QPP Loans
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One of the many benefits provided by the Teachers’ Retirement System of the City of New York (TRS) is
the ability to borrow against your Qualified Pension Plan (QPP) accumulations. This brochure highlights
the important features of this benefit.
FOR ALL TIERS
Eligibility
You may be eligible for one or more QPP loans if you
are not currently in default on a QPP loan and you meet
ONE of the following requirements:
• You are an in-service Tier I or II member, and you
have at least three years of TRS membership service; or
• You are an in-service Tier III, IV, or VI member,
and you have at least one year of TRS membership
service; or
• You are on a leave of absence, and you meet the
service requirements for your tier.
Within a 12-month period, Tiers I and II members may
take up to two QPP loans; however, payments must have
begun for the first loan before a second loan can be
taken. Tiers III, IV, and VI members may take one QPP
loan in a 12-month period.
According to Internal Revenue Service (IRS) regulations,
outstanding loan balances may not be combined
with new loans. Each loan is treated independently
(i.e., separate loan balances, repayment terms, interest
charges, and applicable insurance premiums).
Please note that your request for a loan may be
delayed or canceled if TRS does not have your
date-of-birth documentation on file.
Loan Amounts
QPP loans must be taken in multiples of $10. If you are
a Tier I or II member, the minimum amount of each
loan is $250. If you are a Tier III, IV, or VI member
with no outstanding QPP loan, the minimum loan
amount is $1,000; however, if you are a Tier III, IV,
or VI member with an outstanding QPP loan, the
minimum additional loan that you may request is
generally $250. Your new loan amount, plus any existing
QPP loan balances, must total at least $1,000.
• In general, the maximum new QPP loan amount you
may request is limited to the least of the amounts
described in restrictions A, B, and C below.
• If you take a loan at retirement, the maximum is the
amount described in restriction B below.
A. $50,000, less your highest combined loan balance
during the previous 12-month period from the
QPP, Tax-Deferred Annuity (TDA) Program, and
New York City Deferred Compensation Plan
(DCP) loan programs.
B. 75% of your QPP account balance, less any
outstanding QPP loan balance.
C. The greater of (i) 50% of the combined value
of all your TRS accounts (QPP and TDA), less
any outstanding QPP and TDA loan balances, or
(ii) $10,000, less any outstanding QPP and TDA
loan balances.
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TRS will also limit your maximum loan amount so that
the total per-installment payment amount on all TRS
loans does not exceed your net pay.
Note: In restriction B, the QPP account balance includes
MCAF for Tiers III/IV/VI or ASF for Tiers I/II, plus
AMC employee portion for Age 55 Retirement Program
participants only. In restriction C, the QPP account
balance for Tiers III/IV/VI also includes any ASAF
balance. Please see your Quarterly Account Statement
for details on these accounts.
The value of your accounts is based on your most recent
account balances and (for Tiers I and II members only)
the most recent unit values of the variable-return
Passport Funds available to TRS when your loan is
calculated. There may be a two-month lag in the
updating of account balances. For example, a loan
issued in March may be based on your account balances
for January.
Please be advised that any loan balance you may have
from a New York City DCP 401(k) or 457 account may
affect the loan amounts you may borrow from your QPP
account; if you have a DCP loan, your available QPP
loan amounts may differ from the estimates provided
by TRS before you apply. Also be advised that adverse
tax consequences will result if the combined balance
of your DCP and TRS loans exceeds $50,000, which is
the maximum loan amount allowable under all public
employer-sponsored programs. Please note, since TRS
must first verify your DCP loan status and balance
before determining the amount you may borrow from
your QPP account, the processing of your loan
application may be delayed.
To find out the amount you are eligible to borrow or
any loan balances, please log in to the secure section
of our website.
Loan Applications
If you are in active service or on a leave of absence, you
may apply for a QPP loan on our website, provided you
have registered for secure access. Alternatively, you may
file a paper “QPP Loan Application” (code LO6).
TRS issues loans each Wednesday; the funds are available
the Friday of the same week. Loans are issued in one of
two ways:
• Electronic Fund Transfer (EFT): You may be eligible to
receive your loan via EFT if you are paid on the City
of New York payroll and receive your paychecks
through direct deposit. You may elect to receive
your loan in the account where your paychecks are
deposited. (Note: City University of New York
(CUNY) members paid on the New York State
payroll, and Charter School members, cannot receive
loans via EFT.)
• Check: If you receive your loan by check, TRS is not
responsible for any delays or loss through mailing.
In the event of a delay or the loss of a check,
interest charges on your loan will continue to accrue
and your repayment schedule will remain unchanged.
Since TRS issues loans on a weekly basis, TRS must
generally receive paper loan applications by the close
of business on Wednesday of the preceding week.
(If a holiday occurs during the week, TRS must receive
your paper loan application by the first business day of
the week.) Online loan applications must be received
by 11:59 p.m. on the Sunday preceding the week they
are issued.
If you file for a loan at retirement, you must file a paper
“QPP Loan Application” or e-form equivalent. TRS
must receive your application no later than one business
day prior to your effective retirement date. In this case,
your loan will be issued after your effective retirement
date (generally the third Wednesday after your retirement
date) to meet IRS requirements. If your loan application
is not preceded by or filed in conjunction with an
application for retirement, your loan will be subject to
the same restrictions that apply to members who are not
retiring (see “Loan Amounts” section).
Generally, if you would like to change the loan amount
or repayment terms you elected on your application, you
must submit a notarized request indicating any changes
no later than the next business day after TRS receives
your loan application. However, for a loan taken at
retirement, you have until the close of the business day
immediately preceding your effective retirement date to
submit this notarized request.
If you would like to cancel your QPP loan application,
TRS must receive a notarized “Request for Withdrawal
of Form/Application/Online Filing” (code MI5) or
e-form equivalent by the following deadlines:
• If you filed a paper loan application, TRS must
receive your cancellation request no later than the
close of the next business day after TRS receives
your loan application.
• If you filed an online QPP loan application
Monday-Thursday, TRS must receive your
cancellation request no later than the close of
the next business day.
• If you filed an online QPP loan application
Friday-Sunday, TRS must receive your cancellation
request by 9:30 a.m. on the first business day
following the weekend.
If your cancellation request is not received by the
appropriate deadline, TRS will process your loan
application.
Please note that your loan may not be returned after
it has been issued.
Leaving Active Service
Retirement
Any outstanding and (Tiers III, IV, and VI only)
defaulted QPP loan balance you have on your effective
retirement date will be deducted from your QPP
accumulations, and will generally reduce the amount of
the retirement allowance you would otherwise receive.
An outstanding loan balance will be considered a
distribution; this information will be provided to the IRS
(see “Tax Consequences of Distributions” section).
If you elect to repay an outstanding loan that you have
at retirement, TRS must receive your check at least one
business day before your planned retirement date.
Any new QPP loan taken at retirement will not be
repaid to TRS. Instead, it will be considered a
distribution; this information will be provided to the
IRS. You will have the following three choices regarding
the disbursement of a QPP loan taken at retirement:
a) Receive the entire loan amount as a Direct
Cash Payment;
b) Have TRS directly roll over the entire taxable loan
amount (minimum $200) to one or more eligible
Individual Retirement Arrangements (IRAs) or
other successor programs; or
c) Receive a portion of the loan amount as a Direct
Cash Payment and have TRS directly roll over the
taxable balance (see “Tax Consequences of
Distributions” section). To roll over all or part of
your QPP loan at retirement, you must file a “QPP
Loan Direct Rollover Election Form” (code LO57).
(If you elect to have TRS directly roll over your
QPP funds, you may not change the rollover
institution after your effective retirement date.)
Leave of Absence
If you take a leave of absence, you automatically qualify
for a 12-month grace period when loan payments need
not be made; however, interest will continue to accrue on
the unpaid balance. If you have outstanding loans when
your leave begins, the grace period will commence upon
the receipt of payroll records indicating your change in
status. If TRS issues a loan to you during your leave of
absence, the grace period will begin upon issuance of the
loan, unless you elect on your “QPP Loan Application”
to begin making regular payments instead.
If you take advantage of the 12-month grace period,
your loan payment amount will include the interest
charges and (for Tiers III, IV, and VI members only)
the insurance charges that will accrue during this time.
In addition, your payments will be recalculated and you
must recommence scheduled loan payments when your
grace period ends or you return to active service
(whichever is sooner).
However, you may elect to initiate immediate repayment
at any time during the grace period. This option
allows you to avoid paying additional interest and any
applicable insurance charges that accrues from the time
you make the repayment to the end of the grace period.
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If your leave of absence exceeds the 12-month grace
period, you must make periodic QPP loan payments
after the grace period in order to avoid defaulting on
your loans. Generally, Tiers I and II members must make
quarterly payments. Tiers III, IV, and VI members must
make monthly payments in all cases. TRS must receive
these payments by the 15th of the month. TRS will
provide monthly loan statements with payment
instructions.
Note: If you transfer your TRS membership to an
eligible New York City or New York State public
retirement system during your leave of absence, you will
be given a 30-day period in which to fully repay any
outstanding loan balance. If you do not fully repay any
outstanding loan balance to TRS within this 30-day
period, the total balance will be transferred to your new
retirement system. (To be eligible to transfer your TRS
membership while on a leave of absence, your leave
must be unpaid.)
FOR TIERS I AND II ONLY
Resignation/Termination/Membership Transfer
If you have an outstanding QPP loan balance when you
resign or are terminated, you will be given a 30-day
period in which to fully repay the balance with a lump-
sum payment. If you transfer your TRS membership to
an eligible New York City or New York State public
retirement system and do not fully repay your total
outstanding loan balance to TRS within this 30-day
period, the total balance will be transferred to your new
retirement system.
If your total outstanding loan balance is not repaid
within the 30-day period, or transferred to a new
retirement system, the total balance will be charged
against your QPP accumulations; your QPP loans will
be closed and your QPP accumulations available for
withdrawal will be reduced. The total amount charged
against your QPP accumulations will be considered a
distribution; this information will be provided to the IRS
(see “Tax Consequences of Distributions” section).
FOR TIERS III, IV, AND VI ONLY
Resignation/Termination/Membership Transfer
If you have an outstanding or defaulted QPP loan
balance when you resign or are terminated, you will be
given a 30-day period in which to fully repay the balance.
If you transfer your membership to an eligible New
York City or New York State public retirement system
and do not fully repay your total outstanding or
defaulted loan balance to TRS within this 30-day period,
the total balance will be transferred to your new
retirement system.
If your total outstanding loan balance is not repaid
within the 30-day period, or transferred to a new
retirement system:
• If you are vested, you will be enrolled automatically in
a monthly payment plan, provided that your loans
have not been outstanding for five years or longer.
• If you are not vested, your total outstanding QPP loan
balance will be considered in default (see “Defaults”
section).
FOR ALL TIERS
Tax Consequences of Distributions
Generally, loans are not taxable. Please note the
following tax information on loans that become
distributions:
• The total taxable portion of the distribution will
be subject to federal income taxes and may be
subject to state and local taxes; TRS suggests that
you consult a tax advisor.
• If you live outside of New York State, state and
city taxes may also apply.
• You may incur an IRS-imposed 10% penalty on
any taxable portion of the distribution if your
service is terminated prior to the year in which you
reach age 55, or if the distribution occurs before
you reach age 59½.
Any taxable portion of a QPP loan balance that is
considered a distribution may be rolled over to an
IRA or other successor programs, subject to IRS
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requirements. Any amount that is rolled over will not
be taxable until it is distributed to you. If you would
like to roll over any portion of your eligible amount, you
must provide the funds to do so. Defaulted loans
(which are classified as “deemed distributions”) are not
eligible for rollover.
Please note the following tax information on loans
taken at retirement:
• If you have an outstanding loan balance at
retirement, it will be considered a distribution.
• New QPP loans taken at retirement are considered
distributions and are not repaid to TRS.
• IRS regulations require TRS to withhold 20%
of the taxable amount of a new loan taken at
retirement that you do not directly roll over.
TRS will send the amount withheld to the IRS as
credit toward your federal income taxes for the
year of distribution.
• If you have an outstanding loan balance at
retirement and you take a new loan, TRS is required
to withhold an amount equaling 20% of the taxable
portions of any existing loan balance and of any
new loan amount that you do not directly roll over.
• If you receive a loan at retirement as a Direct
Cash Payment, the withholding from the existing
outstanding loan balance must be taken, even if all
or part of the new loan is tax-free. If the total
withholding amount exceeds the amount of your
new loan, TRS will issue you a check in the
minimum amount of $10. If you are a Tier I or II
member, any remaining withholding deficit will be
applied to any subsequent excess withdrawal you
receive directly in the same tax year; this withholding
will be taken in addition to any withholding that
would ordinarily be applied to an excess withdrawal
you receive directly.
FOR TIERS I AND II ONLY
Interest
You will be charged the applicable interest on your
outstanding loan balance at the rate in effect at the
issuance of your loan. At the time this brochure was
published, the annual rate was 6%.
If you are in active service, your new QPP loan will be
separately insured against your death, at no cost to you,
with the following conditions:
• Insurance coverage begins 30 days after a loan is
issued.
• From 30 to 59 days after a loan is issued, 25% of
the balance is insured, up to a maximum of $10,000.
• From 60 to 89 days after a loan is issued, 50% of
the balance is insured, up to a maximum of $10,000.
• Beginning 90 days after a loan is issued, 100% of the
balance is insured, up to a maximum of $10,000.
The above insurance coverage will be applied to any
loan balance outstanding upon your death. If any
balance still remains, it will be deducted from your ASF
(and the balance in the employee portion of your AMCs,
if applicable); this will reduce any QPP benefits payable
to your designated beneficiaries. Insurance coverage on
your loan will end as of your effective retirement date or
if you default on the loan.
Repayment
With the exception of a loan taken at retirement, your
QPP loan generally must be repaid within four years
(48 months) of the date the loan was issued. If you are
an in-service member, loans are normally repaid through
payroll deductions. (If your payroll deductions do
not commence as indicated on your loan statement,
or if they are unexpectedly interrupted, you must
notify TRS immediately.) Please note that you will be
responsible for any interest charges that accrue during
the period when payments were due but not received by
TRS. (If you are employed by the United Federation of
Teachers (UFT) or the Council of School Supervisors &
Administrators (CSA), your union will deduct the
appropriate amounts from your paychecks and provide
monthly loan payments directly to TRS on your behalf.)
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To reduce your loan balance, you may make a partial
payment in addition to your regularly scheduled
payments. Partial payments would not stop payroll
deductions (if applicable) and would not change the
amount of your regularly scheduled payments. You can
make partial payments online in the secure section of
our website.
If you want to change the terms of your loan
(e.g., amount or duration of payments), you must submit
a written request to TRS. A service charge would be
applied to the reamortization of your loan.
If you want to repay your total outstanding balance in a
lump sum, you will need to file a “QPP Loan Repayment
Request Form” (code LO11q) or online equivalent.
Upon receipt of that form, TRS will calculate the total
amount required to repay your outstanding loan balance
and send you written notification of the repayment
amount and payment instructions.
In certain cases, if you are an in-service member and
make a lump-sum payment in June or July (after summer
paychecks with loan payment deductions have been
issued), you will be refunded those summer payments
later. You may avoid loan payment deductions for the
summer months by filing a “QPP Loan Repayment
Request Form” by the last business day in February.
For CUNY Employees Paid on the
New York State Payroll
TRS will receive payment for only one outstanding
QPP loan through automatic payroll deductions.
For any additional QPP loan balance, monthly payments
are required, please use the secure section of our website
to make online payments to TRS. Payments are due to
TRS no later than the 15
th
of the month, normally for
the duration of the loan. TRS will provide monthly loan
statements with payment instructions.
Defaults
With the exception of a loan taken at retirement, your
QPP loan will be in danger of default if you have an
outstanding loan balance five years (60 months) after the
loan’s issuance date, or if your total past due is equal to
or greater than the equivalent of one quarterly payment
or three regular monthly payments. If any of the
above occurs, TRS will request that you submit full
repayment of the total outstanding balance (including
interest). If TRS does not receive full repayment by the
date requested, you will default on your QPP loans; the
loans will be closed and the total defaulted balance will
be charged against your QPP accumulations. The total
defaulted balance will be considered a distribution; this
information will be provided to the IRS (see “Tax
Consequences of Distributions” section).
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FOR TIERS III, IV, AND VI ONLY
Service Charge
A non-refundable service charge will be added to each
QPP loan you take, to cover the administrative costs of
issuing a loan. At the time this brochure was published,
the service charge was $30. You may incur an additional
service charge for any requested action that necessitates
a recalculation of your repayment amount.
Interest
You will be charged the applicable interest on your
outstanding loan balance at the rate in effect at the
issuance of your loan. At the time this brochure was
published, the annual rate was 6%.
Insurance
If you are in active service, your new QPP loan will
be fully insured against your death 30 days after your
loan is issued. Prior to that date, there will be no
insurance coverage.
Insurance premiums of 0.1% will be included in your
regular loan payments, as long as you maintain an
outstanding balance and your loan is not in default.
For loans originated on or before June 30, 2019, the
insurance premium was 0.2%.
Any uninsured loan balance outstanding after you die
will be deducted from your MCAF account (and the
balance in the employee portion of your AMCs, if
applicable); this will reduce any QPP benefits payable
to your beneficiaries. Insurance coverage on your loan
will end as of your effective retirement date or if you are
in default on the loan.
Repayment
With the exception of a loan taken at retirement, your
QPP loan must be repaid within five years (60 months)
of the date the loan was issued. If you are an in-service
member, loans are normally repaid through payroll
deductions of at least 2% of your contractual salary.
(If your payroll deductions do not commence as
indicated on your loan statement, or if they are
unexpectedly interrupted, you must notify TRS
immediately.) Please note, you will be responsible for
any interest and insurance charges that accrue during the
period when payroll deductions were expected but not
received by TRS. (If you are employed by the United
Federation of Teachers (UFT) or the Council of School
Supervisors & Administrators (CSA), your union will
deduct the appropriate amounts from your paychecks
and provide monthly loan payments directly to TRS on
your behalf.)
If you are an in-service member, you may submit a
partial lump-sum payment to reduce your loan balance.
(However, partial payments will not stop payroll
deductions.) This payment will be made in addition to
your regularly scheduled payments. To make a partial
lump-sum payment, please submit a check payable to the
“Teachers’ Retirement System of the City of New York”
with a written request to have your repayment period
changed (if it will not exceed 60 months) or to change
the amount of your regularly scheduled payments. Once
TRS receives your payment and written request, your loan
balance will be recalculated. If TRS receives your partial
lump-sum payment without a written request, your
payment will be applied to your loan balance; however,
the amount of your regularly scheduled payments will be
unaffected. Please note, if you request to change the
terms of your loan, a service charge will apply.
If you want to repay your total outstanding loan balance
in a lump sum, you will need to file a “QPP Loan
Repayment Request Form” (code LO11q) or online
equivalent. Upon receipt of that form, TRS will calculate
the total amount required to repay your outstanding
loan balance and send you written notification of the
repayment amount and payment instructions.
In certain cases, if you are an in-service member and
make a lump-sum payment in June or July (after summer
paychecks with loan payment deductions have been
issued), you will be refunded for those summer payments
later. You may avoid loan payment deductions for the
summer months by filing a “QPP Loan Repayment
Request Form” by the last business day in February.
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For CUNY Employees Paid on the
New York State Payroll
TRS will receive payment for only one outstanding QPP
loan through automatic payroll deductions. For any
additional QPP loan balance, monthly payments are
required, please use the secure section of our website to
make online payments to TRS. Payments are due to TRS
no later than the 15
th
of the month, normally for the
duration of the loan. TRS will provide monthly loan
statements with payment instructions.
Defaults
With the exception of a loan taken at retirement, your
QPP loan will be in danger of default if (a) you have an
outstanding loan balance five years (60 months) after the
loan’s issuance date; or (b) your total past due amount is
equal to or greater than the equivalent of three regular
monthly payments; or (c) you are not vested and you resign
or are terminated with an outstanding QPP loan balance.
If any of the above occurs, TRS will request that you
submit full repayment of the total outstanding balance
(including interest and insurance charges). If TRS does
not receive full repayment by the date requested, or your
loan balance is not transferred, you will default on your
QPP loans. Your insurance will be terminated and your
total defaulted loan balance will be considered a
distribution; this information will be provided to the IRS
(see “Tax Consequences of Distributions” section).
Any defaulted QPP loan balance will remain due. This
balance will continue to accrue interest until it is repaid to
TRS, or until you retire, when it will be charged against
your QPP retirement benefits. In addition, if a defaulted
QPP loan balance remains unpaid, it may eventually equal
or exceed the funds in your MCAF that may otherwise be
available for withdrawal. If you are an active member, you
will be ineligible for any new QPP loans until you repay
your defaulted balance.
Code 4.1
6/21
Teachers’ Retirement System of the City of New York
55 Water Street, New York, NY 10041
www.trsnyc.org • 1 (888) 8-NYC-TRS •
For your convenience, TRS forms and publications are available on our website.
This publication should not be solely relied upon, as it is based on currently available information that is subject to change.
In all cases, the specific provisions of the governing laws, rules, and regulations prevail.
