Want to retire when Trump takes over?

Under the Trump administration, change is inevitable. Some agencies will prosper while others may find themselves diminished or eliminated. The same goes for their employees.

If you suspect your agency will take a hit and you have the right combination of age and service, this may be a good time to retire. The end of the 2016 leave year would be the best time to do it. That’s especially true if you carried the maximum amount of annual leave into the current year and haven’t used much of the time you’ve accumulated since then. Here’s why.

When you retire, all of those hours of unused annual leave will be paid to you in a lump sum, which will be calculated as if you had remained on the job until that leave ran out. Assuming there’s a pay increase in January, all the hours that fall after its effective date of Jan. 8, 2017, will be paid to you at the higher hourly rate.

Another incentive to retire at the end of the year is that you’ll be paying less in taxes than before you retired. Here’s why. First, your income will not only be reduced but you may also fall into a lower tax bracket. Second, a portion of your annuity will be tax free because it’s a return of the money you contributed to the retirement fund while you were working, money on which you’ve already paid taxes.

If you decide to retire, it’s important to pick the right date because the rules are different for CSRS and FERS. If you are a FERS employee, you must retire no later than the last day of a month to be on the annuity roll in the following month. If you are a CSRS employee, you may retire up to the third day of a month and be on the annuity roll in the same month. However, your annuity payment will be reduced by 1/30th for every one of those three days that you aren’t on the annuity roll.

Here’s what could happen if you pick the wrong date: If you are a FERS employee who retires Jan. 1 instead of Dec. 31, you won’t go on the annuity roll until Feb. 1 and won’t receive your first annuity payment until March 1. Similarly, if you are a CSRS employee who retires Jan. 4 instead of Jan. 3, you’ll be faced with the same delay in receiving your first annuity payment.

Here’s something else to consider: If you are a CSRS employee who is debating whether to retire Dec. 31 or wait until Jan. 3, you’ll have to weigh the value of three extra days at full pay versus a 1/10th reduction in your January annuity payment.

You also need to be aware that you’ll only get credit for annual and sick leave earned during a pay period if you retire at the end of that pay period. You won’t get any credit for those hours if you retire before that pay period ends. This rule will affect anyone who retires either on the last day of December or no later than Jan. 3. That’s because the last pay period in December ends Dec. 24. And the last pay period in 2016 ends on Jan. 7, 2017, too late for you to be on the annuity roll in January.

While a new administration may increase your desire to retire, make sure to consider other factors before you make up your mind to leave.