Active Members' Handbook
Contributions,   
Loans & Credit

Member Contributions
Tiers 1 and 2—Annuity Savings Fund (ASF)
Today, most Tier 1 and 2 members do not have an ASF. You may have one if you joined prior to July 1, 1970 and made member contributions, transferred contributions from another NYS or NYC public retirement system or purchased prior service credit under Tiers 1 and 2. If you have an ASF:
Contributions accrue 5% interest (tax deferred) annually, providing your membership remains active.
You may borrow from your ASF and make repayments until you retire.
  Your ASF will be paid to your beneficiary or estate if you die before you retire.
  At retirement, you have the option of withdrawing your ASF and investing the funds privately, or leaving it in the System to provide you or your beneficiary with an annuity return as part of your retirement benefit.
 
Tiers 3 and 4—Required Contributions Fund
You are required by law to contribute 3% of your salary until you have been a member for 10 years or accrue 10 years of total service credit, whichever occurs first. Required contributions help fund your pension at retirement. They do not provide you with a separate annuity or any other retirement benefit. If you have contributions in the System:
For purposes of borrowing or withdrawal of membership only, contributions accrue 5% interest (tax deferred) annually.
You can borrow from your contributions fund and make repayments until you retire.
Contributions made prior to July 1, 1989 were federally taxed at the time they were made. Those made after that date are not subject to federal income tax until they are received as part of a withdrawal, retirement benefit or death benefit.
Contributions are subject to New York State income tax when they are made.
Contributions plus interest are paid to your beneficiary or estate if you die before you retire.
Borrowing From Your Contributions

You may borrow only from your contributions, not those made by your employer. In order to borrow you must have one year of service credit, your contributions (plus interest) must total at least $1,334, and you cannot have an existing loan more than two months delinquent or in default. The minimum you can borrow is $1,000. (For Tier 1 and 2 members, contributions must total at least $400, and the minimum you can borrow is $300.)

Tier 3 and 4 members may borrow once per calendar year (Jan. 1-Dec. 31). Tier 1 and 2 members may borrow once between Jan. 1 and June 30, and once between July 1 and Dec. 31. Also, you cannot borrow more than 75% of your total fund.

Important Note: Members with an unpaid balance on a current NYSTRS loan who wish to borrow additional funds could be faced with severe tax consequences on a combined loan if the balance remaining on the current loan plus the amount of the combined loan exceeds $10,000. Contact the IRS or a certified tax representative for more information.

If you have any questions about a new or existing loan, call (800) 348-7298, Ext. 6080.

Repayment:
All new loans must be repaid by payroll deduction if you are employed by a NYSTRS participating employer. (No payments are due in July or August.)
Loans generally have a maximum five-year repayment schedule.
Loans are charged interest at the annual rate of 5% (Tiers 1 and 2) or 7% (Tiers 3 and 4).
A life insurance premium is charged at an annual rate of 0.10%, and loans are fully insured after 30 days.
A $30 service charge is added to your balance for each loan given.
Partial payments received will be applied to the outstanding loan, but will not advance your due date or excuse you from any charges that may accrue.
There is a $10 fee per delinquent payment, and a $20 fee for each returned check.
If A Loan Is Not Repaid:
If you are unable to use payroll deduction to make your loan payments and your loan becomes four months past due, it is considered in default status. A defaulted loan is not covered by insurance. When a loan is in default, NYSTRS will either deduct the outstanding balance from your ASF (Tiers 1 and 2) or place the outstanding balance in a non-performing status (Tiers 3 and 4). Any unpaid balance may become subject to federal tax, which may also expose you to a 10% early distribution penalty. You must repay the full balance of a loan by certified check or money order before you are eligible to borrow again.

If you have an outstanding loan, you should contact the System prior to retirement to discuss your situation. If you are a Tier 3 or 4 member and don’t repay your loan, your retirement benefit will be reduced. However, you would have the funds available to you to invest privately or for other purposes.

   
Service Credit
It is important to make sure you have all the service credit for which you are eligible, because it may affect when your benefits begin and how much you will receive. Here's how:

When. Throughout your career, the amount of service credit you have will determine your eligibility for benefits. These include loans, vesting rights, disability coverage and death benefits. In addition, with 10 years of membership or credit, Tier 4 members stop making 3% contributions toward their retirement.

How Much. Service credit is used to determine your pension factor, a primary component of the formula used to calculate your retirement benefit. Additional credit will increase the pension factor in almost every situation.

Ways to earn service credit include:
Working for a NYSTRS participating employer.
Transferring credit from another New York State public retirement system.
Reinstating to an earlier date of membership.

Receiving credit for:
Military service (as allowed by law)
Article 19/Benefit Enhancement (Tiers 1 and 2 only)
Credit for Member Service

The number of days of service credit earned in a given school year (July 1-June 30) is the actual number of paid work or paid leave days (or parts thereof) reported to the System by NYSTRS participating employers. You can receive a maximum of one year of credit within a school year. To receive credit for part-time, partial year or substitute teaching, you must have worked the equivalent of at least 20 full days in a school year.

Days of service are then converted into months of credit as follows:

Days Per Year
  
Credit
 
 
Under 20 days
=
   None
20- 29
=
   1 month
30- 49
=
   2 months
50- 69
=
   3 months
70- 89
=
   4 months
 
 
Days Per Year
  
Credit
 
 
  90-109
=
   5 months
  110-129
=
   6 months
  130-149
=
   7 months
  150-169
=
   8 months
  170+
=
   9 months
  9 months
=
   1 year

Service in private or parochial schools, for the federal government or in armed forces dependent schools is not creditable in NYSTRS under any tier.

Credit for Prior Service

Prior service is NYS public service completed before your current date of membership in this System. Receiving credit for prior service does not change your date of membership or your tier, unless it is the result of a membership reinstatement or transfer (see Transferring Credit or Reinstatement Credit). Additional service credit can affect your eligibility for, and the calculation of, your benefits. You cannot receive credit for federal government employment or non-public school teaching except for a charter school participating in NYSTRS.

Service previously credited in a New York State public retirement system
All Tiers—You may receive credit for prior service completed under a former membership in:
This System;
The New York State and Local Employees' Retirement System;
The New York City Teachers' Retirement System; or,
Any other New York State (including New York City) public retirement system.
Prior NYS Service not credited to a membership
All Tiers—You may receive credit for work prior to your date of membership that would have been creditable in a New York State public retirement system. This includes partial year(s), part-time and substitute teaching.
Out-of-State Prior Service
Tier 1—You may receive credit, to a maximum of 10 years, for teaching before your current date of membership in the public schools and colleges of another state, provided you will not receive a benefit for that service from another state or the federal government. Out-of-state service that brings your total service above 35 years is excluded from the pension calculation.
Tier 2—You may receive credit for out-of-state service only if it had been credited under a previous Tier 1 membership in NYSTRS.
Tiers 3 and 4—You cannot receive credit for service in another state.
Prior Service Cost
Tiers 1 and 2—Prior service is cost-free.
Tiers 3 and 4—The cost is 3% of salary received during the period of the service. In addition, Tier 4 members must pay interest of 5% per year. Tier 3 members must pay interest only on service under a former Tier 3 membership.
How to Apply
Print a Prior Service Claim form (PRS-2) from our Web site or call our forms Hotline at (800) 782-0289 to request one. If you did not have credit for that service under an earlier membership, complete Part 1 of the applicable verification of salary and service form and submit it to your former employer for completion. It is the employer’s responsibility to submit the form to NYSTRS.

After you have earned two years of service credit under your present membership and have made any required payment, you will receive the prior service credit. It generally takes 6-8 months to fully process a claim. Priority, however, is given to those who are retiring and members who will be eligible to end mandatory contributions as a result of the additional service. Members are urged to submit their claims as soon as possible.

Transferring Credit
If you are currently a member of another New York State public retirement system and no longer work in employment reportable to that system, you may transfer service and membership from the other system to NYSTRS. However, you cannot receive more than one year of credit within a school year if your service was concurrent. You should contact both systems to discuss this option. You cannot transfer to or from an out-of-state public retirement system.
Reinstatement Credit
If you had a previous membership in this System or any other New York State public retirement system, you are eligible to be reinstated to your earliest date of membership. You will receive the service credited under that membership, provided it is not credited in another system, along with any possible advantages of an earlier tier. Contact NYSTRS before initiating a reinstatement.
Credit for Military Service
Two types of service credit are available for active military duty: Service preceding NYSTRS membership and service interrupting NYSTRS membership. In all cases, honorable discharge documentation is required as verification of military service.
Service Preceding NYSTRS Membership

You may be eligible for military service credit if you: a) are a full-time or part-time member, or are a member who retired on or after December 21, 1998; and b) were in active military service prior to joining NYSTRS; and c) have at least five years of membership since the date you last entered our system; and d) meet at least one of the following requirements.

You served during one or more of the following military periods:

World War II (Dec. 7, 1941 to Dec. 31, 1946)
Korean Conflict (June 27, 1950 to Jan. 31, 1955)
Vietnam Era (Feb. 28, 1961 to May 7, 1975)
—OR—
You received the Armed Forces, Navy or Marine Corps Expeditionary Medal for service in:
Lebanon (June 1, 1983 to Dec. 1, 1987)
Grenada (Oct. 23, 1983 to Nov. 21, 1983)
Panama (Dec. 20, 1989 to Jan. 31, 1990)
—OR—
You served in the theater of operations on or after August 2, 1990, including the Persian Gulf and Iraq.
Total credit under this law, combined with any previously credited military service in a public retirement system in New York State, cannot exceed three years.
Service Interrupting NYSTRS Membership

Generally, you may be eligible for credit if: a) you were a full-time or part-time NYSTRS member under contract when military service interrupted your membership; and b) you were re-employed under contract in a NYSTRS-eligible position within 90 days of your discharge. However, other conditions may exist that would allow you to obtain this credit. Call NYSTRS’ Military Service Unit at (800) 348-7298, Ext. 6060 for more information.

Military Service Cost

For service preceding membership, for each year purchased the cost is 3% of the salary you earned during the 12 months of credited service immediately preceding the year in which you make the claim.

Full payment must be made to the System by June 30 of the plan year immediately following the year in which you are provided a cost by the System. If payment is not received within this time frame, a recalculation will be required.

For service interrupting membership, there is no cost for Tier 1 or 2 members. Tier 3 or 4 members still contributing to NYSTRS must make the mandatory contributions they would have made if they were employed in NYS public service during the period of military service, with the exception of those called to duty between Sept. 11, 2001 and Jan. 1, 2006 (see next paragraph). For those who returned to work before December 12, 1994, the cost would include interest to the date of payment.

The payment of member contributions required under law to obtain military service credit is waived for members called to active military duty on or after Sept. 11, 2001 and prior to Jan. 1, 2006, as the result of Non-Contributory Military Service Credit legislation signed as Chapter 326 of the Laws of 2005.
How to Apply

To apply for military service credit, forward a copy of your honorable military discharge Form DD214 to the System for evaluation. We encourage you to submit your DD214 before retirement. If you do not have this form, you may obtain a copy by contacting:

National Personnel Records Center
Military Personnel Records
9700 Page Avenue
St. Louis , MO 63132-5100
Benefit Enhancement (Article 19)
At retirement, eligible Tier 1 and 2 members receive one-twelfth of a year in enhancement credit for each year of their service credit at retirement, up to a maximum of two years of credit. To be eligible for the credit, you must have been in active service for at least 20 days in any one school year on or after July 1, 1992.
New York City Subsequent Service
You can obtain service credit for teaching in New York City public schools at a time when you were a member of NYSTRS and were prohibited from joining a city retirement system. To be eligible, you must have taught prior to July 1, 1990, and must have at least two years of NYSTRS service. You must claim this service by filing a New York City Subsequent Service Under Chapter 352 of the Laws of 2002 form (MAC-79), available on our Web site or by calling our forms Hotline at (800) 782-0289, and NYSTRS must verify this service before it is credited.