At retirement a Tier 2 member can take cash from the Annuity Savings Fund. The booklet says it cuts the pension for life. This lesson covers the ceiling, the trade and the tax.
The short answer. In Tier 2 you can take up to 90% of your required amount, as well as some or all of your excess, as cash when you retire. The booklet says doing so “has the same effect as creating a shortage; therefore the member’s pension will be reduced for the life of the pension” (Tier 2 booklet, June 2026, p.14). Leaving the excess in raises your pension instead. Tier 3 has no final withdrawal.
The full walk-through, with every quote, is in our post NYPD Final Withdrawal: Leave It, Take the Excess, or Take All.
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The booklet states a pension cut as a number of dollars a year, for life, and nothing in it raises that number as prices rise. The cash is worth its full amount the day you take it. If prices keep rising, the same yearly cut takes a smaller bite out of what things cost in later years. The other side of the trade: the cut lasts as long as the pension does, and the cash lasts only as long as you make it last.
Part of the withdrawal can be money you paid in after tax (p.12). On the taxable part, the Fund withholds 20% for federal tax unless you choose a direct rollover to an IRA or other qualified account. It may also carry a 10% early-withdrawal penalty unless you’re over 50 or have 25 years of uniformed service (p.12); under the federal rule, the age test is leaving the job in or after the year you turn 50. A direct rollover avoids both, but money in an IRA no longer has the age-50 exception. Take your own case to a tax professional before you choose.
The decision is on the first form you send when you file for retirement, so it comes early. Lesson 9 shows where the figure is on your statement.
Sources: NYC Police Pension Fund, Tier 2 Summary Plan Description, June 2026, pp.7-10 and 12-14; 26 U.S.C. 72(t)(10). Tax rules change and have exceptions; confirm the specifics 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 the New York City Police Pension Fund before acting.