“Hi Micah and Tammy, I’m a Federal employee with 30 years in, and 5 years out from retirement. Can you explain how unused Sick and Annual leave are handled at retirement? I understand that unused SL balances can increase your annuity but I don’t understand the formulas. Thank you.” -Cheryl
Annual Leave
Let’s start with annual leave which is paid to you in a lump sum when you separate or retire from federal employment.
- Equals the pay you would have received if you worked until expiration of the period covered by the annual leave.
- Retire at the end of the leave year and:
- Receive payment for leave earned and not used the current year plus the amount carried over from prior year.
- If there is a general pay adjustment in the following year, some/all leave paid at the new rate!
For example:
If you retire on December 31, 2021 and have an annual leave balance of 448 hours…
Wait! How did you get 448 hours of annual leave?
You carried over 240 hours of A/L from 2020 (if you had more than this, you could have had 25% of use or lose leave restored in 2021, but the additional leave cannot be paid in a lump sum). Then, in 2021, you didn’t use any annual leave and you earn leave at the rate of 8 hours / pay period. There are 26 pay periods in a year and you retired at the end of pay period 26.
26 x 8 = 208
208 + 240 = 448
- Annual basic pay rate:
- GS 11/Step 10 RUS: $84,049 / year
- Determine hourly rate:
- $84,049 / 2087 hours = $40.27 / hour
- Add 2022 pay increase:
- 2022 pay adjustment = 2.5%
- Determine new pay rate:
- $86,150.22 / 2087 = $41.28 / hour
- Compute lump sum:
- $41.28 x 448 = $18,493.44
- Don’t forget taxes!
- Withholdings: federal income tax, state income tax (if applicable), FICA, Medicare Tax
- Net amount approximately: $13,000
Sick Leave
- Used to increase creditable service for annuity computation purposes only
- 2,087 hours = 1 year
- Sick leave + creditable service = years/months for computation
- Retirement Facts #8 provides sick leave conversion chart
Example: | Years | Months | Days | |
Total Service | 30 | 6 | 18 | |
Sick Leave (1,300 hours) | + | 7 | 15 | |
30 | 13* | 33* | ||
Years and months for Calculation | 31 | 2 | 3 |
*1 month = 30 days and 12 months = 1 year
Converting Unused Sick Leave | ||||||||||||
Days | Months | |||||||||||
| 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 |
0 | 0 | 174 | 348 | 522 | 696 | 870 | 1044 | 1217 | 1391 | 1565 | 1739 | 1913 |
1 | 6 | 180 | 354 | 528 | 702 | 875 | 1049 | 1223 | 1397 | 1571 | 1745 | 1919 |
2 | 12 | 186 | 360 | 533 | 707 | 881 | 1055 | 1229 | 1403 | 1577 | 1751 | 1925 |
3 | 17 | 191 | 365 | 539 | 713 | 887 | 1061 | 1235 | 1409 | 1583 | 1757 | 1931 |
4 | 23 | 197 | 371 | 545 | 719 | 893 | 1067 | 1241 | 1415 | 1589 | 1762 | 1936 |
5 | 29 | 203 | 377 | 551 | 725 | 899 | 1073 | 1246 | 1420 | 1594 | 1768 | 1942 |
6 | 35 | 209 | 383 | 557 | 731 | 904 | 1078 | 1252 | 1426 | 1600 | 1774 | 1948 |
7 | 41 | 215 | 388 | 562 | 736 | 910 | 1084 | 1258 | 1432 | 1606 | 1780 | 1954 |
8 | 46 | 220 | 394 | 568 | 742 | 916 | 1090 | 1264 | 1438 | 1612 | 1786 | 1960 |
9 | 52 | 226 | 400 | 574 | 748 | 922 | 1096 | 1270 | 1444 | 1618 | 1791 | 1965 |
10 | 58 | 232 | 406 | 580 | 754 | 928 | 1102 | 1275 | 1449 | 1623 | 1797 | 1971 |
11 | 64 | 238 | 412 | 586 | 760 | 933 | 1107 | 1281 | 1455 | 1629 | 1803 | 1977 |
12 | 70 | 244 | 417 | 591 | 765 | 939 | 1113 | 1287 | 1461 | 1635 | 1809 | 1983 |
13 | 75 | 249 | 423 | 597 | 771 | 945 | 1119 | 1293 | 1467 | 1641 | 1815 | 1989 |
14 | 81 | 255 | 429 | 603 | 777 | 951 | 1125 | 1299 | 1473 | 1646 | 1820 | 1994 |
15 | 87 | 261 | 435 | 609 | 783 | 957 | 1131 | 1304 | 1478 | 1652 | 1826 | 2000 |
16 | 93 | 267 | 441 | 615 | 789 | 962 | 1136 | 1310 | 1484 | 1658 | 1832 | 2006 |
17 | 99 | 273 | 446 | 620 | 794 | 968 | 1142 | 1316 | 1490 | 1664 | 1838 | 2012 |
18 | 104 | 278 | 452 | 626 | 800 | 974 | 1148 | 1322 | 1496 | 1670 | 1844 | 2018 |
19 | 110 | 284 | 458 | 632 | 806 | 980 | 1154 | 1328 | 1502 | 1675 | 1849 | 2023 |
20 | 116 | 290 | 464 | 638 | 812 | 986 | 1160 | 1333 | 1507 | 1681 | 1855 | 2029 |
21 | 122 | 296 | 470 | 643 | 817 | 991 | 1165 | 1339 | 1513 | 1687 | 1861 | 2035 |
22 | 128 | 301 | 475 | 649 | 823 | 997 | 1171 | 1345 | 1519 | 1693 | 1867 | 2041 |
23 | 133 | 307 | 481 | 655 | 829 | 1003 | 1177 | 1351 | 1525 | 1699 | 1873 | 2046 |
24 | 139 | 313 | 487 | 661 | 835 | 1009 | 1183 | 1357 | 1530 | 1704 | 1878 | 2052 |
25 | 146 | 319 | 493 | 667 | 841 | 1015 | 1188 | 1362 | 1536 | 1710 | 1884 | 2058 |
26 | 151 | 325 | 499 | 673 | 846 | 1020 | 1194 | 1368 | 1542 | 1716 | 1890 | 2064 |
27 | 157 | 331 | 504 | 678 | 852 | 1026 | 1200 | 1374 | 1548 | 1722 | 1896 | 2070 |
28 | 162 | 336 | 510 | 684 | 858 | 1032 | 1206 | 1380 | 1554 | 1728 | 1902 | 2075 |
29 | 168 | 342 | 516 | 690 | 864 | 1038 | 1212 | 1386 | 1560 | 1733 | 1907 | 2081 |
Key Points:
- Save annual leave near retirement for maximum lump sum payout
- Save sick leave throughout your career in case you get sick
- Lump sum annual leave payment can provide needed cash while transitioning to retirement
- Sick leave can increase your FERS retirement benefit by approximately $4 – $15 / month for every month of service added to your retirement benefit.
2 Responses
per my stub i have 95.12 hrs. of current sick leave balance. I plan to retire on 30 Nov 2022. How much of my sick leave can I use without being penalized. My body is in pain everyday, my MRA is 56 yrs. 4 months which is on the 17th of November. I am a mail carrier in Chicago. Any information would be greatly appreciated. THANKS!!!!!!!
What if a FERS employee wants to use sick leave to leave early before retirement. For example, you have 2 months of sick leave and are planning to retire in June. Can you use sick leave in April and not effectively go back to work?