Q: I am an employee under the Civil Service Retirement System, 6C, facing mandatory retirement the second week of January 2012. I anticipate finishing 2011 with 448 hours of annual leave on the books. Jan. 1, 2 and 3 would be the ideal retirement dates. In 2011, Pay Period 26 ends on the last day of the year. I’m now looking at Dec. 31, a Saturday, as the retirement date on the paperwork in order to receive the full annual leave 448-hour lump-sum payment.
Do you see any problem with that date given the information provided? Additionally, I would imagine the lump-sum payment, which will be a direct deposit sometime in January 2012, will be counted as 2012 income and not in the 2011 tax year.
A: No, I don’t see a problem with retiring on that date; and yes, your lump-sum payment will be taxed in the year it’s received.
