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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

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The Q&A forum is moderated by Ed Zurndorfer -- an expert on federal employee benefits -- and a Certified Financial Planner, chartered life underwriter and chartered financial consultant in Maryland.

Zurndorfer is also the author of several federal employee benefits guides published by Federal Employees News Digest.

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Note: FederalSoup.com has attempted to compile information that is as accurate and current as possible for federal employees. Federal policies, laws, regulations, statistics and addresses continually change. Therefore, no warranties are made as to the accuracy or completeness of the information presented in this column. If additional clarification or information is needed, it is suggested that competent and professional assistance be sought. Mr. Zurndorfer does not moderate other forums on FederalSoup and will not reply to general FederalSoup inquiries submitted in this Q&A forum.

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Ed Zurndorfer  
#21 Posted : Wednesday, December 05, 2018 8:42:36 PM(UTC)

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Yes, that is correct.
MDKidd  
#22 Posted : Tuesday, December 18, 2018 8:43:29 AM(UTC)
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In an effort to make this discussion less complicated, I just verified all of this with someone who retired last Dec 31. Here's the bottom line … No matter whether you retire in the middle of a pay period or at the end, treat any unused annual leave as if you were still working. What this means is that IN ADDITION TO YOUR ANNUAL LEAVE LUMP SUM, you will be paid for any holidays that occur in the time frame that your annual leave would have lasted. Also note that if you work a compressed schedule (i.e. 9-9-9-9-8/9-9-9-9-0), you will be paid 9 hours for each holiday rather than 8.

What this also means, as Ed notes, is that you will get paid for the annual leave at the rate of pay that you would have been making if you still were working (i.e. at the new salary rate for the new year if a salary rate increase occurs).

There is no need to treat the days remaining in your final active pay period any differently. If you retire mid-pay period, you will get paid for the remaining days in this pay period from your annual leave balance just the same as you will get paid for the days in the following pay periods. For example, if you have a balance of 440 hours, you will be paid for 440 hours plus 24 hours (or 27 if compressed) for the 3 holidays. Don't subtract 32 hours for last pay period. Also note that this entire sum will most likely be paid all at once with your last pay check - it was for my friend who retired with 6 days left in his last pay period vs 5 left this year.

Hope this clears up a lot of this confusion.
Colosky  
#23 Posted : Tuesday, December 18, 2018 1:18:22 PM(UTC)
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I have question that goes along with retiring in the middle of a pay period. My HR on site said that I needed to put in annual leave request for the remaining days for the pay period. He stated I should discuss with my supervisor and see if she will approve leave or I will be considered AWOL. I have 173 hours now and I want to retire on March 8th.
MDKidd  
#24 Posted : Tuesday, December 18, 2018 1:27:01 PM(UTC)
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One quick minor correction … If you retire on Dec 31, the 32 hours (or however many hours are left in the leave year) remaining in your final pay period ARE TREATED DIFFERENTLY, but only in that the payout for these days is at your current year's rate of pay, whereas the remainder of your annual leave lump sum is paid at next year's pay rate.
Ed Zurndorfer  
#25 Posted : Tuesday, December 18, 2018 4:57:29 PM(UTC)

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Thank you again for your input into this forum.
nearlyDone  
#26 Posted : Tuesday, December 18, 2018 5:54:31 PM(UTC)
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I am about to test the theories on how you are paid if you retire on 12/31 in the middle of a pay period. I was told by my HR department to expect a reduced final paycheck, but then to also expect to be paid for the full 440 hours of my unused annual leave plus the three holidays that will fall within that period in the lump-sum payment. I will post to this forum as soon as I receive my paycheck and paystub for my final pay period (pp 26) which ends on Jan 5. So I will post again in mid January with the details.
Ed Zurndorfer  
#27 Posted : Tuesday, December 18, 2018 6:13:28 PM(UTC)

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Thank you for posting this and we look forward to hearing back from you in January after you retire to let us know how you were paid.
Colosky  
#28 Posted : Thursday, December 20, 2018 6:32:42 AM(UTC)
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I appreciate your response, but if I put in for retirement for March 8 which is a Friday and in the middle of a pay period will my annual leave automatic cover the remaining days with my annual leave? I'm being torn between staying the whole pay period or leaving on March 8. My HR is telling me I would need to ask permission from supervisor to leave in the middle of a pay period which I don't believe is correct.
Ed Zurndorfer  
#29 Posted : Thursday, December 20, 2018 2:30:29 PM(UTC)

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Do not know what you mean by "your unused annual leave will cover for the rest of the pay period". If you retire on on March 8, 2019 (a Friday), then you will get paid for 4 days of that pay period. You will not accrue annual and sick leave for that pay period and you will also get paid in a lump sum payment for all unused annual leave. Assuming you are eligible to retire on March 8, 2019, you do not need your supervisor's approval to retire in the middle of a pay period.
HoosierDaddy  
#30 Posted : Friday, December 21, 2018 5:43:44 PM(UTC)

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Ed, I plan to retire on 01/31/2019. My normal schedule is Sunday - Thursday so I will have worked 80 hours for the pay period. Would I earn annual leave for that pay period?
Ed Zurndorfer  
#31 Posted : Saturday, December 22, 2018 3:26:46 PM(UTC)

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If, by the retire, you would have worked the 80 hours of your last pay period preceding your retirement date, then you will accrue the 8 hours of annual leave and 4 hours of sick leave for your last pay period of Federal service.
RickBinABQ  
#32 Posted : Tuesday, January 29, 2019 9:09:38 PM(UTC)
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Originally Posted by: nearlyDone Go to Quoted Post
I am about to test the theories on how you are paid if you retire on 12/31 in the middle of a pay period. I was told by my HR department to expect a reduced final paycheck, but then to also expect to be paid for the full 440 hours of my unused annual leave plus the three holidays that will fall within that period in the lump-sum payment. I will post to this forum as soon as I receive my paycheck and paystub for my final pay period (pp 26) which ends on Jan 5. So I will post again in mid January with the details.


Can you post those details yet?
Thanks.
MDKidd  
#33 Posted : Monday, February 04, 2019 7:46:58 AM(UTC)
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Important update ...

I retired on Dec 31, a date in the middle of my last pay period. In my last paycheck, I received pro-rated pay and benefits for the time worked for this last pay period. Included in my last paycheck, I received my annual leave lump sum payment in full.

However, please note, no EXTRA pay was given for the 3 holidays (New Years, MLK, Pres Day) occurring in the time frame that my annual leave would have lasted. These days were treated as regular work days. After researching OPM's website, I discovered that this is consistent with official policy. See the following links for further explanation ... (https://www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/lump-sum-payments-for-annual-leave/) and the corresponding link to the noted reference (https://www.law.cornell.edu/uscode/text/5/5551). The definitive statement in the reference link is the following ... "The period of leave used for calculating the lump-sum payment shall not be extended due to any holiday occurring after separation."

All the annual leave was paid at my rate of pay at retirement, with a premium to be paid (supposedly) in the future if/when any pay raise is agreed upon by Congress.

Fed and State taxes were withheld on the entire amount of the annual leave lump sum based on my last W4 withholding rate. Note that the amount of tax withheld was calculated based on me receiving this size paycheck every payday for the entire year. Therefore, because my lump sum was so large, the withholding rate for my taxes was for the highest tax bracket - a bit of a shocker. No biggie - I will just reduce my withholding rate for the rest of the year to make up for it.

Also note that I maxed out my HSA contribution so that no taxes were paid on any of my last salary - taxes were only paid on my lump sum. I highly recommend doing this to anyone with an HSA account. I was unsure if I could contribute a large amount right at the beginning of the year, but it was allowed, and it saved me over $400 in Fed and State taxes. That is tax FREE, not tax deferred. Huge difference. I also changed my last TSP contribution to 5% (to get the entire gov match). I had been contributing a fixed dollar amount which was greater than my last paycheck (since the paycheck was for less than 14 days). If I hadn't changed it, I am told that no contribution would have been made.

Anyway, it was disappointing to find that holidays are not additional paid days in retirement, but I hope all this information is helpful to anyone retiring in the future.
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