Q. I’m retiring with four months of sick leave, bringing my total time in FERS to 32 years, 1 month at age 65. In the interest of increasing final annuity, I have been using annual leave, rather than sick leave, for medical appointments and when ill. In retrospect, it seems I did not accomplish much, and that using sick leave as intended and preserving annual leave to increase lump sum payout might have been a better strategy. Correct?
A. Maybe, maybe not. There are too many variables. While unused annual leave will be paid out at the hourly rate you would have received if you had continued working, it will be treated as earned income when you file your taxes. The tax rate will depend on your tax bracket. When your annuity is computed, any sick leave hours will be added to any hours of employment that don’t add up to a full month. Since each retirement annuity month equals 174 hours, any hours that don’t add up to a full month will be dropped.