Ask The Experts: Retirement

By Reg Jones

Unused sick leave

Bookmark and Share

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?

Read the rest of this entry »

Tags: , , ,

Credit for sick leave

Bookmark and Share

Q. It is my understanding that unused sick leave after Jan. 1, 2014, is credited at 100 percent to the employee at retirement. Is it just added to the total annuity, or is it a lump-sum payout like unused annual leave?

A. Unused sick leave has no cash value. Instead those hours are added to any actual service hours that weren’t used in the initial computation of an annuity. For every combination of hours that adds up to 174, an additional month will be added to the actual service time and increase the amount of the final annuity.

Tags: , , ,

Best date to retire

Bookmark and Share

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.

Tags: , , , , , , ,

Excess retirement contributions

Bookmark and Share

Q. I’ve come to understand that excess retirement contributions can be had/applied in two ways for annuity purposes. One is a lump-sum return of same and the other can be applied toward my annuity over the 80 percent.

I’m a CSRS employee and will have almost 43 years of service in May. I also have more than a year’s sick leave on the books, which is another 2 percent, which puts me at 82 percent. If I chose to apply my excess to my annuity, how and what percentages would apply?

A. You would receive an annuity based on 42 years and 11 months of service (80 percent) plus however much additional annuity you would be entitled to based on your unused sick leave. Before your annuity was finalized by the Office of Personnel Management, you’d be given the option of receiving a refund of your excess retirement contributions or using that money to buy additional annuity that, like unused sick leave, isn’t subject to the 80 percent limit.

Tags: , , , ,

Leftover sick leave

Bookmark and Share

Q. FERS annuity computation includes only whole years and whole months worked in calculating longevity service time. But unless you retire on an exact date — completing a whole year or a whole month worked on the specific date of retirement — you will be left with some workdays not credited for longevity service time purposes. But can these few uncredited days — not amounting to a whole month — be added to your sick leave balance and have those non-whole month days PLUS your sick leave hour balance combined and added to your total service time for longevity?

A. Yes. All leftover days of actual service are added to any unused sick leave days and used in the computation of an annuity. However, because an annuity year is treated as if it was made up of 12 30-day months, those days have to be converted into months. To do that, 360 (12 x 30) is divided into 2,087 (the number of hours in a work year). Therefore, on average, a month equals 174 hours. Once the number of additional months is determined, all remaining hours are discarded.

Tags: , , ,

Unused sick leave

Bookmark and Share

Q. I’ve worked for the U.S. government as a Department of Defense Dependents Schools teacher for 40 years. I am under CSRS and have 230 days of accumulated sick leave. What would this be converted to should I elect to retire this year at age 65? Also can I, should I wish, work as a substitute teacher once retired, even should I be granted Voluntary Separation Incentive Pay?

A. Because unused sick leave is added to hours of actual service that weren’t included in the initial annuity computation, you’ll have to do the arithmetic. Go to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c050.pdf and scroll to Section 50A2.1-3

Tags: , , , , , ,

VERAs and sick leave

Bookmark and Share

Q. If I have met the requirements for a Voluntary Early Retirement Authority being offered in 2014 (over 25 years and any age — in my case, 27 years and age 46), would I get credit in my retirement benefit calculation for sick leave. I know after Dec. 31, 2013, the full amount can be used. However, I wasn’t sure if you have to retire under “normal” circumstances and whether it was still applicable in a VERA situation. After meeting the requirement for a VERA, I know you can collect your retirement annuity immediately. Does the same hold true for the Thrift Savings Plan? Are there penalties for being under the minimum retirement age?

A. Yes, any unused sick leave would be used in your annuity computation.

Tags: , , , ,

Early retirement, unused sick leave and SRS

Bookmark and Share

Q. I am 50-year-old FERS employee with 28 years of service. If I am offered an early-out and take it, what would happen to my 578 hours of sick leave? Would I still be entitled to get credit for my unused sick leave? Also, would I be eligible for special retirement supplement?

A. If you retire before Jan. 1, 2014, you’ll only get half credit for your unused sick leave in the computation of your annuity. If you retire on or after Jan. 1, you’ll get full credit for it. As for the special retirement supplement, you’ll be entitled to receive it when you reach your minimum retirement age, which in your case is 56.

Tags: , , , , ,

Postponed annuity and unused sick leave

Bookmark and Share

Q. I work for the Postal Service. If I retire at 56 with 20 years of service after Jan. 1, 2014, and decide to postpone my annuity, what happens to my sick leave? Will I be credited with 100 percent, 50 percent or 0? If it does not count, is there any reimbursement?

A. You’ll receive full credit for your unused sick leave in the computation of your annuity. That’s true regardless of when you begin receiving your annuity. Because you’d be retiring under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. You can, of course, defer the receipt of your annuity to a later date to reduce or eliminate the age penalty.

Tags: , , , , ,

Retirement and marriage timing

Bookmark and Share

Q. I have decided to retire June 1. I’m in CSRS Offset, will have 36½ years of actual service, and 2,200-plus hours of unused sick leave, for 37½ years of credited service time. This is my 35th year of credited Social Security earnings. I’m aware of the offset reduction. I’m a widower and my retirement forms have been sent in as such.

If I were to remarry after the effective date of my retirement but before I were to receive the first full annuity payment, and sent in a revised retirement form, marriage certificate, beneficiary forms, etc., to the Office of Personnel Management, is there a period of time that the payback of the difference of nonsurvivor vs. survivor annuity and interest would not apply? I thought I read in an OPM circular that if this were to occur (marrying after retirement) before the first full annuity payment was received, the difference payback and interest would not be applied, just the permanent survivor annuity reduction.

A. That’s my understanding, too.

Tags: , , , , , , , ,

Retirement date

Bookmark and Share

Q. Is Feb. 8, 2014, a good time to retire?

I am a CSRS employee. I was looking at Dec. 28, 2013, but I am not sure about my sick leave. If I have 160 hours of sick leave on the books, will this count as an additional month added to my retirement? My goal is to have 33 years. For either date, when would I receive my first retirement check?

A. Typically, a good day to retire is one that is at the end of a pay period (to get credit for any annual and sick leave earned during that period), before the end of the leave year (to receive a lump-sum payment for all unused annual leave, including any that exceeds the annual 240 hour limit), and, for CSRS employees, no later than the third day of a month. Keeping the latter point in mind, if you retired Feb. 8, you wouldn’t be on the annuity roll until March and be entitled to your first annuity payment in April.

One hundred and seventy-four hours of unused sick leave equals one month. However, unused sick leave doesn’t stand alone. It is added to any hours of actual service that don’t add up to a month when an employee’s annuity is calculated. Like sick leave days, a day of unused actual service is 5.797+ hours long. That figure is derived by dividing 2,087 (the number of hours in a work year) by 360 (the number of days in a retirement year).

Tags: , , , , ,

Sick leave

Bookmark and Share

Q. I am eligible for retirement in July. I started under CSRS and transferred to FERS. I know that after Jan. 1, 2014, I will get time of service for all of my sick leave. How is that figured? Do 2,080 hours add one year of service?

A. No, 2,087 hours equals one year. Therefore, a month of additional credit is roughly 174 hours. Be aware that unused sick leave isn’t treated separately. It’s added to any hours that weren’t used in the computation of your annuity. There are usually some hours left over because your annuity is based on years and full months of service.

Tags: , , , , , ,

Unused sick leave

Bookmark and Share

Q. I have 17 days of unused sick leave. I do not want to give it back when I retire. Is that calculated as 17 working days or 17 calendar days?

A. Neither. Unused sick leave days (and days of actual service that don’t add up to a full month) are converted to annuity days. That’s done by dividing 2,087 (the number of hours in a work year) by 360 (12 30-day months). As a result, an annuity day is about 5.79 hours long, and an annuity month about 174 hours long.  Only full months are used in an annuity computation. Any leftover hours are dropped.

Tags: ,

Unused sick leave

Bookmark and Share

Q. I am retired military with 27 years in. Since that time, I have been a civil servant and am coming up on my 10-year anniversary under FERS. My service computation date is Aug. 10, 2003. I am planning to resign from my civil position Dec. 31, prior to my 62nd birthday. (I was born Dec. 11, 1952.) I plan to ask for a lump-sum check for my unused accrued leave. But it looks like I will not gain anything for having been such a healthy individual and that my many days of sick leave will simply go wasted. Is my sick leave balance used in any form to accrue additional deferred benefits or can I get paid for my unused balance?

A. If you leave your retirement contributions in the fund when you leave, you’ll be eligible for a deferred annuity. However, deferred annuitants receive no credit for their unused sick leave. FYI: If you stayed on until your 62nd birthday, you’d receive full credit for that unused sick leave in the computation of your annuity.

Tags: , , , , , , , , ,

Unused sick leave

Bookmark and Share

Q. When I retire at the end of this school year, I will have 43 years of service with the Department of Defense Education Activity and 130 days of unused sick leave. I have been informed that my sick leave can be used to add additional service time. Does that apply when I have already reached 80 percent of my salary for retirement?

A. Yes. Unused sick leave isn’t subject to the 80 percent limit.

Tags: , , ,

High-3

Bookmark and Share

Q. According to my leave and earnings statement, my service computation date is Feb. 28, 1971. So on Feb. 28, I will have 42 years of continuous federal government service. I am under CSRS and have paid back my military contribution. So I reached my maximum annuity based on actual service that’s allowed under law: 80 percent. How is this annuity computed? I know it is based on my high three grades, but how is the high-3 established? Is there a certain amount of time required between these grades?

Also I have been told that after 42 years of service, I am working for free. But don’t my retirement deductions continue to be taken from my pay? And am I not eligible to have these deductions returned to me? How do I apply to have these deductions returned? And are there any other options available? I just turned 60 and plan on working in my current position for at least another five years, but I would really like to work eight more years, just to have 50 years of continuous government service.

A. Your high-3 is based on the average of your highest three consecutive years (78 pay periods) of basic pay, not your three highest grades. When you have 41 years and 11 months of creditable service, you will be entitled to 80 percent of your high-3, the highest amount that can be paid for actual service. Unused sick leave isn’t subject to that limit and will be added to increase your annuity above 80 percent. Although retirement deductions will continue to be taken from your pay, they will be returned to you by the Office of Personnel Management, which will offer you the option of accepting them or using them to purchase additional annuity, which, like sick leave, isn’t subject to the 80 percent limit.

Tags: , , , , , , ,

Retirement date

Bookmark and Share

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.

Tags: , , ,

Retirement date and annual leave

Bookmark and Share

Q. I am a FERS employee who plans to retire at the end of 2013. At that time, I hope to have around 448 hours of annual leave (240 hours carried over from 2012).

What is the best date for me to retire without losing any annual leave? I will be 65 on Nov. 10, 2013.

A. Before I get to your question, let me remind you that if you retire before Jan. 1, 2014, you’ll only get half credit for any of your unused sick leave. With that out of the way, you can retire on any day up to Jan. 11, 2014 and get a lump-sum payment for all of your unused annual leave. Leaving on Jan. 11 makes the best sense because you’d get credit for any sick and annual leave you earned during that pay period.

Tags: , , , ,

Re-employment and sick leave carryover

Bookmark and Share

Q. My husband was a temporary federal employee for the Defense Department for five years. He was laid off in August. He had two years of military service, which he bought that time back, so in essence he has seven years of federal service. He is 60 years old. He put 10 percent of his salary in the Thrift Savings Plan. Should he leave that money in TSP or put it in another vehicle?

Also, when he reaches retirement age (62), will he receive a pension for the seven years of federal service? He left DoD with a sick leave balance — his annual leave he was paid for. Is it true, if he receives another government position within three years, his remaining sick leave will carry over?

A. Reg: He would be eligible for an annuity at age 62 if he had five years of full-time service from which retirement deductions were taken and he didn’t take a refund of those deductions when he left. The unused sick leave he had to his credit when he left wouldn’t be included when his annuity was computed. On the other hand, if he returned to work for the federal government, his sick leave would be restored.

Mike: He should leave his money in the TSP for as long as possible, and manage it there. Its costs and investment options are superior to those he’ll find anywhere else.

Tags: , , , , , , , , ,

Unused sick leave and creditable service

Bookmark and Share

Q. I’m a FERS employee who is retiring Dec. 31. Will my unused sick leave count for some service time in 2012?

A. You will receive half credit for your accrued and unused sick leave in the computation of your annuity.

Tags: , , ,