New Jersey Statutes Title 43. Pensions and Retirement and Unemployment Compensation 43 § 13-22.67

Any member who has at least three years of service credit for which contributions have been made as a member may borrow from the retirement system an amount equal to not more than 50% of the amount of the member's aggregate contributions, but not less than $1,000.00. Any loan from the retirement system must satisfy the requirements of the federal Internal Revenue Code of 1986, as amended, regulations of the United States Treasury Department, and other directives or guidance of the federal Internal Revenue Service. At the time a loan is made, a loan amount shall not result in the projected required loan payments, including interest contained in the payment, for the following calendar year exceeding 25% of the member's annual salary at the time the loan is made. If a member's salary is uncertain at that time, the commission shall use a reasonable estimate of the member's expected salary to impose this 25% limitation. The amount so borrowed, together with interest at a rate fixed by the commission on any unpaid balance, shall be repaid to the retirement system in equal installments by deduction from salary or in another manner and in amounts which the commission shall approve; but the installments shall be at least equal to the member's contribution to the retirement system and at least sufficient to repay the amount borrowed with interest at the conclusion of a term fixed by the commission. No more than two loans may be made to any member in any 12-month period.The retirement system shall make no loan to a member after the member has terminated employment with the city.

Interest charged for loans to members shall be fixed annually by the commission to take effect January 1 of each calendar year at a rate equal to the average of the daily rates of interest at constant maturity based on daily trades paid by 30-year United States Treasury bonds for the period beginning on the first and ending on the 30th day of the immediately preceding November plus 1%, or 10%, whichever is less. The interest earned from loans to members shall be treated in the same manner as interest from investments of the retirement system.