FERS and cashing out annual leave


Q. Recent legislation entitles FERS-eligible employees to have sick leave credited to their time in service: 50 percent until 2013 and 100 percent in 2014. At the same time, FERS annual leave hours past 240 are not lost but paid in full in completing your last year of employment.

Can you clarify that if you retire Jan. 1, 2014, you lose the hours in excess of 240? (I was informed by an HR employee that if you don’t retire Dec. 31, your hours in excess of 240 are not paid even if you retire the next day, Jan. 1 — I have my doubts.)

But if you didn’t and retired Dec. 31, you would lose 50 percent of your sick leave.

I have four months of accrued sick leave, whereas I would have about $20,000 in unused annual leave paid if I retired Jan. 1.

If the information from HR is true, I would have to choose between losing 50 percent of my 700 hours of accrued sick leave for retiring before Jan. 1, 2014, and losing more than 240 hours.

What is the better financial decision? Accruing four months of time in service and losing all my leave in excess of 240 or taking the full lump sum and getting credit for only two months?

A. First, you are correct that if you retire before Jan. 1, 2014, you will receive only half credit for sick leave. If you retire on or after Jan. 1, 2014, you’ll receive full credit for it.

Second, the law allowing you to receive a lump-sum payment of any unused annual leave hasn’t changed. If you retire before the leave year ends, you can receive a payment for all your unused annual leave. If you retire after the new leave year begins, you’ll receive payment for only a maximum of 240 hours. FYI: The 2013 leave year ends Jan. 11, 2014.


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

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