Every NYPD rank has a City-funded annuity fund run through its union, separate from your pension. This lesson covers when you can take it, your choices, and the tax rules that change if you move it.
The short answer. Police officers are in the PBA fund, sergeants the SBA fund, detectives the DEA fund, and lieutenants and captains share the SOC fund. The money pays out after you retire or leave the NYPD, depending on the fund. Each fund lets you take it, leave it invested, or roll it to an IRA, and the SBA and SOC funds also offer installments. Payouts are taxed federally. The SOC, DEA and SBA funds are on New York’s list of local government plans whose payouts can be subtracted from state income; the PBA fund isn’t on that list.
The full walk-through, with every quote, is in our post Your NYPD Union Annuity Fund at Retirement.
Not while you’re working. The DEA says “YOUR ANNUITY CAN NOT BE REMOVED UNTIL YOU RETIRE,” and the SOC says you must be retired before asking for a distribution or rollover. If you’re leaving before retirement, check your own fund’s rule. PBA officers hired on or after March 15, 2017 get no annuity contribution in their first five years.
New York tax. For the funds on the Tax Department’s list, money taken straight from the fund can be subtracted from your New York income at any age. Roll it to an IRA and, in the Tax Department’s advisory opinions, withdrawals stay exempt only to the extent they return the money you rolled over; growth earned in the IRA afterward is taxable in New York, though it may fit the $20,000 pension and annuity exclusion once you’re 59½. Each IRA withdrawal is part exempt and part taxable, in proportion.
The 10% penalty. Leave the NYPD in or after the year you turn 50 and money taken from the fund before 59½ has no 10% federal penalty (26 U.S.C. 72(t)(10)). That exception stays with the plan. In an IRA, a withdrawal before 59½ carries the 10% unless another exception applies.
So money that stays in the fund, or comes straight out of it, keeps the fund’s New York treatment and, if you left at 50 or later, the penalty exception. Rolling it to an IRA gives those up for future growth and early withdrawals, in return for whatever an IRA offers you that your fund doesn’t.
Each fund also keeps its own beneficiary designation, separate from the Pension Fund’s. Lesson 13 covers beneficiaries.
Sources: SBA Annuity Fund, Summary Plan Description (updated December 13, 2024); Superior Officers Council Annuity Fund; DEA Annuity Fund; PBA Benefits Bulletin, June 2013 (archived); NYS Department of Taxation and Finance, Information for retired persons; Advisory Opinion TSB-A-24(3)I; 26 U.S.C. 72(t)(10). Advisory opinions bind the Tax Department only for the person who asked; confirm your own case with a qualified tax professional.
This lesson is general, not a recommendation for your own case. If you roll money into an IRA that we manage, we are paid on it. If it stays where it is, we are not. Confirm every figure and date with your union annuity fund before acting.