Annual leave: Rules and retirement


One of the most important benefits provided to federal employees is annual leave. With the end of the leave year rapidly approaching (it’s January 9, 2016), I thought it would be a good idea to spell out the basic rules governing that benefit, and how it can pay off when you retire.

Earning leave

The amount of annual leave you earn is based on your years of federal service, including creditable military service.

However, credit for military retirees is generally limited to those who retired on the basis of a combat disability or for service performed during a war. (By law, the latter period includes all service performed between December 7, 1941, and April 28, 1952.)

Credit may also be granted to those participating in a campaign or expedition for which a campaign ribbon was authorized.

If you have less than three years of service, you earn 13 days leave per year (four hours per pay period); if you have more than three but fewer than 15, you earn 20 days (six hours per pay period); and if you have 15 or more years, you earn 26 days (eight<TH>hours per pay period).

If you are a part-time employee with fewer than three years of service, you earn one hour of annual leave for every 20<TH>hours you are in a pay status; if you have three but fewer than 15 years, you earn one hour for each 13 hours; and if you have 15 or more, you earn one hour for each 10 hours.

Using leave

As a rule, if you want to take annual leave, it must be approved in advance by your supervisor. However, there are circumstances where that may not be necessary.

For example, if you are dealing with a personal or family emergency or during inclement weather when your agency may open on time but permit non-emergency personnel to take unscheduled leave.

Leave accumulation

Under current law, most non-Postal Service employees can accumulate 30 days of annual leave (240 hours). However, there are exceptions. For example, overseas employees may accumulate 45 days (360<TH>hours), and those in the Senior Executive Service even more. (see below). Postal Service bargaining unit employees have an annual limit of 55 days (440 hours) and Executive Administrative Schedule employees, 70 days (560 hours).

Originally, SES members were able to accumulate an unlimited amount of annual leave.

That changed with the Government Management Reform Act of 1994. Beginning on the first day of the first pay period starting after October 13, 1994, a It set a 720-hour (90-day) limit was set on the amount that current and future SES members could carry over from one leave year to the next. However, the law included a grandfather clause that allowed current SES members who had accumulate more than 90<TH>days of annual leave to keep that higher figure as their personal leave ceiling. That figure became the maximum amount that could be carried from one leave year into the next one.

If you accumulate more than the annual limit, with certain exceptions, you have to either use or lose those excess hours by the end of the leave year.

For example, if you moved from a higher leave-ceiling job to a job with a lower leave ceiling, you can retain the amount you brought with you. Also, if you had to forfeit annual leave that was scheduled in writing well in advance, either because of illness or agency needs, that leave can be restored. In general, this restored leave must be used within two years. (The Postal Service has no provision for restoring forfeited annual leave.)

Lump-sum Payments

You will receive a lump sum payment for accrued and unused annual leave when you either leave government or retire. A lump-sum leave payment represents all the days you would have worked if you had remained in federal service. (By law, holidays are counted as workdays when making that projection.)

The lump-sum payment is based primarily on your rate of basic pay plus any locality pay or similar geographic adjustment. However, it may also include other types of pay, such as administratively uncontrollable overtime, supervisory differentials, regularly scheduled overtime pay under the Fair Labor Standards Act, non-foreign area cost-of-living allowances and post differentials, and foreign area post allowances.

For non-SES, non-foreign area employees, the maximum amount of hours for which a lump-sum payment will be made is 240 hours (the maximum amount of leave one can carry over from one leave year to the next), plus any additional leave accumulated during the year prior to retiring.

When you receive your lump-sum payment, a number of deductions will have been taken out of it. For example, federal and state income taxes, Medicare taxes, and Social Security (FICA) taxes (if you are a FERS-covered employees). However, no deductions will be taken for such things as health and life insurance premiums or TSP contributions.

Because the lump-sum payment is projected forward, if you are reemployed by the federal government before the expiration of the lump-sum leave period, you’ll have to pay back the portion of the payment that represents the time between the date of your reemployment and the expiration of the lump-sum period. The days you buy back will be re-credited to your annual leave account.

Note: If you are retiring, your annual leave can’t be used to increase your length of service nor can it be used in determining your high-3 average salary. You’ll just have to settle for a lump-sum payment.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to


  1. Would you please clarify this statement on lump sum leave when retiring? If I carry over 240 hours to a new FY then decide to retire during that new year, would I be given a lump sum of 240 plus the hours accrued for the new FY? For example, if I carry over 240 and during FY 2016 I accrue an additional 100 hours, would I receive a lump sum for 340 hours?

    Thank you

  2. I was a Postmaster in the US Postal Service
    I transferred from the Postal Service with 488 hours of Annual leave to a DOC agency. My max carryover as of PP26 2014 was 418. As of PP 1 2015, should I be able to keep my max carryover and not drop down to 240 hours?

  3. I’m at catch 22. I will retire late Jan 16 under CSRS offset. Due to my SCD being changed, I will be due leave dated back to 2010. DFAS just advised me that it would be reflected upon next pay period. Here’s my concern: Will I lose all leave over 240 hours after 9 Jan 16? If so then what would I need to do to ensure leave would not be lost?

  4. I recently retired and noticed that my Lump Sum Annual Leave (A/L) Payout had an error, the majority of it should have had the new 2016 hourly wage rate applied, also since the A/L should include two (2) days of holidays that occur in early 2016.

    Note: I have discussed this with other recent retires and it appears to be a systemic problem with annual leave lump sum and I have e-mailed DFAS but have not received a response yet.

    • Thanks for sharing this with us. Agencies occasionally fail to project a retiree’s annual leave forward and set the hourly rate at the one that would be payable on each and every day, as required by law.

  5. Thank you Reg. Should I be concerned if for instance, I retired on Dec 31, 2015 and elected annual leave lump sum deposit – and I have not received the payment. It’s Feb 8, 2016. I have – however – received an interim pension payment.

    • Since the payment for unused annual leave is made by your agency, you’ll have to check with them to find out where they are in the process.

  6. I am a mail handler with 30 plus years service. I plan to retire later this year. I carried over 440 hours from 2015. If i’m understanding this correctly, I can retire with more than 400 hours annual and be paid for all of it in a lump sum even though it it exceeds the maximum 400 hour limit. That I don’t have to be under the 400 hour limit when I retire.

    • That isn’t our understanding. You can only be paid for accumulated leave carried over from the previous year and accrued annual leave for the year in which you separate that doesn’t exceed the maximum carryover limit for your bargaining unit. In most cases that’s 440 hours.

  7. As a FERS employee, GS-15/8, if I retire 12/31/2016 with 420 hours of accumulated A/L, will I be paid at the hourly rate for 2016 or will the hourly rate be based on the 2017 pay rate since the pay out occurs in 2017?

    Also – if I have accumulated 420 hours of leave at the time of retirement – can my boss elect to give me additional hours as a part of a Time Off Award during the year to increase what I get paid out for in 2017?

    If I can get paid for the time off award in addition to the 420 hours of accumulated A/L, is there any limitation to the time off award that I can be paid out for?


    • Hours of annual leave are projected forward as if you were still on the job. Therefore, if there is a pay increase in 2017. any hours that fall after that increase goes into effect will be paid at the higher rate. P.S. No, your boss cannot give you additional hours.

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