N.Y. Comp. Codes R. & Regs. tit. 2, § 354.7 – Computation of benefits for restored Tier 3 and Tier 4 members who retire with an outstanding loan balance.

(a) Upon restoration to membership pursuant to this Part, neither the contribution balance nor the loan balance that was outstanding at the time of retirement shall be restored. However, upon the retirement of a Tier 3 or Tier 4 member who has previously retired with an outstanding loan balance and who has subsequently been restored to membership, the retirement allowance shall be reduced by the same amount as it was reduced pursuant to either subdivision (i) of section 517-c of the Retirement and Social Security Law or subdivision (h) of section 613-a of the Retirement and Social Security Law (whichever was applicable in connection with the previous retirement).
(b) If a restored Tier 3 or 4 member retires with an outstanding balance from a loan taken during a post-retirement restored membership, benefits payable shall be reduced with respect to any outstanding loan balance from such loan pursuant to the provisions of subdivision (i) of section 517-c of the Retirement and Social Security Law or subdivision (h) of section 613-a of such law, as applicable, and calculated as of the date of such subsequent retirement.