Retirement date

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Q. I am a federal employee under CSRS with 36 years of service.  I’m thinking about retiring the end of this year.  Is there any advantage to retiring on Saturday, Dec. 31,  which is the beginning of the pay period  versus Tuesday, Jan. 3, after the New Year holiday?

A. Saturday, Dec. 31, is the end of a pay period, not the beginning. If you retired then, you’ll receive a lum-sum payment for any unused annual leave you had to your credit. If you retired after that, any unused leave that exceeded the limit (usually 240 hours) would be lost. That’s why it’s called “use of lose” leave. Also, by retiring at the end of the pay period, you would be on the annuity roll the following day, Jan. 1. Because you are a CSRS employee, you could retire up to January 3, 2012 and be on the annuity roll in January. However, while you’d gain a couple of days of extra pay by staying on, you’d lose two things by doing so: any use-or-lose leave you had to your credit and a 1/30th reduction in your first month’s annuity for each day you weren’t on the annuity roll.

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5 Comments

  1. Keep in mind the cash you receive for the annual leave you have on the books will be credited to your 2011 earnings if you retire Dec 31. If you wait until Jan. 2 (my retirement date), that money will be part of your 2012 earnings. Since your income will be lower in 2012 (as a retiree) you might want the earnings to go there for tax purposes rather than be added on to a full year’s work of pay.

  2. This is in reference to the answer regarding the Retirement Date question. Since the employee is under CSRS s/he may also elect to retire on Jan. 1, 2, or 3 and the annuity will begin the following day. If they retire any other day during the month, the annuity would not begin until Feb. 1.

  3. Bernd Hoffmann;

    I’m not a HR person and I’m not quite sure about answering your question about sick leave and annual leave. But here goes. I thinks you will be able to retire on the first working day of CY 2114 and retain 100% of your sick leave, but your annual leave is a different story. If you retire on the first of the year you will only get to cash in any accrued leave, but if you retire at the end of the year you can cash in all accrued leave and earned leave for that year. If you have 240 hours of use or lose and earn 108 hours during the year, you could retire with a mustering out check of 348 hours. Again, I am not a human resources person so these are just my opinions.

  4. If a CSRS employee retires on the last day of a month or the first three days of the next month their annuity starts immediately the next day. If retiring on the 3rd their annuity for that first month would be based on fewer days but would be full after that in future months.

  5. The date you retire has no effect on the tax you must pay on a lump sum payment for accrued annual leave. The taxes on that income is calculated and due in the year the check is actually received. A retiree will not see that check for 6 to 8 weeks after retirement so anyone retiring on Dec 31 or Jan 1 will pay 2012 taxes on any lump sum annual leave payment received on or after Jan 1. Anyone who has more than 240 hrs of accrued annual leave should retire on Dec 31. If they retire on or after Jan 1, they will forfeit all annual leave exceeding 240 hrs. The only exception is if they worked oconus and were allowed to accrue upto 360 hrs of annual leave.

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