In New York we have eight public-sector retirement systems. The State administers three while the City administers five.

Of the eight systems the NYSLRS is the only one that informs its members that they cannot rollover a taxable loan taken at or near retirement. This is wrong.

With that said, the opportunity to rollover taxable loans taken at or near retirement was first codified by the Unemployment Compensation Amendments Act of 1992; effective January 1, 1993 (UCA ’92).

For 28 years soon-to-be retirees have been told by the NYSLRS they can receive an unreduced pension by not taking a loan or they can take a loan, a taxable event, and receive a reduced pension. For 28 years they have never been told they can also receive a reduced pension by rolling the loan into an IRA.

UCA ’92 mandates the NYSLRS to inform its members that if the Direct Rollover option in not elected the check will be mailed to the member less 20 percent for federal withholding tax. First violation of law: Not permitting direct rollover of loans. Second violation of law: Not withholding 20 percent when the amount of the loan is sent to the member.