Nycers Tier 4 Early Retirement Penalty

Date:

Am I Still Eligible For A Death Benefit

100 Years of NYCERS

If you are a vested member with at least ten years of service, you have not retired and you die more than one year after leaving public employment, 50 percent of the death benefit may still be payable. This benefit is also payable if you die within one year of leaving covered service but were gainfully employed during that time. Your family or employer should notify us of your death as soon as possible so we can send the appropriate forms to your beneficiary.

An Online Tool To Help You Make Your Decision

Most members can use Retirement Online to estimate their pensions.

A Retirement Online estimate is based on the most up-to-date information we have on file for you. You can enter different retirement dates to see how those choices would affect your benefit, which could help you determine the right time to retire. When youre done, you can print your pension estimate or save it for future reference.

If you are unable to use our online pension calculator, please contact us to request a pension estimate.

This post has focused on Tier 3 and 4 members. To see how retirement age affects members in other tiers, visit our About Benefit Reductions page.

Will Your Retirement Age Affect Your Benefit

Only you can decide when its time to retire, but you should know that your age at retirement can affect your pension benefit. Some New York State and Local Retirement System members are in special plans that allow for retirement after a certain number of years, regardless of age . But for most members, you can retire with full benefits at the age specified by your plan. Most members can choose to retire as early as age 55, but if you do, you may receive a permanently reduced pension benefit.

Also Check: Healthcare Options For Early Retirees

How To Stay Informed

Your retirement benefits are an important part of a solid financial plan. They can help you and your beneficiaries achieve financial security in retirement or in the event of disability or death. Use these resources to help you understand your benefits and stay informed.

  • Connect with us on social media.
  • Subscribe to our blog, New York Retirement News, where youll find tools to help you understand your benefits, as well as important Retirement System news.
  • You can also like us on and follow us on for quick tips and updates on a variety of retirement topics.
  • , our free email newsletter, for the latest retirement news and information dedicated to pre-retirement planning.
  • Read your member newsletter for current retirement information and updates on your benefits.
  • Review your Member Annual Statement carefully and notify us of any errors promptly.
  • Visit our website frequently to learn about your benefits, download forms, read informative booklets and brochures, and get tips on preparing for retirement.
  • Attend a pre-retirement presentation to learn about the retirement process, know what you can expect and discuss post-retirement issues. At your employers request, we offer these presentations designed for members within five years of retirement eligibility.
  • Make an appointment to visit any of our consultation sites, where you can meet with an Information Representative to discuss special concerns or request specific information.
  • Tier 6 Benefits A Closer Look

    Tier 6 members are eligible for a lifetime pension benefit once theyve earned 10 years of credited service. And that pension can replace a portion of your salary throughout your retirement.

    Your NYSLRS pension will be based on your Final Average Earnings and the number of years you work in public service. FAE is the average of the five highest-paid consecutive years. For most members, those higher-paid years come at the end of their careers. Since retirement is still some years in the future for most of you, we wont focus on the dollar amount of your FAE today. But we can look at what percentage of that salary would be replaced by your pension if you continue in the system until retirement age.

    For Tier 6 members of the Employees Retirement System , the benefit is 1.66 percent of your FAE for each year you work, up to 20 years. At 20 years, the benefit equals 1.75 percent per year . After 20 years, the benefit grows to 2 percent per year.

    Social Security: You also should factor in Social Security. According to the Social Security Administration, Social Security now replaces about 36 percent of the wages of a typical worker who retires at full retirement age. In the future, its estimated that Social Security might still replace between 25 and 30 percent of a typical workers pay.

    Also Check: Maine Public Employees Retirement System

    Are There Any Tax Implications If I Withdraw My Contributions

    If you withdraw your membership and receive a refund of your contributions, the payment is reportable for federal income tax purposes and we are required to withhold 20 percent of the taxable amount. In addition, if you receive a payment before age 55 and you do not roll it over, you may have to pay a penalty tax equal to 10 percent of the taxable portion of the payment.

    You can continue to defer federal income tax on your contributions if you transfer the taxable portion of the refund directly into an IRA or another qualified retirement plan. Your contributions are not subject to the income tax of New York State or its municipalities. You may wish to consult a tax advisor before withdrawing your contributions.

    Early Retirement Incentive Approved By Ny State Legislature

    dateApr 9, 2021

    The New York State Legislature has passed budget bills S2509C and A3009C, including an Early Retirement Incentive and sent them to the governor on April 7, 2021. If and when the Governor signs the bill, the City will have the option of implementing it or not. The Mayor can deny any individual or title or unit deemed critical for revenue or public safety reasons. He can designate each agencys commissioner to make these decisions for their respective agencies.

    MEA Pension Consultant Jay Warshofsky has analyzed the bills basic points to note to potential participants:

    • The bills include NYCERS, TRS and BERS members only NY State and local pension systems are not mentioned.
    • If approved by the Governor and the Mayor, the ERI in NYCERS cannot start before June 30, 2021 and end no later than October 31, 2021. The ERI in TRS cannot start before April 1, 2021 and end no later than August 3, 2021. The open application period for both will probably be 90 days. Any retiree must provide at least 14 days notice.
    • All pension members would retire under the rules of their current tier and plan. To be eligible they must have a minimum age of 50 with minimum 10 years pension credit.
    • Employees both age 55 or older and with 25 years or more of pension credit will not incur an age penalty.
    • The ERI provides one month additional credit for each year of credited service with a maximum of 36 months credit.

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    The Service Retirement Process

    FILING AN APPLICATION

    Tier 4 members in the 62/5 Plan who are on active payroll and meet all eligibility requirements may file a service retirement application no earlier than 90 days before, and no later than one day before, their effective retirement date.

    Before filing an application with NYCERS, it is strongly recommended that you coordinate with your employer to determine if you are entitled to payment of any accumulated annual leave. Coordinating with your employer is essential to determining your last day paid, which is necessary to determine your correct retirement date.

    Getting your retirement date correct is imperative. If your retirement application is processed with the wrong retirement date there can be negative consequences. For example, unused leave time may be paid in a lump sum or through paychecks . For non-managers, if you are being paid for unused leave time through paychecks you are still considered an active employee. Your retirement date should be the day after the last day you are paid by your agency. If you select a retirement date prior to your last day paid you will not receive service credit following your retirement date. Moreover, any salary after your retirement date will be subject to post-retirement earnings limitations .

    For example:

    RETIREMENT DATE = JANUARY 2 -> FIRST ADVANCE PAYMENT = JANUARY 31

    RETIREMENT DATE = JANUARY 3 -> FIRST ADVANCE PAYMENT = FEBRUARY 28

    PROCESSING THE APPLICATION

    Interim Option Selection
    Final Option Selection

    Nyslrs One Tier At A Time: Ers Tiers 3 And 4

    New Early Retirement Pension Bill 2020 – WA DRS, TRS, PERS, SERS

    When you join the New York State and Local Retirement System , youre assigned a tier based on the date of your membership. There are six tiers in the Employees Retirement System and five in the Police and Fire Retirement System so there are many different ways to determine benefits for our members. Our ongoing series, NYSLRS One Tier at a Time, walks through each tier and gives you a quick look at the benefits the members are eligible for before and at retirement.

    Todays post looks at Tiers 3 and 4 in the Employees Retirement System. Now, we know these are technically two tiers, but many of the members in these tiers are eligible to retire under the same retirement plan: Article 14 or Article 15 . Of our current 637,746 ERS members, 310,985 are in Tiers 3 and 4, representing 48.8 of ERS membership.

    Check out the graphic below for the basic retirement information for Tier 3 and 4 members.

    If youre an ERS Tier 3 or 4 member, find your retirement plan publication from the list below for more detailed information about your benefits:

    Look for more NYSLRS One Tier at a Time posts.

    Read Also: What Amount Do You Need To Retire

    If You Leave Public Employment

    When you stop working for a public employer in New York State, you need to know your rights as a member of the New York State & Local Retirement System . Specific rights depend on your tier and the number of years of service credit you have.

    Public employment in New York State means working for:

    • The State of New York
    • One of its political subdivisions
    • A school district or Board of Cooperative Educational Services
    • A public authority or public benefit corporation or
    • Any other entity that participates in the Retirement System.

    Tier 4 Pension Plan Informationjuly 1 1997 December 31 2001

    Tier 4 is a defined benefit plan that provides pension benefits based upon final average pay and years of service. This plan provides service, disability, and survivor pension benefits as well as retiree health insurance subsidies to eligible sworn members and certain qualified survivors. When you participate in this plan, you do not contribute to or earn Social Security credit.

    Review the information below for key provisions of your Tier 4 benefits. For additional information, review your Tier 4 Summary Plan Description or active member newsletters.

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    Tier 3 & 4 Members: When Is The Right Time To Retire

    Tier 3 and 4 members in the Article 15 retirement plan qualify for retirement benefits after theyve earned five years of credited service. Once youre vested, you have a right to a NYSLRS retirement benefit even if you leave public employment. Though your pension is guaranteed, the amount of your pension depends on several factors, including when you retire. Here is some information that can help you determine the right time to retire.

    Is There An Advantage To Leaving My Contributions On Deposit

    There could be an advantage to leaving your contributions on deposit. If you return to public service and your new employer participates in NYSLRS, your service and salary with your new employer will be added to your current membership, as long as its still active . If your new employer participates in another New York State or New York City public retirement system, you can transfer your active NYSLRS membership to your new retirement system. Even if you are going to work in the private sector, you might return to public service in the future.

    Note: If you have previous public service for which you do not have credit and you wish to request credit to become vested, you must submit your request while you are still on the payroll of a participating employer. If there is a cost for this credit and you receive a statement of the cost after you leave the payroll, you must make payment within 30 days to receive the credit and become vested.

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    If Youre Not Working Heres Something To Consider

    Everyones situation is unique. For example, if youre vested and no longer work for a public employer, and you dont think you will again, taking your pension at 55 might make sense. When you do the math, full benefits at age 62 will take 19 years to match the money youd have received retiring at age 55 even with the reduction.

    What Happens To My Retirement System Loan

    If you have any outstanding loans with the Retirement System when you leave the public payroll, you must make payments directly to us, since we will no longer be able to receive payroll deductions.

    You must make a loan payment at least once every three months and your loan must be repaid within five years of the date it was issued, otherwise you will default on your loan. The law requires us to report any outstanding loan balance at the time of the default to the IRS as an early distribution from a qualified pension plan. The amount reported could be considered taxable income and you may incur a 10 percent tax penalty in addition to any regular income tax due on the distribution. At the time of the default, you will be advised of the taxable amount.

    You will not be eligible for a loan once you are off the public payroll.

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    Thoughts On Nyslrs One Tier At A Time: Ers Tiers 3 And 4

  • Jackie Brusa
  • May 14, 2021 at 1:38 pm

    In most cases, collecting Social Security will not reduce your NYSLRS pension.

    For questions about your specific situation, please email our customer service representatives using our secure email form. One of our account representatives will be able to answer your questions. Filling out the secure form allows them to safely contact you about your personal account information. For questions about Social Security, please visit their website.

    As you plan for retirement, you may also be interested in the retirement timeline on our website. It shows the steps youll need to take and highlights import topics and information youll need to consider.

  • Good afternoon,

    I have 20+ years in the NYSLRS system and are no longer in the system. I am not of retirement age nor do I plan to collect from NYSLRS until age 62. I currently have 5 years in NYCERS. I understand I cant receive pension benefits from one plan while employed by another agency. However, is it permissible to receive a pension from both plans upon reaching 62 years of age if I meet the criteria?

    Thank you

  • For answers to your questions about transferring service, please call our customer service representatives at 1-866-805-0990 , press 2, then follow the prompts. You can also email our customer service representatives using our secure email form. Filling out the secure form allows them to safely contact you about your personal account information.

  • Edward Kear
  • Tom
  • Chris
  • Calculating Your Retirement Benefit

    “When Can I Retire?” for Tier 2 Nonhazardous

    Members in the 62/5 Plan must be at least age 62 and have five or more years of Credited Service, of which two years is Membership Service, to be eligible to receive an unreduced Service Retirement Benefit. Each year of service is calculated at a certain percentage contingent upon the years of Credited Service youve accumulated. The calculation is as follows:

    Members with less than 20 years of Credited Service 1 .67% for each year
    Members with 20-30 years of Credited Service 2% for each year
    Members with more than 30 years of Credited Service 2% for each year up to 30 years, PLUS 1.5% for each year in excess of 30

    LR: Chapter 266 of the Laws of 1998

    SR: RSSL §604 subdivisions a,b and c

    At retirement, the number of years of Credited Service you have will be confirmed and the Maximum Retirement Allowance payable to you will be calculated by multiplying:

    Years of Credited Service X Applicable percentage X Final Average Salary

    EXAMPLES OF MAXIMUM RETIREMENT ALLOWANCES

    Please note that the figures in the table represent Maximum Retirement Allowances which are based on payments to you during your lifetime only. A deficit in any of your contribution accounts, or outstanding loans at retirement, will result in a reduction in your retirement benefit.

    FINAL AVERAGE SALARY

    LR: Chapter 414 of the Laws of 1983

    SR: RSSL §608 subdivision a

    KINGSTON LIMITATION

    WAGES EARNED IN ANY YEAR USED IN THE FAS COMPUTATION CANNOT EXCEED MORE THAN 10% OF THE AVERAGE OF THE PREVIOUS TWO YEARS

    55 27%

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    Three Reasons To Keep Working

  • Tier 3 and 4 members can claim their benefits as early as age 55, but theyll face a significant penalty for early retirement up to a 27 percent reduction in their pension. Early retirement reductions are prorated by month, so the penalty is reduced as you get closer to full retirement age. At 62, you can retire with full benefits. members who are in the Article 15 retirement plan and can retire between the ages of 55 and 62 without penalty once they have 30 years of service credit.)
  • Your final average earnings are a significant factor in the calculation of your pension benefit. Since working longer usually means a higher FAE, continued public employment can increase your pension.
  • The other part of your retirement calculation is your service credit. More service credit can earn you a larger pension benefit, and, after 20 years, it also gets you a better pension formula. For Tier 3 and 4 members, if you retire with less than 20 years of service, the formula is FAE × 1.66% × years of service. Between 20 and 30 years, the formula becomes FAE × 2.00% × years of service. After 30 years of service, your pension benefit continues to increase at a rate of 1.5 percent of FAE for each year of service.
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