Annual leave payout and Social Security earnings limit


Q. I am FERS employee planning to retire Jan. 31, 2014. I will receive a check for unused annual leave when I retire. I know the annual leave payment will be taxed and Social Security taken out. Is that annual leave payment considered income against the $15,000 that I can earn without affecting my Social Security benefit in 2014? Is the annual leave payment considered in establishing my Social Security benefit? The annual leave payment check will be over $15,000.

A. The lump-sum payment is treated as earned income for tax and Social Security benefit purposes. However, you don’t need to worry about the Social Security earnings limit because you’ll be covered by the so-called first-year rule. See


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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

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