When a member dies prior to retirement, the System pays whatever death benefit is provided for under law to the member’s designated beneficiary or beneficiaries. The System also refunds the member’s accumulated contributions in the Annuity Savings Fund (ASF) in the case of a Tier 1 or 2 member or the member’s accumulated contributions in the case of a Tier 3 or 4 member. Under law, an alternate payee is not entitled to receive a share of the member’s death benefit and accumulated contributions unless the DRO expressly provides that the alternate payee is to share in the death benefit. Language in a DRO dividing a member’s retirement benefit is not sufficient under law to require a division of the member’s death benefit.

Tier 1 and 2 members have the right to withdraw from the System at any time prior to retirement if they are no longer in teaching service. Tier 3 and 4 members may only withdraw from the System prior to retirement if they have less than 10 years of credited service and are no longer in teaching service. Withdrawal from the System is accomplished by the member requesting a withdrawal of their accumulated contributions, if any. A withdrawal of membership extinguishes any benefit entitlements the member may have. Accordingly, any right, if any that an alternate payee may have to share in such member’s benefits would be extinguished as well. Typically, members will withdraw if their accumulated service affords no entitlement to any retirement benefit or if it is possible for them to obtain retirement credit in some other public retirement system for the service credited in NYSTRS.

The System will permit a member to withdraw his/her accumulated contributions, if any, and thereby terminate his/her membership in NYSTRS unless the DRO on file with the System contains specific language prohibiting the member from withdrawing his/her accumulated contributions.

The law governing the System permits eligible members who are permanently disabled to retire for disability. When a member is retired for disability, the System will apply the provisions of a DRO requiring an alternate payee to receive a share of a member’s retirement benefit, unless the DRO expressly provides that the alternate payee is not to share in the member’s disability retirement benefit. This is consistent with New York law which regards the portion of a disability retirement benefit earned during a marriage as marital property unless the recipient demonstrates to the contrary.

As mentioned earlier, a Tier 1 or 2 member may borrow from his/her accumulated contributions, if any, to the System’s Annuity Savings Fund (ASF). A Tier 3 or 4 member may borrow from his/her accumulated contributions. A failure to repay a loan has consequences for the benefit to which the member may be entitled to at retirement.

If a Tier 1 or 2 member fails to repay a loan from his/her accumulated contributions in the ASF, the member is treated as having received a distribution from the ASF at the time of default. If the Tier 1 or 2 member has not repaid the loan at the time of retirement, the member is treated as having received a distribution of the outstanding amount of the loan at retirement. In either case, the distribution reduces the member’s accumulated contributions available at retirement to provide an annuity based upon those contributions.

If a Tier 3 or 4 member fails to repay a loan from his/her accumulated contributions, the member’s benefit is actuarially reduced at retirement to take into account the fact that the unpaid balance of the loan has already been received by the member.

As a general matter, unless a DRO contains specific language prohibiting a member from taking a loan or transferring or encumbering his/her retirement benefit, the System will place no restriction on the member’s right to obtain a loan. On the other hand, if a DRO contains specific language prohibiting the member from taking a loan or from transferring or encumbering his/her retirement benefit, the System will not permit the member to obtain a loan.

In the case of a Tier 1 or 2 member, if a member was not restricted by a DRO from obtaining a loan from his/her accumulated contributions in the ASF, the alternate payee’s share of the member’s accumulated contributions in the ASF at retirement, if any, will be calculated using only the remaining balance of the ASF, unless the DRO expressly provides otherwise.

In the case of a Tier 3 or 4 member, even if a member was not restricted by a DRO from obtaining a loan from his/her accumulated contributions, the alternate payee’s share of the member’s retirement benefit will be calculated based upon the member’s retirement benefit without taking into account any reduction in that benefit due to a failure on the part of the member to repay the loan. In other words, in the case of a failure by a Tier 3 or 4 member to repay a loan, the reduction in the member’s retirement benefit will be assessed against the member’s share of the retirement benefit only.

Under law, a Tier 1 or 2 member has the right to withdraw his/her accumulated contributions, if any, in the ASF at the time of retirement. If the accumulated contributions are not withdrawn, the System pays an annuity benefit based upon those accumulated contributions to the member following retirement, which annuity is separate from and in addition to the member’s retirement benefit.

The System will permit the member to withdraw those accumulated contributions, unless a DRO expressly prohibits the member from withdrawing his/her accumulated contributions in the ASF, and, in that event, the System will not make any adjustment in the alternate payee’s share of the member’s retirement benefit, unless the DRO expressly requires the parties’ shares to be adjusted to take into account the member’s withdrawal of his/her accumulated contributions. Alternatively, a DRO may provide that the member is permitted to withdraw his/her accumulated contributions at retirement but require that the accumulated contributions be divided between the member and the alternate payee in a manner which must be expressly provided for in the DRO for the withdrawn contributions.

As discussed above, if a Tier 1 or 2 member does not withdraw his/her accumulated contributions, if any, in the Annuity Savings Fund at retirement, those accumulated contributions are actuarially converted by the System into an annuity which is separate from and in addition to the member’s retirement. If the alternate payee is to share in that annuity in addition to the member’s retirement benefit, the DRO must so provide and expressly state the manner in which the annuity is to be divided between the parties.