Ask The Experts: Retirement

By Reg Jones

VSIP and annual leave cash-out

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Q. My agency is contemplating a buyout but wants everyone off the books by Dec. 31. I would think it would be beneficial to retire on a date that would roll any buyout payment and any annual leave lump sum into the following tax year, when income would be lower. Am I correct that retiring on Dec. 29 would place me on the annuity role in January, and my Voluntary Separation Incentive Payment buyout and annual leave lump sum would be 2013 income?

A. Yes.

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Leave accrual

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Q. I am a Defense Department civilian employee under FERS. My date of birth is March 15, 1954. My EOD was Oct. 1, 2007, which gives me five years of service. I have accrued 111.75 hours of annual leave, 80 hours of sick leave and 8.5 credit hours as of the pay period ending Oct. 6. I do not meet eligibility requirements for an early retirement under FERS, so If I resign within the next few weeks, what is the process I need to go through, and what can I expect as far as payout? Will I lose any of my leave? What are my options, if any? I also have 32 years of service in the private sector.

A. When you separate from the government, your agency will give you a lump-sum payment for any unused annual leave and credit hours. As a rule, it will be included in your final biweekly paycheck. To receive a refund of your retirement contributions, you’ll need to fill out a copy of Standard Form 3106, Application for Refund of Retirement Deductions, and send it to the Office of Personnel Management. That form is available from your personnel office or at www.opm.gov, click on Find Form(s).

While you won’t receive anything for your unused sick leave, if you ever returned to work for the federal government, those hours would be recredited to you. Because you were covered by FERS, you were earning Social Security credits for the entire time period of your employment. When you are eligible for a Social Security benefit, those credits will look no different from the ones you earned in the private sector.

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High-3 and retirement date

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Q. I plan to retire at the end of the year under CSRS with 30 years of service. I received my last cost-of-living increase Jan. 3, 2010, which would be part of my high-3. Do I have to stay until Jan. 3, or can I retire Dec. 29 and still receive full credit for the cost-of-living increase toward my high-3? If I have to stay until Jan. 3, will I still get paid in my last check for my 439 hours of annual leave?

A. The 2012 leave year ends Jan. 12. If you want to be on the annuity roll in January, you’d have to retire no later than Jan. 3.

However, if you waited until Jan. 3, your first month’s annuity would be only 27/30ths of the full amount. Further, you wouldn’t get partial credit for sick or annual leave you would have earned if you’d completed the pay period. Therefore, retiring Dec. 29 would seem to make better sense.

As for your high-3, employees don’t get cost-of-living increases, only pay raises. Since your high-3 will be based on the average of your highest three consecutive years of basic pay, even if you stayed through the first pay period after a pay increase went into effect, it would affect only one of the 78 pay periods that go into that average.

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Incomplete buyback and resignation

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Q. A former federal employee was making his buyback through payroll deduction and still owed approximately $2,500. He was suspended indefinitely and, after several years, resigned. He was never given an opportunity to pay the lump sum to max his buyback. He was led to believe it would be taken out of his unused leave. Will he still be able to pay a lump sum or at least get credit for the amount he already contributed?

A. He will neither be able to pay a lump sum to complete the deposit nor get credit for the amount he already put in. Unless he returns to federal service, his only option is to request a refund. He can do that by going to www.opm.gov, clicking on Find Form(s), downloading a copy of Standard Form 2802 (CSRS) or 3106 (FERS) and sending the completed form to OPM. The address is on the form.

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Buyouts and annual leave

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Q. In the last buyout the clerks had for $15,000, one of our clerks took that and said that she got paid for the holidays after her retirement date if her annual leave would have taken her through those dates. Back then, the retirement date was the end of November and she got paid for Christmas, New Year’s and Martin Luther King Day. Does this benefit apply all the time when a person retires, or is it just when a buyout is offered?

A. Yes. Unused annual leave is projected forward as if you were still on the job and paid at the hourly rate in effect at the time. For example, if an across-the-board pay increase occurred, any hours of unused annual leave that fell on or after that date would be paid at the new hourly rate. Note: No credit is given for step increases you would have received if you were still on the job.

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Rehired annuitant and leave

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Q. I have been employed as a rehired annuitant under FERS for more than three years and will retire again. While re-employed, I received both my annuity and the salary of my new position. What is the procedure in reference to my annual leave? Will I be given a lump-sum payment for it? And as far as sick leave, will my hours incurred be added to my time as an annuitant.

A. While you will receive a lump-sum payment for your annual leave, you won’t get credit for unused sick leave, nor will you be eligible for a supplemental annuity. No one hired into a position where he receives both his annuity and the full salary of his position receives retirement credit.

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Annual leave and retirement

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Q. I am covered under CSRS and am retiring Dec. 29. I will have an annual leave balance of 440 hours, which includes hours I must lose or use at the time of retirement. Normally, 240 hours of annual leave carry over to the next year. Will I forfeit the extra hours, or will I get a lump-sum payment for all of the 440 hours of annual leave?

A. For most employees, the leave year ends Jan. 12, 2013. Therefore, you’d be paid for all your unused annual leave.

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Leave accrual

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Q. I’m considering retiring on July 3, 2013. My current and projected sick leave balance is as follows:

Currently as of pay period 14 = 2,320.45

End of this calendar year projection = 2,372.45

Projected amount as of June 29, 2013 = 2,428.45 (last pay period before retirement)

If you apply the Office of Personnel Management’s sick leave conversion to the 2,428.45 sick leave hours at the time of my probable retirement (July 3, 2013), the conversion table states that I’ll be one hour or .55 hours shy of having one year and two months of sick leave applied to my retirement.

In 2013, pay period 14 will end on June 29, 2013 and I would like to retire the following week. Will I be able to accumulate two hours for the one week, or is leave only accrued for an entire pay period basis?

A. No. You must complete a pay period to get credit for any annual and sick leave earned during that pay period. However, don’t despair. Unless you will be retiring with an exact number of years and full months of service, you’ll have some leftover days that will be converted to sick leave hours and added to your actual sick leave hours, thereby increasing the probability that you’ll be credited with an additional month in the computation of your annuity.

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Annual leave and return to federal service

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Q. I worked for the federal government for 14 years (1980 to 1994). When I left federal service, I took a buyout.

I would like to return to federal service. If I get a job, will I start out at 13 days of annual leave, or will I earn an amount equal to the amount I accrued after 14 years of service?

A. You will get credit for your earlier service in determining your leave accrual category.

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Leave without pay

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Q. Would you please explain the differences between using leave without pay and leave without pay-uniformed services and how it impacts someone at retirement? Am I automatically placed on LWOP-US when activated for Reserve training (title 32), or can I request LWOP and not have to make a deposit? I have been making deposits for a lot of LWOP-US over my career and would hate to find out I didn’t have to make those payments for stints less than six months.

A. No, you don’t have a choice. When called to active duty, you are automatically placed on LWOP-US unless you elect to use annual leave for some or all of that time.

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Military and federal service

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Q. I am a retired Navy veteran who recently became a federal employee. How does my military service count toward my federal service time, leave and retirement benefits?

A. To learn what benefits you are entitled to as a retired member of the armed forces, go to www.opm.gov/StaffingPortal/vetguide.asp and scroll to Service Credit.

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Annual leave before retirement

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Q. I am going to retire in October. I have 42 hours of annual leave left. I would like to use 24 hours before I go. I will turn 60 in those three days and will be able to reach the FERS bridge I need to be in a pay status. Since we are given our leave at the first of the year, can I do this? Will I owe them money? Will it be allowed?

A. First, you would need to get your supervisor’s approval to take annual leave. Second, if you took leave that you hadn’t earned, you’d owe the government money for every one of those hours.

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Leave years 2021, 2022

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Q. I am doing long-range retirement planning, and the answer I need is not addressed by the OPM website, as the end of leave year page is only shown through 2020. Could you give an estimate of the best days for a FERS covered employee to retire at the end of leave year in 2021 and 2022? My research shows that I need to work until Dec. 31, 2022, to get full credit for the entire leave year.

A. I don’t know when the leave year will end in 2021 or 2022. And I’m not going to waste my time finding out, because it really doesn’t make any difference. That’s because you need to obey only two rules when retiring at the end of a year. First, retire at the close of a pay period so you’ll get credit for any annual and sick leave you earned during that pay period and be able to get a lump-sum payment for any annual leave that exceeds the annual carry-over limit. Second, retire at the close of a pay period closest to the end of a month so you’ll be on the annuity roll in the following month.

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Best time to retire from USPS

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Q. I am a CSRS USPS employee (age 56 with 35 years’ service) thinking about retiring at the end of the year. Do the same dates hold true for postal workers as federal employees? To maximize my benefits, I believe Dec. 29 is the best date. USPS pay periods do not follow the same as federal. Does this affect the retirement date?

A. To maximize your benefits when you retire, you need to do only two things: 1) retire no later than the end of the leave year and 2) retire before Jan. 3. That way you’ll receive a lump-sum payment for any unused annual leave (not to exceed 440 hours in most cases) and you’ll be on the annuity roll in January. If Dec. 29 is the end of a pay period, it would be the best of all possible times for you to retire.

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Annual leave and final regular paycheck

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Q. Do you know if sell back of annual leave is included in your final regular paycheck from your agency after retiring? Or is it sent as a separate check?

A. Because there is no set rule, only your agency payroll office can answer that question.

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Military service and annual leave accrual

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Q. I was medically retired after more than 20 years with the U.S. Army due to a service-connected disability (arteriosclerosis — heart disease — falling under Agent Orange exposure during the Vietnam War as recognized by the VA and the Army). The medical retirement is reflected on my DD 214, and I have VA documentation of my 60 percent disability. I believe I qualify for receiving credit for my uniformed service toward annual leave accrual. Does this qualify me to receive credit for military service toward annual leave accrual? How do I get OPM to recognize and process my case to see if I can fall under paragraph 2 below?

“Credit for uniformed service is substantially limited for retirement members of the armed forces. When it enacted the Dual Compensation Act in 1964, Congress adopted a compromise between the view that retired members should receive preference and full credit for their service and the view that there should be no advantage for retired members. As a result, retired members only receive leave accrual credit for actual service 1) during a war declared by the Congress or while participating in a campaign or expedition for which a campaign ribbon is authorized or 2) when the retirement was based on a disability received as a direct result of armed conflict or caused by an instrumentality of war and incurred in the line of duty during a period of war.”

A. Only your agency, in consultation with OPM, can answer your question.

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Leave accrual

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Q. I am on six weeks of sick leave. Will I continue to accrue sick leave and annual leave during these six weeks?

A. Yes.

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Annual leave and prior federal service

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Q. I worked for the Department of Justice for 18 months, then transferred to the Department of Veterans Affairs. I have served three years of federal service. Am I entitled to begin receiving six hours of annual leave per pay period, or did my service time start over when I transferred?

A. Yes. Your prior service time transferred with you.

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Military medical retirement

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Q. I served in the Army for two years and nine months and was medically retired out. I have become a federal employee. I have been told by my HR office that my time in the service will not count toward my leave accrual or retirement because I was retired out. I have been to OPM’s website and looked at the regulations, and from what I can tell, OPM defines military retirement as that for which you are eligible to receive retirement benefits, which I am not. So I am confused.

A. According to OPM, these rules apply:

Under law 5 U.S.C. 6303(a)(A-C), an employee who is a retired member of a uniformed service as defined by section 3501 of title 5 is entitled to credit for active military service only if (A) his retirement was based on disability (i) resulting from injury or disease received in line of duty as a direct result of armed conflict; or (ii) caused by an instrumentality of war and incurred in line of duty during a period of war as defined by sections 101 and 1101 of title 38; (B) that service was performed in the armed forces during a war, or in a campaign or expedition for which a campaign badge has been authorized; or (C) on Nov. 30, 1964, he was employed in a position to which this subchapter applies and thereafter he continued to be so employed without a break in service of more than 30 days.

If you meet the criteria, you’ll get credit for that time. If you don’t, you won’t.

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Retirement and annual leave payment timing

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Q. I am a CSRS employee who plans to retire at the end of 2012 and plans to have 440 hours of annual leave, for which I wish to get paid in 2013 so it will be in my 2013 income.

I understand that I could retire Dec. 29, which is the end of the 26th pay period, and receive this annual pay in my last paycheck, which I would receive Jan. 4, 2013.

Can I retire Jan. 3 and still carry over my extra leave and get paid for that in the 27th paycheck, which would be issued Jan. 14?

A. You can retire Jan. 3 and receive a lump-sum payment for all your unused annual leave. However, if you do, your first month’s annuity will be reduced by 1/30 for each day you are still on the payroll. Note: If it helps in your decision making, lump-sum annual leave payments are rarely included in the final paycheck. They are usually made only after your personnel file has been closed out by your agency.

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