62-5 SPD:62/5 SPD.qxd - NYCERS

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SUMMARY PLAN DESCRIPTION - 62/5 TIER 4 MEMBERS VERSION APRIL 2012We recommend EFT because:It is SAFE - eliminates the risk of your loan check being lost or stolenIt is FAST - no waiting for the check to clear your bank – the funds are immediately availableIt is EASY - no more trips to the bank - no more waiting in line to deposit the checkJOIN THE THOUSANDS OF NYCERS MEMBERS AND PENSIONERS WHO SELECTED EFT FOR THEDEPOSIT OF THEIR LOAN OR PENSION FUNDS. THEY OVERWHELMINGLY CONFIRM THAT EFT ISSAFE, FAST, AND EASY.REPAYMENTWhen you apply for a loan, you agree to repay your loan through payroll deductions while onactive City payroll. If you should leave City service or are simply off payroll for another reason,you are still responsible for payments due on your loan. Failure to make your payments in atimely manner may result in your loan being declared a "Non Performing Loan." If this occurs,not only are you still responsible for paying off your outstanding loan, but your loan will be subjectto Federal taxation and may be subject to early distribution penalty charges imposed by theInternal Revenue Service (IRS).You may choose to pay off the full amount of your outstanding loan in a lump sum at any time(no partial lump-sum payments are permitted, except at retirement before you are finalized).Determining your pay-off amount is simple! Just visit our website and locate "Pay-off Figure"under "Your Loan Activity" on your MY NYCERS page (this feature is only available to MYNYCERS accountholders with registered Personal Identification Numbers [PINs]). In addition, MYNYCERS accountholders with registered PINs may take advantage of an online payment featurecalled E-payments. Payment can be made by a credit or debit card, or by online check.NOTE: The current interest rate is 7.3% (7% basic interest rate plus 0.3% mandatory loan insurancepremium).LR: Chapter 920 of the Laws of 1990SR: RSSL §613-b subdivisions d and fWhile repaying your loan by payroll deductions, you must pay at least 2% of your gross salaryper pay period, and the payments must be sufficient to repay the amount borrowed plus interestwithin five years. Deductions for repayment of your loan should begin in the first or secondpay period after your loan application has been processed. If loan payments are not deductedfrom your paycheck following the second pay period after your loan has been processed, notifyNYCERS immediately. If you do not notify NYCERS, interest will continue to accrue on your outstandingbalance.LR: Chapter 920 of the Laws of 1990SR: RSSL §613-b subdivision cIf you wish to change the amount of your repayment, you may elect one of the following twooptions:File a “Change of Repayment Form” (Form #309)You may change the amount of your repayment only once in any 12-month period at a onetimeservice fee of $40.00 (money order only).Renegotiate your loanWhen you are eligible for another loan you may change your loan repayment schedule byWWW.NYCERS.ORGLOANS21
NEW YORK CITY EMPLOYEES’ RETIREMENT SYSTEMborrowing additional amounts and changing the repayment schedule based on the new consolidatedloan. Be forewarned, however, that a renegotiated loan may have tax consequences.All loans (except Non-Performing Loans) are fully insured against the death of a member 30days after being issued.If you are called to Active Military Duty, the obligation to repay your loan will be suspended, andwill be extended for the same amount of time that you are on Military Duty. However, theextension cannot exceed the five-year limitation on loan repayments. Interest will continue toaccrue, but at the reduced rate of 6% plus the 0.3% loan insurance premium.LR: Patriot Plan; Chapter 106 of the Laws of 2003Patriot Plan; Chapter 127 of the Laws of 2004 (one-year extension)Patriot Plan; Chapter 150 of the Laws of 2005 (one-year extension)Patriot Plan; Chapter 56 of the Laws of 2006 (two-year extension)Patriot Plan; Chapter 133 of the Laws of 2008 (two-year extension)SR: Unconsolidated Law; Section 42 of Chapter 106 of the Laws of 2003FEESBy law, NYCERS is authorized to assess a service fee for processing each loan, which is usedfor the administration of loans for Tier 4 members. As of July 1, 2009, the service fee is$40.00. This fee is automatically deducted from the loan check.LR: Chapter 920 of the Laws of 1990SR: RSSL §613-b subdivision eThere is a loan insurance premium of 0.3% (in addition to the 7% interest rate). Loan insuranceis mandatory and you may not elect to waive the premium.LR: Chapter 920 of the Laws of 1990SR: RSSL §613-b subdivision fThere is a $40.00 service fee when filing Form #309 for a Change of Repayment.If you are no longer on payroll, contact NYCERS to switch to direct payment; however, thereis a $5.00 per-payment fee for each direct payment.NOTE: If you are on union leave, you must repay your loan by direct payment, but the $5per-payment fee is waived.There is a $20.00 service fee for personal checks that are returned uncollected.CONSEQUENCES OF NON-PAYMENT:If you fail to make a payment on an outstanding loan for over 90 days for any reason, the loanis in default -- it is a Non-Performing Loan. This means that:LOANSYou will not be eligible to take out another loan until you have paid the outstanding balanceof your Non-Performing Loan in full.Your Non-Performing Loan will be taxable for Federal income tax purposes as a taxable distribution.There is an additional 10% early distribution tax penalty for members who areunder age 59½.Your Non-Performing Loan will no longer be insured against your death and if a beneficiaryis due to receive a benefit, the amount of that benefit will be reduced by the amount of theoutstanding loan.22
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