§ 512-B — Loans

§ 512-b. Loans. 1. Any member in active service or on leave of absence\nwho has credit for at least one year of member service may borrow from\nhis accumulated contributions in the retirement system once during each\nsix month period an amount of not less than three hundred dollars\nproviding the retirement board shall approve such loan. The total of any\nsuch loans shall not exceed seventy-five per centum of his accumulated\ncontributions.\n 2. Repayment. An amount so borrowed, together with interest on any\nunpaid balance thereof, shall be repaid in equal installments which\nshall be made by the borrower directly to the retirement board or, with\nthe consent of the employer, through regular payroll deduction. The\nstate comptroller is authorized to provide through regular payroll\ndeduction for such repayment of loans made by employees of the state of\nNew York. Such installments shall be in such amount as the retirement\nboard shall approve; however, they shall be at least (a) two percent of\nthe member's contract salary, and (b) sufficient to pay the interest on\nthe unpaid balances thereof. In the event that a member is on leave of\nabsence without pay or is not regularly employed by an employer subject\nto the provisions of this article, any such outstanding loan shall be\nrepaid in such installments of principal and interest as the retirement\nboard shall determine. In the event of default the retirement board\nshall be authorized to collect such payments due from the employer of\nsuch member through payroll deduction and such member shall forfeit all\nfuture entitlement to borrow from the retirement system until the unpaid\nbalance of the loan outstanding at the time of default is fully paid.\nThe retirement board, at any time, may accept payments on account of any\nloan in addition to the installments fixed for repayment thereof. All\npayments of principal and interest at the minimum rate permitted\npursuant to subdivision three of this section made by the member shall\nbe credited to his accumulated contributions. Any additional interest\npaid by the member shall be credited to the pension accumulation fund.\n 3. Interest. The rate of interest payable upon loans made pursuant to\nthis section shall be set by the retirement board. The retirement board\nshall have power, from time to time and at any time, to decrease such\nrate to not less than that currently being credited on the member's\naccumulated contributions or to increase the same to not more than six\nper centum per annum. Any such decrease or increase shall apply, from\nthe effective date thereof, to unpaid balances of loans outstanding on\nsuch date and to new loans made thereafter.\n 4. Service Charge. A uniform service charge payable upon loans made\npursuant to this section shall be set by the retirement board in an\namount sufficient to cover the cost to the retirement system of\nadministering the loans. Such charge shall be deducted from the member's\naccumulated contributions when the loan is made or in equal annual\ninstallments over the period the loan is outstanding.\n 5. Insurance. Each loan made pursuant to this section shall be insured\nagainst the death of the member in an amount equal to the amount of the\nloan outstanding at any given time; with the exception that until thirty\ndays have elapsed after the making thereof no part of the loans shall be\ninsured. Such insurance shall be provided by the retirement board\nthrough the retirement system. Upon the death of the member the amount\nof insurance so payable shall be credited to his accumulated\ncontributions. The premium payable by the member for such insurance\nshall be set by the retirement board at a rate of not to exceed one per\ncentum of the amount loaned.\n A premium of one per centum per annum of the amount loaned, prorated\nto July first next, shall be deducted from the accumulated contributions\nof the member when the loan is made. Thereafter, a premium of one per\ncentum per annum of the present value of the outstanding loan as of July\nfirst shall be deducted from the accumulated contributions of the member\neach succeeding year until such loan is repaid or the member is retired.\n The retirement board in its discretion on any July first may increase\nor reduce the premium, modify the terms or conditions of coverage, or\ndiscontinue the insurance of loans. In no event shall this subdivision\nimpose any obligation upon the retirement board to continue to insure\nloans of members upon the terms and conditions herein provided or upon\nany other terms or conditions.\n 6. Special Funds. The retirement board is authorized to establish such\nfunds as may be necessary to carry out the provisions of subdivisions\nfour and five of this section.\n 7. Withdrawals and retirements when loan is outstanding. Whenever a\nmember becomes entitled to the return of his accumulated contributions\nbecause of withdrawal from the system or because of having become\neligible for a death benefit or a retirement allowance or because of an\nelection to withdraw his accumulated contributions pursuant to\nsubdivision six of section five hundred sixteen of this article the\namount of any loan outstanding on such date shall be construed to have\nbeen already returned to such member and the accumulated contributions\nto which he shall then be entitled shall be the net amount of such\ncontributions together with interest thereon standing to his credit in\nthe annuity savings fund on such date.\n 8. Rules and Regulations. The retirement board is authorized to adopt\nsuch rules and regulations as it finds to be necessary in administering\nthe provisions of this section. Anything in this section\nnotwithstanding, the retirement board is authorized to adopt rules and\nregulations permitting a loan at any time prior to retirement to a\nteacher who is not in active service or on leave of absence, provided\nsuch loan would otherwise be permitted under this section and under\napplicable provisions of the Internal Revenue Code relating to loans\nfrom pension plans.\n 9. The retirement board shall have the power to discharge any evidence\nof a loan to a member pursuant to this section upon the satisfaction of\nthe obligation of the member thereunder.\n