Ask The Experts: Retirement

By Reg Jones

Unused sick leave

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Q. I plan to retire after 20 years of service at age 64 in 2015. I understand that I will be paid for unused annual leave. Will I be paid for unused sick leave?

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Annual leave payout

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Q. I’m being retired on medical disability, and I have more than 190 hours of annual leave. Who pays me for this and approximately when?

A. Your agency is responsible for generating a lump-sum payment for any unused annual leave. Usually such payments are made at the same time as your final paycheck is issued. Check with your agency to find out what its payment schedule is.

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Sequestration and unused annual leave

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Q. As a FERS employee retiring at the end of March after 27+ years at age 65. How will the sequestration and continuing resolution affect when I will get my check for unused annual leave? Will there be any effect on the delivery of my first annuity and Social Security checks?

A. There shouldn’t be any delay in the delivery of your annuity and Social Security checks. Whether there would be a delay in your lump-sum annual leave payment is something that only your agency can answer.

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Best date to retire

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Q. I’m 60 with 10 years in CSRS, 25 in FERS, with about 2,900 hours of unused sick leave (900 of which were in CSRS) and about 440 hours of unused annual leave expected by the end of the year.

If I retire on Dec. 31 to try to maximize my unused annual leave lump sum, it looks like I will not qualify to apply up to 100 percent of my unused sick leave to time of service (except the CSRS portion).

If I retire on Jan 1-3, 2014, to be able to use the full (rounded in months) amount of my unused sick leave applied to length of service, then I miss out on the maximum unused annual leave (since only 240 hours can be carried over), but I will get my pension check effective Feb. 1. Or does the leave year actually end in 2014, thereby allowing around 440 hours of unused annual leave for the lump sum?

Since I turn 62 on Oct. 8, 2014, and the annuity formula changes to 1.1 percent, what’s the earliest I could retire and maximize unused annual leave, get to apply my unused sick leave, and get a check in a timely fashion? Dec. 31 2014?

A. If you retire Dec. 31, you’ll only get credit for half of your unused annual leave. Since the 2013 leave year doesn’t end until Jan. 11, 2014, you could retire any time up to that date and get full credit. However, since you are a FERS employee, retiring after Dec. 31 would mean that you wouldn’t be on the annuity roll until February.

If you waited until you were 60, the FERS component in your annuity would be calculated using the enhanced 1.1 percent formula. Although you would have only been able to carry 240 hours into the new leave year, you would be earning additional annual leave during 2014. If you retired at the end of the last pay period in December 2014, you’d be able to get a lump-sum payment for all that accumulated leave and be on the annuity roll on Jan. 1, 2015.

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Postponed annuity and end of leave year

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Q. I will be retiring this year from FERS under MRA +10. I plan to select an immediate annuity postponed for payment to start Dec. 12, 2014, when I turn 62. I want to have my sick leave used to calculate my annuity based on full amount so I will select a date of Jan. 1, 2014, or later. To ensure I can cash out maximum annual leave, what is the last day of the 2013 leave year so that I can take a lump sum for unused annual leave of around 340 hours?

A. For most agencies, the 2013 leave year ends Jan. 11, 2014. Check with your own agency to be sure.

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Leave payment at retirement

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Q. I retired Dec. 31. At the time of retirement, I had accrued 448 hours of annual leave. Human resources told me this would be paid within 30 days. I have not received any payment, so I contacted the agency payroll office and was told it won’t be paid until the Office of Personnel Management completes all phases of the retirement paperwork. Is that correct?

A. No, it isn’t. Your agency is responsible for paying you for any unused annual leave. OPM has no role in that.

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Last salary check

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Q. I took the Voluntary Early Retirement Authority, and my retirement date is Feb. 28. I’m due a lump-sum payment for my unused annual leave. I was told in a letter I would get this in my last salary check. I just got paid on the 15th. So what date is considered my last salary check since my first annuity check is March 1?

A. Since salary checks are payments for the preceding two weeks of work, the one you just received would be for that final pay period. While lump-sum payments for unused annual leave are often included in the final paycheck, sometimes they aren’t. You’ll have to check with your agency’s payroll office to find out when to expect that payment.

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Unused annual leave

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Q. Because of the budget cuts, my job will be terminated soon. I have been working on a four-year term position (this is the second term, back to back) receiving both full annuity and full salary. I receive and accrue annual leave and sick leave. When I retired some years ago after 29 years of service, I was paid a lump sum for unused leave. In my current situation, will I be eligible to get a lump-sum payment for unused annual leave when I am terminated from this tour? I will not be retiring again, but I will be terminated. I don’t know if verbiage makes a difference.

A. Whether you retire, retire again or are terminated, you’ll receive a lump-sum payment for your unused annual leave.

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Leave usage

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Q. I plan on retiring in the near future. I will have around 300 hours on annual leave at that time.  Is there any Office of Personnel Management guidance that discusses my option to take the leave immediately prior to retirement rather than being paid for that leave at retirement?

A. There is no such thing as terminal leave in the federal civilian service. Therefore, you don’t have a choice. While you can take annual leave at such time and in such amounts as are approved by your supervisor, you can’t burn it off.  Just be happy that your unused annual leave will paid to you at the hourly basic pay rate you are receiving when you retire.

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Special retirement supplement

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Q. I am planning to retire this year at age 60 with 29.7 years of service under FERS. I understand that I will receive the annuity plus special retirement supplement. However, as a widow, I am also allowed to receive my husband’s Social Security payment at age 60. Does this reduce the special retirement supplement? Also, does the special retirement supplement act as earned income under the Social Security earnings test? Finally, does the check you receive after you retire for annual leave count as earned income under the Social Security earnings test?

A. Only earnings from wages and self-employment count. Therefore, the special retirement supplement doesn’t count. However, your lump-sum payment for unused annual leave does. Fortunately, you’ll be covered by the “first year rule,” which usually eliminates the possibility that your special retirement supplement would be reduced.

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Crediting unused annual leave to FERS

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Q. About two years ago, a bill was submitted to allow credit of unused annual leave to FERS. Has this bill passed in any form to date? Has this been implemented to date? If so, how does one pursue this?

A. Yes, a law was passed that allowed FERS employees to get credit for accrued and unused annual leave in the computation of their retirement annuities. However, the law only granted half credit to anyone retiring before Jan. 1, 2014. Anyone retiring after Dec. 31, 2013, will get full credit.

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Retirement date

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Q. When is the last day of 2013 that I can retire and get a lump-sum payment for unused annual and sick leave?

A. Assuming that you are talking about retiring at the end of the 2012 leave year, the answer is Jan. 12, 2013.

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Use-or-lose leave

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Q. If I retire Jan. 3, will I lose any leave above the 240 hours I have accumulated? Also, since I’m a CSRS employee, if I retire Jan. 3, will I receive my annuity check on the first of each month? Are the two days left on my service computation date considered annual leave for me to take, or do they just go away?

A. Since the leave year doesn’t end until Jan. 13, you’ll receive a lump-sum payment for all your unused annual leave. Because you are a CSRS employee, you can retire up to the third day of any month and be on the annuity roll in that month. However, your annuity for that first month with be reduced by 1/30 for every day you are still on the employment roll. Regardless of the day on which you retire, annuity payments arrive on the first day of the month following the one in which the benefit is earned. If you retire before the end of a pay period, you aren’t entitled to any additional annual or sick leave.

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Retirement date

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Q. When is the last day of 2012 that I can retire and get a lump-sum payment for unused annual leave?

A. December 31. However, since the 2012 leave year doesn’t end until Jan. 12, 2013, you could retire as late as that and receive a lump-sum payment for all of your unused annual leave.

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Unused annual leave and taxes

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Q. When I retire Dec. 29 and receive a check for my unused annual leave in 2013, will those funds be taxable in 2012 or 2013?

A. It will be taxable in the year it is received.

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Retirement date

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Q. I work at Social Security. I was going to retire on Dec. 28, the end of the pay year. But I recently found out the leave year ends Jan. 12, 2013. I will retire with more than 30 days of accumulated annual leave. If I retire Jan. 3, 2013, I understand my pension will be reduced about 1/10, but I can be paid for four days of work, which is much higher than the reduction I will take in my pension. This only makes sense if I can get paid for all of my accumulated annual leave (about 45 days) with a retirement date of Jan. 3, 2013, which is in the next calendar and pay year. Can you give me some insight into this issue?

A. If you retire no later than Jan. 12, 2013, you’ll receive a lump-sum payment for all of your accrued and unused annual leave.

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Re-employment, benefits and sick leave

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Q. I retired from FERS on Dec. 31, 2006, and returned to work on May 10, 2009. I am receiving both my salary and my full annuity. Both Medicare and Social Security are being deducted from my paychecks, which is fine.  I am receiving my full entitlements from Medicare and Social Security. I am 70 years old. Will my benefits be re-evaluated when I return to retirement status, which will be on or around May 10, 2014?

Also, as a retired annuitant, will my sick leave be adjusted to my time in service, and will I be able to draw a lump sum of any leave occurred that I have not used? I plan on having 360 hours of leave to cash in.

A. Because you are receiving both your full salary and your annuity, when you leave government again, you’ll receive a lump-sum payment for your unused annual leave; however, by law, you won’t get any credit either for the time you were re-employed or any unused sick leave. Your annuity will be unchanged. Except for the salary you received and that lump-sum leave payment, it will be as though you had never returned to work.

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Best retirement date

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Q. I am a CSRS fed, planning on retiring at the end of 2012. Is there any difference in benefits leaving either Dec. 31, 2012, or Jan 2, 2013? I know that if I retire Dec. 31, my cost-of-living adjustment in January 2013 will be 11/12 of the consumer price index. If I retire Jan. 2, 2013, won’t my January 2013 CPI also be 11/12? In both cases, won’t my annuity begin in January 2013?

I’m also planning on cashing in my annual leave and wanted the lump sum applied to the 2013 tax year. I believe either date would meet this criterion. Is it true that the leave year doesn’t end until Jan. 12, 2013?

A. Neither of the dates you picked makes any sense. For most employees, the last pay period in December ends on Dec. 29; the next one, which is the end of the 2012 leave year, is Jan. 12. If you want the shortest break between your last paycheck and your first annuity payment, retiring Dec. 29 would be the better choice. If you waited until Jan. 12, you wouldn’t be on the annuity roll until February.

As for COLAs, if you retired Dec. 29, you’d be on the annuity roll in January and eligible for 11/12 of the COLA that would be payable in January 2014. If you retired on January 2013, the amount would be 10/12.

Regardless of which day you pick to retire, you wouldn’t receive a lump-sum payment for your unused annual leave until 2013.

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Selling back travel comp time

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Q. I have heard that, upon retiring, there is a 24-hour limit on selling back credit hours, and one could accumulate about 448 hours of unused annual leave, if done exquisitely; and that religious comp time may not be sold back. What about travel comp time? May that be sold back? Is there a cap?

A. Compensatory time off for travel is forfeited:

* If not used by the end of the 26th pay period after the pay period during which it was earned;

* Upon voluntary transfer to another agency;

* Upon movement to a noncovered position; or

* Upon separation from the federal government.

Under no circumstances may an employee receive payment for unused compensatory time off for travel.

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Rehires and unused leave

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Q. I am a re-employed CSRS annuitant who is receiving both his full annuity and full salary. I receive and accrue annual leave and sick leave. When I retire again, for the second time, I will have accrued and unused annual leave and accrued and unused sick leave. At my retirement, will I be reimbursed for both the accrued and unused annual leave and the accrued and unused sick leave?

A. You will receive a lump-sum payment for your unused annual leave. You won’t receive any payment for your unused sick leave because it has no cash value.

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