Ask The Experts: Retirement

By Reg Jones

Reduction in force and creditable service

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Q. I am a FERS employee with slightly less than five years’ creditable service.

If I am the victim of a reduction in force before I reach the five-year point, will any unused leave be counted toward creditable service?

A. No.

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Unused leave and compensatory leave

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Q. I am planning to retire at the end of this year and may have both credit and compensatory leave balances at that time. Is my agency required to pay me for this unused leave, or is it optional?

A. While comp time will be paid at the overtime rate in effect when it was earned, credit hours have no cash value and will be liquidated when you retire.

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DoD leave and military leave

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Q. I work for the Defense Department and plan on retiring at the end of this year. I’m retired from National Guard and have 240 hours of military leave. When I retire from DoD, will I be paid for the 240 hours of military leave along with my DoD leave?

A. No. You’ll have to check with your branch of service to see if your military leave has any cash value.

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CSRS max percentage and accrued annual leave

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Q. Am I correct that you can “add” accrued annual leave in the calculation of CSRS retirement percentages, even if the accrued and unused leave at retirement would increase your retirement percentage more than 80 percent?

A. Yes. The 80 percent limit applies only to the earned annuity benefit, the one based on your years and full months of creditable service.

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Applying sick leave toward retirement milestone?

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Q: I will be 60 in December 2013 but will not have 20 years of service until April 2014. I have 1,000 hours of sick leave. Can I use that leave beginning Jan. 1, 2014, to reach the April milestone?

A: No. You must meet the actual age and earned service requirements to be eligible to retire. Unused sick leave can only be added after you meet those requirements.

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Unused comp time

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Q: What are the rules concerning getting paid a lump sum for unused comp time (overtime credit) after retirement? Is there a limit on how many hours you can get paid for? Does the balance of annual leave have any effect on comp time balance?

A: Compensatory time must be used within 26 pay periods. If you retire and have any compensatory time remaining, it will be paid at the hourly overtime rate in effect when you earned it. Such a payment is not affected by any lump sum payment for unused annual leave to which you may be entitled.

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Moving leave to TSP accounts

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Q: I read on Fed Weekly that some congressional discussions occurred on the subject of allowing federal workers to transfer all or part of their unused sick and annual leave into their Thrift Savings Plan accounts. Are there any discussions on this topic and if so, do you know the status and if and when this would be implemented?

A: While there may have been discussions, none of them have resulted in a legislative proposal being introduced in either chamber of Congress.

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Retirement dates and leave payouts

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Q: I am an employee under the Civil Service Retirement System, 6C, facing mandatory retirement the second week of January 2012. I anticipate finishing 2011 with 448 hours of annual leave on the books. Jan. 1, 2 and 3 would be the ideal retirement dates. In 2011, Pay Period 26 ends on the last day of the year. I’m now looking at Dec. 31, a Saturday, as the retirement date on the paperwork in order to receive the full annual leave 448-hour lump-sum payment.

Do you see any problem with that date given the information provided? Additionally, I would imagine the lump-sum payment, which will be a direct deposit sometime in January 2012, will be counted as 2012 income and not in the 2011 tax year. 

A: No, I don’t see a problem with retiring on that date; and yes, your lump-sum payment will be taxed in the year it’s received.

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Use-or-lose for 2011

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Q: I want to retire Jan. 1, 2012. will I lose my 240 hours of accumulated leave? What is the use-or-lose date for 2011?

A: In 2011, the leave year ends Dec. 31. However, even if you retire after that date, you won’t lose your 240 hours of annual leave; that’s the number of hours you can carry over from one year to the next. If you retire after Dec. 31, you would lose any hours of annual leave in excess of 240. Those are your use-or-lose hours.

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Adding unused leave to TSP?

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Q: I understand Congress has a bill to allow federal employees, upon retirement, the ability to roll our unused annual leave into the Thrift Savings Plan. Has this been decided upon as of yet?

A: No.

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Unused sick time and annuity calculation

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Q: Under the Federal Employees Retirement System, after 20 years, your annuity is figured at 0.011 percent of your high-3 salary average multiplied by your years of service. Below 20 years, the percentage used is 0.01. With the new law allowing 50 percent of unused sick time to be used for annuity calculations, can that time also be used to meet the 20-years-of-service criterion?

A: Let’s first get the computational facts straight. The standard FERS formula is as follows: 0.01 x your high-3 x your years of creditable service. The 0.011 multiplier is only used if you retire at age 62 or later with at least 20 years of service. Now, to your question: No, sick leave can not be used to meet the years-of-service requirement. It can only be added after that criterion has been met.

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Payment for unused leave

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Q: I currently have an employee who insists on retiring at the end of the current year. This individual has agreed to work as a part-time rehired annuitant for a period not to exceed one year. The issue is this: She has 240 hours of carry-over leave, 168 hours of unused leave for this year and 120 hours of restored leave. Can the individual get paid for the leave and return to work immediately?

A: No. She would lose any leave that exceeded 240 hours, and that 240 hours would be carried over to her temporary position. Because unused leave is projected forward when calculating a lump-sum payment, even if her rehiring were to be delayed, she would have to repay the difference. For example, if she received a lump-sum payment for 60 days of annual leave and returned to work after 40 days, she would have to return 20 days’ worth of that money.

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Retirement: Dec. 31 vs. Jan. 1

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Q: I plan to retire at the end of this calendar year under the Civil Service Retirement System. My tour of duty is 8 a.m. to 4:30 p.m. Monday thought Friday. Everything I read says the optimum date to retire is Dec. 31. Human resources says I can only retire on the first, second or third of the month, and they want me to retire Jan. 1. It is my understanding that there is no advantage to retiring after Dec. 31 because the weekend days aren’t paydays and if I retire Jan. 1, I will lose one day of my January annuity. How can I convince HR that Dec. 31 is the correct date?

A: You can retire on any day, including at the close of business on Friday, Dec. 31. No one else has a say in that. However, your assertion that there’s no advantage to retiring after that date is incorrect. Because the leave year ends on Jan. 1, you could retire on that day and still get paid for any unused annual leave that exceeds the carryover limit. The minor downside is that you’d lose 1/30th of your first month’s annuity.

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Annual leave and separation

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Q: I have 70.5 days of annual leave and will be separating very soon via a Medical Evaluation Board on a service-connected disability. Am I allowed to sell my annual leave? Are there any pros and cons?

A: All civilian employees who separate from the government either by resigning or retiring automatically receive a lump-sum payment for their unused annual leave.

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Retirement, accrued leave and holidays

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Q: I will be retiring from the Postal Service through the Civil Service Retirement System shortly. Will I be paid for any holidays that occur during my accrued annual leave?

A: At retirement, unused annual leave is projected forward. The amount of money you receive in a lump-sum payment will be identical to what you would have received if you were still on the job working eight hours a day, 40 hours a week and 80 hours a pay period.

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Unused leave

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Q: As a federal civil service employee in the Defense Department, I usually have several days of use/lose annual leave at the end of the year. Rather than taking off almost the entire month of December to avoid losing accrued annual leave, am I allowed to sell back the unused leave?

A: There is no provision in law that would allow you to be paid for unused annual leave that exceeds the carryover amount from one leave year to the next.

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