To the Editor: I write to correct inaccurate information contained in two articles which appeared in The Chief-Leader written by Joel Frank on the rollover of public-retirement-system loans taken at retirement. Contrary to what is stated in these articles, under clear Federal law and IRS regulations, public and private pension plans are not required to offer direct rollovers of these loan amounts. In fact, direct loan rollovers are very complicated administratively, which is why so few pension plans do so, public or private.
While the New York State and Local Retirement System (NYSLRS) cannot provide tax advice, it is worth noting that there are other ways that a retiree can roll over outstanding loans at retirement that are not direct rollovers. For example, if a member chooses, he or she may "indirectly" (i.e., on the member's own, without the plan having to take action) roll over "plan loan offsets." The rollover of a plan loan offset is accomplished by the member writing a check or transferring from their own funds in the amount of the rollover to another plan or IRA that will accept it, and then reflecting this on their individual tax return as a rollover.
I refer readers to the IRS website, which has much valuable information if individuals want to know more: www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions
When it comes to rollovers, we recommend members get their own tax advice, because every situation is unique. NYSLRS's practice is consistent with the governing IRS guidance, and any statements to the contrary are erroneous.
COLLEEN C. GARDNER
Executive Deputy Comptroller
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