CRS members who are under age 65 and have at least 3 years of full-time equivalent service, can borrow against their contributions to the CRS.  To qualify for a loan, you must be employed on at least a 75% work basis.  The maximum amount that can be borrowed is 50% of the accumulated contributions at the time your application is submitted, up to a maximum of $50,000.  However, if you are approaching age 65, there may be lower borrowing limits. Contact the Retirement Office for more information on these borrowing limitations.

In accordance with IRS regulations, employee loans must be paid off in full within the five (5) year period (other than mortgage loans which are 15 year repayment schedules). New loan process rules and schedules will be effective February 1, 2008 as an addendum to the current CRS member handbook.

Loan Application Process

Beginning on February 1, 2008, loan applications will be accepted in the Retirement Office until the last business day of each month.  Loan applications must be submitted in person in the Retirement Office, Room 240, City Hall. Applications received each month will be processed for loan checks to be issued on the Wednesday after the 2nd pay date of the following month (for example, applications received through February 29, 2008 will have checks issued on March 19, 2008).

New loan applications will be accepted under the previous schedule until the close of business on Thursday, January 31, 2008.  Existing loans paid off in full on or before January 11, 2008, will be eligible to have a new loan check issued on February 6, 2008.

Effective January 1, 2008, refinancing existing outstanding loans to increase the amount borrowed and/or extend the repayment schedule beyond the originally specified loan term will not be permitted.  A four (4) month waiting period will be required between loan payoff and the issuance of a new loan.

Terms of the Loan

The maximum length of an employee loan is 5 years, unless the purpose of the loan is to purchase your primary residence, in which case, the maximum length of the loan is 15 years.  Loan payments must be between 5% (minimum) and 20% (maximum) of your gross pay and are made through payroll deductions.  Outstanding loan balances may be paid off in full at any time without penalty.

The current interest rate on employee loans is 7.0%.

If you die with an unpaid loan balance, the first $2000 of the outstanding loan balance is forgiven as long the loan is more than 90 days old.  Loan balances in excess of $2,000 are deducted from the survivor benefit payments.