Welcome Guest! To enable all features please Login or Register.

Notification

Icon
Error

Retirement Planning


Whether you are close to federal employee retirement or just starting out in your career, this is the place to share ideas with your federal colleagues on creating a secure financial foundation.


To read today's top news stories on federal employee related news visit FederalDaily.com.

Options
Go to last post Go to first unread
MikeOut  
#1 Posted : Friday, March 23, 2012 8:52:11 AM(UTC)
MikeOut

Rank: Groupie

Groups: Registered
Joined: 1/7/2012(UTC)
Posts: 33



I need to ask if it's true that you would have to work Jan 1,2 or 3 of 2013 in order to ensure the annual leave payout is 2013 wages and not 2012 wages?  I would think it would have more to do with the pay period ending 29 Dec 12. The reason I ask is I just sent off my for my offical annuity calculation and I assumed my last day being 29 Dec 12, the annual leave would be 2013? Thank you for the assistance.
GoHuskers  
#2 Posted : Friday, March 23, 2012 9:28:53 AM(UTC)
GoHuskers

Rank: Senior Member

Groups: Registered
Joined: 1/13/2011(UTC)
Posts: 379

Was thanked: 2 time(s) in 1 post(s)
The leave payout is taxable as wages for the year in which it is paid. As long as it isn't received until 2013, it will be taxable income for 2013. The last day you actually worked isn't material.
Fed1969  
#3 Posted : Friday, March 23, 2012 8:15:05 PM(UTC)
Fed1969

Rank: Senior Member

Groups: Registered
Joined: 10/28/2010(UTC)
Posts: 3,333

You are correct with the last day working 29 December 2012, your lump sum leave payout is in January 2013.
MMOB  
#4 Posted : Saturday, March 24, 2012 12:17:16 AM(UTC)
MMOB

Rank: Senior Member

Groups: Registered
Joined: 6/1/2009(UTC)
Posts: 357


Fed1969 wrote:
You are correct with the last day working 29 December 2012, your lump sum leave payout is in January 2013.
 
As GoHuskers pointed out, the last day someone works is completely irrelevant to the question of whether a lump sum payment is taxable in 2012 or 2013.  The only --- the only---relevant issue is when the lump-sum payment is received.  Someone could even retire in November and if the payment isn't made until January then the payment is 2013 income, not 2012 income.
MikeOut  
#5 Posted : Saturday, March 24, 2012 1:53:51 AM(UTC)
MikeOut

Rank: Groupie

Groups: Registered
Joined: 1/7/2012(UTC)
Posts: 33



Thanks for the information. I understand posts on this site are going to be far from official policy, but I feel confident of the experience and guidance I've seen on this site. Since I'm just starting my journey to retirement I'm sure I'm going to have more questions for you experts that have been there. Only 281 calendar days to go, but who is counting...
Not retiring yet  
#6 Posted : Saturday, March 24, 2012 6:32:28 AM(UTC)
Not retiring yet

Rank: Senior Member

Groups: Registered
Joined: 6/23/2010(UTC)
Posts: 377

FROM my federal retirement.com  (very useful for dates to retire also)  Another issue facing retiring federal employees is the treatment of unused annual leave at the time of retirement. All retiring employees are paid in a lump sum payment for unused annual leave at the time of retirement. This payment will be directly deposited into the retiring employee's same bank account that is used for direct deposit of the employee's payroll check. Many federal agencies will deposit this lump sum payment for unused annual leave into this account usually on the same day that the retiring employee's final paycheck is directly deposited - within two to four weeks of the day of retirement. The lump sum payment for unused annual leave is subject to federal and state income taxes and Social Security (FICA) and Medicare Part A payroll taxes.       HOPE that explains enough for your situation.
crpetersen  
#7 Posted : Sunday, April 08, 2012 1:43:35 AM(UTC)
crpetersen

Rank: Senior Member

Groups: Registered
Joined: 4/6/2003(UTC)
Posts: 469

One other thought - taxes withheld from the annual leave payout are very high.  Don't assume you're going to get most of that payout.  Don't count on the whole amount to tide you over until you start getting your annuity payments.

Vern267  
#8 Posted : Sunday, April 08, 2012 2:18:23 AM(UTC)
Vern267

Rank: Groupie

Groups: Registered
Joined: 8/21/2011(UTC)
Posts: 68

I retired on 12/30/2011 and was paid my lump sum AL on 6 Jan 2012. It  was taxed at 20% rate and will show up on my 2012 taxes. I was not happy with the 20% tax rate, but nothing I could do about it. The other posters are correct, does not matter when your leave years ends, the important fact is when you receive the lump sum AL. I wanted to receive my lump sum  in CY 2012, as this hopefully will be a lower tax bracket year for me.  I also received the $25k buyout and it was also taxed at 20% rate. Should be getting a refund on some of this when I file my 2012 taxes in January 2013.

lbeck  
#9 Posted : Thursday, April 12, 2012 3:20:57 AM(UTC)
lbeck

Rank: Advisor

Groups: Registered
Joined: 6/13/2007(UTC)
Posts: 111

This thread touches on a couple of items of concern for my personal situation.  I, too, plan to retire at the end of 2012.  I was thinking about possibly early in December so that I could spend holidays with family, but I'm greedy enough to stay beyond 1/1/13 if it provides substantial monitary benefit.
 
I read somewhere on this site (another thread) a debate on whether lump sum AL contains pay for holidays.  But I may have misread or misinterpreted.  Are holidays added to the total days AL? Is there any monitary advantage to retiring after rather than before the holidays?
 
My other concern is that I may want to not receive my lump sum until 2013.  I have some rental property on the market and if it sells in 2012 the earnings from the sale plus the lump sum for 400-500 hours AL will push me into a higher tax bracket than if the two events occured in different tax years.  What I read earlier in this thread makes it appear that it takes a week or two for the lump sum to arrive.  What is the shortest time?  I'd hate to misjudge and receive the lump sum late in December.  On the other hand, I don't want to LOSE any of my use-or-lose leave by waiting too late in January.  If the property doesn't sell this year then I'll want to be sure to get my lump sum payment in 2012.
dhacker56  
#10 Posted : Thursday, April 12, 2012 3:48:26 AM(UTC)
dhacker56

Rank: Senior Member

Groups: Registered
Joined: 12/9/2008(UTC)
Posts: 6,382

If you retired December 22nd  your AL pay out would most likely not arrive until 2013.  and yes they add Holiday pay for ALL holidays that your AL would get to.  Most likely Jan 1, MLK and President's day.

AFTeri  
#11 Posted : Thursday, April 12, 2012 5:03:49 AM(UTC)
AFTeri

Rank: Rookie

Groups: Registered
Joined: 10/4/2011(UTC)
Posts: 34

I have 11 days and 1 hr until I work out the door.
 I get paid on 27 April, but my last pay will be (for 6 days) 11 May. According to personnel and other retiree friends, I will likely get the pay for 6 days, my annual leave payout and my $25K (after taxes I'm sure that will be about $17K).
Because I am retiring at the end of the 4th month of the year, I think my salary, including what I just mentioned, will be less than if I had worked a whole year and had this money on top of it.
Thank gawd for a good CPA.
Did I mention I have 11 days to go?
lbeck  
#12 Posted : Thursday, April 12, 2012 5:19:02 AM(UTC)
lbeck

Rank: Advisor

Groups: Registered
Joined: 6/13/2007(UTC)
Posts: 111

So you're saying that if for example I have 50 days AL banked and I retire on December 22, then my lump sum will be for 54 days AL (which includes the 3 holidays that you cite plus Christmas)? lbeck2012-04-12 13:25:41
RetirednHappy  
#13 Posted : Thursday, April 12, 2012 7:24:58 AM(UTC)
RetirednHappy

Rank: Senior Member

Groups: Registered
Joined: 3/18/2009(UTC)
Posts: 652

Lump sum payment for unused annual leave may or may not include additional days due to holidays. It appears to depend on the agency. I retired from DoD and did NOT receive additional days for holidays within the time my leave covered. The legislative language says that holidays are to be treated as work days. (In my case with DoD, they interpreted that to mean that annual leave hours would be applied to holidays, just as if they were any other work days). I had 448 unused annual leave hours and received lump sum pay equal to those 448 hours only, not anything additional for the 3 holidays which would have been included during the pay periods. If you get paid extra, congratulations, but don't count on it as being absolute! 
keeponkeepingon  
#14 Posted : Thursday, April 12, 2012 8:14:42 AM(UTC)
keeponkeepingon

Rank: Groupie

Groups: Registered
Joined: 10/20/2009(UTC)
Posts: 51

It must be different depending on your agency.  I work for a Department of Interior agency, and as part of my job I see lump sum leave payments.  We absolutely do NOT get paid for holidays that are in the lump sum leave time.   If there is an annual pay raise that happens during the time period covered by the leave time, than you do get the higher rate of pay, but no holidays.

dhacker56  
#15 Posted : Thursday, April 12, 2012 8:20:02 AM(UTC)
dhacker56

Rank: Senior Member

Groups: Registered
Joined: 12/9/2008(UTC)
Posts: 6,382

I retired from USPS  Got holidays but not for any raise.

The HalfBreed  
#16 Posted : Thursday, April 12, 2012 2:53:30 PM(UTC)
The HalfBreed

Rank: Senior Member

Groups: Registered
Joined: 3/30/2008(UTC)
Posts: 2,499

Was thanked: 2 time(s) in 2 post(s)
I'm in agreement w/Keeponkeepingon & Retirednhappy. Maybe it DOES depend on what agency you work for. I'm with the FAA, and for instance, if I retire on 12/21/2012, the 26th pay period ends on 12/15 and payday is 12/25 (maybe the 24th).
Since I worked an extra 4 or 5 days between the 16th and 21st of Dec. I will only get half a paycheck in January, no A/L or S/L added, however, my 448 hours of A/L would be paid out in Jan 2013.
Since I did NOT work Christmas or New Years (or any In-Lieu of Holiday), none will be paid. My A/L stops when I retire, on 12/21 or my actual day of retirement.
No Holiday pay....since I was not there to work it.


RETIRED 12/19/2012 !!! Good Bye Tension !!! Hello Pension !!!
MMOB  
#17 Posted : Saturday, April 14, 2012 4:44:28 AM(UTC)
MMOB

Rank: Senior Member

Groups: Registered
Joined: 6/1/2009(UTC)
Posts: 357


lbeck wrote:
So you're saying that if for example I have 50 days AL banked and I retire on December 22, then my lump sum will be for 54 days AL (which includes the 3 holidays that you cite plus Christmas)?
 
Yes, that is exactly what dhacker is saying.
 
Unfortunately, he is incorrect as it pertains to non-postal employees.  I do not know nor care what the postal rules are,  but I can tell you with 100% certainty that it is against federal law for federal civilian employees to receive pay for holidays in their lump sum annual leave payments.
 
For the definitive answer, I direct your attention to the law itself: Title 5, Section 5551(a). I've even bolded, italized, and underlined the relevant sentence so that no one can possibly miss it:
 
(a)An employee as defined by section 2105 of this title or an individual employed by the government of the District of Columbia, who is separated from the service, is transferred to a position described under section 6301(2)(B)(xiii) of this title, or elects to receive a lump-sum payment for leave under section 5552 of this title, is entitled to receive a lump-sum payment for accumulated and current accrued annual or vacation leave to which he is entitled by statute. The lump-sum payment shall equal the pay (excluding any differential under section 5925 and any allowance under section 5928) the employee or individual would have received had he remained in the service until expiration of the period of the annual or vacation leave. The lump-sum payment is considered pay for taxation purposes only. The period of leave used for calculating the lump-sum payment shall not be extended due to any holiday occurring after separation. For the purposes of this subsection, movement to employment described in section 2105(c) shall not be deemed separation from the service in the case of an employee whose annual leave is transferred under section 6308(b).
 
You'll note above that this law pertains to all employees as defined by 5 U.S.C. 2105.  That covers virtually all executive, legislative, and judicial branch employees with the exception of the postal service.  As most people know, the postal service has its own rules and regulations with regard to how employees are compensated, including how much they are paid and how much they pay for benefits such as health insurance, for example.
 
Unfortunately, dhacker keeps extrapolating his own experience working with the postal service to all civilian employees in the federal government.  Consequently, he has a habit of providing incorrect info for the majority of people who post here.  
lbeck  
#18 Posted : Tuesday, April 17, 2012 12:31:56 AM(UTC)
lbeck

Rank: Advisor

Groups: Registered
Joined: 6/13/2007(UTC)
Posts: 111

 
Quote:
The period of leave used for calculating the lump-sum payment shall not be extended due to any holiday occurring after separation.
 
 
That's clear
Rss Feed  Atom Feed
Users browsing this topic
Guest
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.


This page was generated in 1.495 seconds.