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Sick and Annual Leave at Retirement

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“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!
Sick and Annual Leave at Retirement

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.
Sick and Annual Leave at Retirement
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2 Responses

  1. 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!!!!!!!

    Reply

  2. 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?

    Reply

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