Annual leave: Rules and retirement

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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.

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About Author

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

50 Comments

  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’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?

  3. 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.

  4. 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.

  5. 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.

      • When you retired, your unused annual leave was projected forward and paid to you at the hourly rate if effect during that time. If you had 240 hours of unused annual leave to your credit when you retired, it would have been exhausted after 6 work weeks (6 X 40=240). So, if you returned to work after that, you wouldn’t owe anything.

          • The simple answer is: as long as it takes your agency to complete the paperwork, send it the Treasury Department, the Treasury Department to cut a check, and the Postal Service to deliver it to you. Agencies vary widely in their ability to complete their part of the process, especially now when there may be a shortage of personnel needed to do the work.

        • cecelia giordano on

          thank you for clearing that up for me. now that i’m working for the VA again, I plan to retire again in about 2.5 years. will I be able to sell back my AL again?

          • cecelia giordano on

            also, when I retired in May 2020 I had sold back a little over 7 years of military time with a SCD of 2/14/1995. when I returned to work in Nov 2020, my SCD changed to 8/7/1995. why is that?

          • There’s no way that I can answer your question. You’ll have to check with your personnel and payroll offices to find out why they did that.

          • When you retire, any unused annual leave you have to your credit will be converted to the hourly rate you are currently receiving; however, if any of that leave carries over to a new leave year, that portion will be paid at the new hourly rate.

  6. 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?

    Thanks!

    • 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.

  7. I am a CSRS employee and will retire around June of 2017. I will have 240 hours from 2016 plus about 160 hours of restored (carryover) leave I was unable to use in 2016 (approved by agency). In addition I will have accumulated around 80 hours of AL during FY-17 for a total of around 480 (+/-).

    My question is will I be paid this carryover leave from FY16 in addition to my accumulated AL in FY17….

    Sincerely

    EB

  8. Well – I didn’t get around to retiring in December, however, as a LEO with 6c coverage my retirement will be mandatory in August of this year.

    My agency – ICE – may be undergoing significant growth under the current administration. There is discussion of bringing me back as a rehired annuitant with a waiver so i can work full time and not have my regular retirement offset by the wages earned while reinstated (double dipping).

    At the time I retire I will have accumulated almost 440 hours of leave – having had leave re-instated in early 2017 because I was unable to take it before years end due to preparation for the transition.

    Should the government rehire me after my mandatory retirement date – and should I not have a time of separation equal to the 440 hours of leave for which I will be paid a lump sum (11 weeks) – will i still be required to pay back the portion of leave I could not use – especially since my retirement was mandatory? I am guessing that the job i will be rehired into will be a non-LEO – and the LEO issue REQUIRES that I go on 8/31….unless they were to actually waive the retirement age and rehire me as a LEO. (Since I cap out either way – it makes no difference to me as to the series of my position).

    If i am required to pay back a portion of the leave – having a waiver as a rehired annuitant – could that waiver also be negotiated to include that I don’t pay back any portion of the lump sum that most rehires get hit with if they are rehired soon after they retire?

    p.s. thanks for answering my last question.

  9. Teresa Decker on

    I currently earn 8 hours of leave per pay. Credited with 16 years prior service, however I’m being told I may only use 1 week of vacation this year. I will earn 5 weeks Why the inconsistency

  10. I am a LEO GS 14 step 8 and hit the pay cap. If I retire November 30, 2017 and have 350 hours of unused annual leave will I get paid for all those hours since I currently don’t get paid around $59.00 a pay period.

    • Your annual leave payout will be based on the hourly rate you are receiving, not on the one you would have received if there wasn’t a pay cap.

      • If I worked through the end of December, I would not get my full pay because I hit the biweekly pay cap. I cannot earn OT in Decemfer because of the pay cap. So my question is 400 hours of Annual Leave is worth about $28,800.00 which would be way over the pay cap so do I get the full amount after taxes or will they not pay me for the full 400 hours since it is over the annual pay cap?

  11. Keshav Gopinath on

    I retired from the Foreign Service under FSPS on October 31, 2017 for age. My last posting was in India. I just received the Earning and Leave Statement for my unused Annual Leave of 357 hours. I was paid strictly based on my FO 4/14 hourly rate without the Post Differential, Post Allowance, or language Bonus pay that I received till I retired. Does that seem okay to you?

    • Your unused sick leave will be included in the computation of your annuity. As a result, only the hours that weren’t used in that computation annuity could be restored. Annual leave cannot be restored. It would be paid out to you in a lump sum.

    • I forgot to add one important qualifier. Here it is:

      Unused annual leave is projected forward as if you were still on the job and the hourly rate for those hours paid to you in a lump sum. If any of those hours fall after you return to work, you would be required to repay the amount of money they represent; then you would have those hours restored to your account.

  12. Question: I retired in January 2016, and have recently been re-hired as an annuitant (effective January 2018). Will my leave accrual rate be at 8 hours per pay period (based on more than 15 years of service), or does my SCD begin again with my re-employment? Thanks!

  13. How long does it usually take to receive the lump sum? I have been waiting 8 weeks already. And just getting the run around when I call my agency, TSA.

  14. My brother in law who retired from the gov says u will get paid anything over 440 hrs once u retired. I said no . Only Postal employees can save up to 440 hrs and anything over that u must use it or lose it and it dosent matter if u retired or continue working .

    • You are correct. As a rule, the maximum number of hours of annual leave a federal employee could cash out is the 240 hours he carried over from one leave year to the next plus the 208 hours of annual leave he earned in the year before retiring. The payout could be larger if the employee was prevented from using his excess leave in the preceding year and was permitted to carryover that excess into the year in which he retired.

  15. You might like to use up all of your annual leave before retiring, but you can’t. The Comptroller General has ruled that employees may not take terminal leave.

  16. Would you explain if the following situation would be considered taking terminal leave? I am a FERS employee. I want to notify my agency in June that I will retire on September 25. I would like to take annual leave 5 weeks before I retire, then return to work for 1 week. Is this situation terminal leave? Am I forbidden from taking more than a few days of annual leave after I notify my agency of my retirement date?

    • Probably not; however, you’d need to check with your agency to be sure that they are 1) willing and able to work around your absence and 2) don’t believe your being on extended leave at the end of your career would constitute terminal leave.

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