conditions of coverage or discontinue the insurance of loans.

6. Continuity of insurance not obligatory. This subdivision g shall

not impose any obligation whatsoever upon the retirement system or any

employer to continue to insure loans of members upon the terms and

conditions herein provided or upon any other terms and conditions.