I’m planning my finances and not counting on AL. I’m taking that time before retirement. Every day commute, the bs from management, the unrealistic expectations, doesn’t worth the check after. Some people collapse after retirement because of the exhaustion and stress of many years. Take care and plan accordingly.
I don’t know if I would like to retire at the end of the year. 1) you’re one and thousands who are retiring at that end of the year and given the wait time could be several months for your pension check to kick in. 2) I don’t think I can go a year without enjoying time off although I could use sick leave but not in the same way as AL. 3) payout equals huge taxes. It’s all about quality of life, for me at least.
As Dallen says, if you retire at the end of the year and have unused annual leave, you are required by law to be paid using any pay increase that happens at the beginning of the year. It should not be paid using your hourly rate when you retired. I retired from GS USAF 31 Dec 2022 and my annual leave payout was not calculated that way. I had to file 2 congressionals to get AFPC to correct it after 4 months. Everyone at local finance, AFPC, and OPM were adamant that I was not correct. It is by law written in Title 5 CFR - Administrative personnel - Chapter 1 OPM - subchapter B - CSR. PART 550 Pay Administration (General) - para 550.1204. Good luck and enjoy retirement.
I read 5 CFR 550.1205(b)(2) which says "The agency must adjust the lump-sum payment to reflect the increased rate on and after the effective date of the pay adjustment." The effective date of the pay adjustment typically is not Jan 1, but the first day of the first full pay period of the new calendar year. Just curious how your congressional inquiries overcame that?
It's simple. Try to save as much of your annual as you can in the last few years. Use sick leave where you can and save that annual. When you retire, you get a lump sum of the balance of annual, and you get it before your OPM status kicks in.
I turned 60 in the first week of January and retired . The end of the leave year was a few days after that. So I entered that final leave year with 240 hours of carry over and didn’t take any annual leave. I accumulated an additional 200 or so hours that final leave year. Then when I retired, just before the end of the leave year, I had an annual leave pay out of about 420 hours. Sweet!
my plan is to retire end of December 2028. i’ve been carrying a balance of 240 hrs of AL at end of each year. max is 240 + 208 but will take at least about a week off plus a few days my last year so figure about 390-400 hrs to cash in. yes it will get taxed, no way around that
As letter carrier at the post office you can carry over 440 hours every year of annual leave. In the beginning of the year, we get our five weeks and one day 208 hrs advanced in our 3rd check. so it would make more sense to just use up your leave the year before down to your max and hang around for three more pay periods and leave when you get that advance with 608 hrs.
I'm saving time off awards. You can't get paid for them. You can't transfer them to a new agency. By the time I retire, I'll have around 40 days worth of time off award leave. So I won't use any annual leave that last year, so I'll get the full 56 days, and still take off 8 or more weeks that year. (Maybe 4 of them just before retirement.)
Use it. Not only might there be a delay in your pension, there might be a delay in accessing your TSP. Max a Roth IRA for 10 years. That will have you 70k to use.
In my opinion it’s better to use your leave. I retired 12/30/23 with 420+ hours of A/L only to have half of eatin up by taxes. Hopefully I’ll get a decent amount back with my 24 filing, however it was very disappointing to have saved & saved A/L only to have half be withheld or paid into taxes. Therefore I would have been better off to have used a large sum of my leave in my opinion.
Hey buddy.... I'm trying to plan myself and have pretty close to what you have when I do retire 12/31/2026. Without going into your personal finances....can you provide an example on the "Amount of Taxes" that was taken out?
@@jt2quick I retired the end of 2023. It was the usual percentage taken out of each pay period while working. It was normal payroll taxed, around 40% for me.
@@jt2quick a little more than 40% of my 420+ hours lump sum. In the end it seems as though a person would be better off to use leave over the last year or so instead of having such a large chuck taken out. I had 10+ months of sick leave, so I had to widdle that down to a little over 10 months to not lose sick. I always heard your lump sum payment would bridge the gap before the first monthly payment starts. I actually started getting my interim payments prior to my lump sum payment. In the end I only received two interim payments prior to OPM finalizing my retirement. So not much of a wait at all for me.
I did hear however that the 520 came during covid and it might go back to 440 but we can cash some out every year rather than losing it which seems fair.
Great video and thank you for sharing. This is extremely common for those in the military about to retire. It is called "terminal leave". Terminal leave isn't a technical term, but it's the same concept of using all of your saved leave at the end of your career or of your term of service. In the military though, all affairs will be taken care of before the "terminal leave" starts so there wouldn't be a requirement to come back to the office to check in. Sure, each case may vary, but it's so commonplace in the Army (I can't speak for the other services) that it's nearly a sure thing if one wants it. And yes, it comes with those same perks as you mention it. It is the better play financially than to sell back any leave.
In some cases, taking extended annual leave would cause problems. We had projects due all the time, so there's no way I could have done that. Very commonplace in the military, though.
@@morganjen1962 I think the point would be that the leave is terminal, meaning that all parties understand and agree that the federal career is ending. The individual going on leave wouldn't be involved in any projects anymore since they are retiring. The office workload isn't a factor. No one can say, "oh, I can't retire yet because we're too busy or I have such and such project due". I think the premise is that a "terminal leave" option should be able to apply in federal positions just as much as in military.
Thank you, very informative video! Quick question, so if there is a situation where we accumulate use or lose leave a year out before retirement, if we start off with 240 and accumulate use or lose throughout the year. Is there a possibility of get 240 plus whatever you accumulate during the year before retirement? Like now I have 240 that I didn’t take last year and have 108 hours that I need to take or I would lose it. So would it be where we get 348 hours of pay?
I am planning to retire at the end of this year under the old CSRS system. I am still debating whether to do so on 12/31 or since I am under CSRS, I can hold off a few days till 1/3. Either way, I will be in the last pay period of the leave year, and my retirement will begin in January. I will have 440 hours of lump sum annual leave. If I hear you correctly, my lump sum annual will be paid at the new year's pay rate.
You have to be on the books in the pay period the new rate is effective in order for you to have your lump sum paid at the new rate. But by then, your "use or lose" will have expired.
Retiring at the end of the year though with use or lose AL you wind up paying more taxes when you file your tax return. I'm an RN for the VA i carry the max AL every year which is 685 hours for nurses. I'm trying to figure out then what is the best month for someone like me to retire.
Once you leave the uniformed services, you’ll no longer be able to make retirement contributions. So isn’t it better to use up most of the annual leave so to get the TSP match, extend time of service for social security and FERS?
I dont belive , that true , If you have a elegable retirement account , from a new job you can put money in, look into it. If you are going strait to a new job for example.You can roll over money from eligible retirement plans, such as a 401(k), 403(b), or traditional IRA, to your existing TSP account. There are multiple advantages to rollover contributions to the TSP, and you can use this option even after you retire. ,,just dont touch it !!!
When you retire at USPS annual leave carryover is 520 hours.I will have 639 when I retire at the end of leave year 2024.Will I get paid for the amount over the 520?
Great video. What if I had leave restored from the previous year and I also carry over 240 hours of leave and earned an additional 240 throughout that year. be then paid out the three aforementioned totals when I retire at the end of that year?
Thanks for the informative video once again. Now that I see other comments about it, having 2nd thoughts on selling or using my potential accumulated leave. Been carrying over 240hrs every year now over 3 years and have till 12/31/2026 when I ETS....now..wondering which would more....financial sense based on other people's experiences... keep them videos coming.
Never thought about taking my annual leave at the end. Interesting. Will have to think about that. I will have 250 hours when I plan to retire. Take leave in place + new leave earned or lump sum it. Good idea.
@@salsaverde3521it comes out to be a little over a 5% bump in my pension. Not life changing, sure, but I prefer it over "liberal sick leave" before retirement.
What if you’re retiring on December 31 and you want to maximize putting most of your annual leave lump sum payout into your TSP basically filling up the 2025 limit of $23,500 since it would be paid out in January? Can you do this?
The 2025 leave year begins on January 12, 2025 and ends on January 10, 2026. I plan to retire in 2025 with 448 hours of unused annual leave (240 + 208 use or lose). Will I save more money on tax if I retire on January 10, 2026 than on December 31, 2025? And will there be a chance I would lose 208 hours of use or lose?
Great question. We would love to sit down with you and have a zoom meeting to better help answer your question. Feel free to schedule a meeting with us here: app.hawsfederaladvisors.com/whatservicemakessense
How does this work if one has "use or lose" leave? Will that amount of "use or lose" be paid out? For example, if one has 240 hours of annual leave accrued plus 63 hours of "use or lose" and retires before the "lose" date. Will 303 hours of leave be paid?
Great question. Here is a great article about that: www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/leave-year-beginning-and-ending-dates/
@eandrgoodwin Right, it's not called terminal leave for civil since you have to come back on last day... but the concept is the same, assuming your boss oks it, you're on leave at the end.
One reason I read for not allowing Terminal Leave is that a Civil Service employee can withdraw their retirement application all the way up to their departure date, so your employer can’t hire your replacement until they’re sure you’re gone! So letting someone use up all of their leave before they retire delays that hiring process.
@@morganjen1962 That is incorrect the end of the leave year is no necessarily December 31 and rarely is. For the next several years, it is some time in early January.
You are correct, the end of the leave year coming up is Jan 11. It varies year-to-year. He has other videos about the value of leaving at the end of the month so that your pension is effective the first day of the following month, so you just have to do calculate what works best for you.
If you don't have any money saved or at least one year of savings .. then you are not ready to retire... because when you are retire.. you will get a greatly reduce amount to live off. It best to use your Annual Leave and take off and get your full salary amount and save that money !! When you retire you shouldn't have any leave left.
I’m planning my finances and not counting on AL. I’m taking that time before retirement. Every day commute, the bs from management, the unrealistic expectations, doesn’t worth the check after. Some people collapse after retirement because of the exhaustion and stress of many years. Take care and plan accordingly.
I don’t know if I would like to retire at the end of the year. 1) you’re one and thousands who are retiring at that end of the year and given the wait time could be several months for your pension check to kick in. 2) I don’t think I can go a year without enjoying time off although I could use sick leave but not in the same way as AL. 3) payout equals huge taxes.
It’s all about quality of life, for me at least.
As Dallen says, if you retire at the end of the year and have unused annual leave, you are required by law to be paid using any pay increase that happens at the beginning of the year. It should not be paid using your hourly rate when you retired. I retired from GS USAF 31 Dec 2022 and my annual leave payout was not calculated that way. I had to file 2 congressionals to get AFPC to correct it after 4 months. Everyone at local finance, AFPC, and OPM were adamant that I was not correct. It is by law written in Title 5 CFR - Administrative personnel - Chapter 1 OPM - subchapter B - CSR. PART 550 Pay Administration (General) - para 550.1204. Good luck and enjoy retirement.
I read 5 CFR 550.1205(b)(2) which says "The agency must adjust the lump-sum payment to reflect the increased rate on and after the effective date of the pay adjustment." The effective date of the pay adjustment typically is not Jan 1, but the first day of the first full pay period of the new calendar year. Just curious how your congressional inquiries overcame that?
It's simple. Try to save as much of your annual as you can in the last few years.
Use sick leave where you can and save that annual.
When you retire, you get a lump sum of the balance of annual, and you get it before your OPM status kicks in.
I turned 60 in the first week of January and retired . The end of the leave year was a few days after that. So I entered that final leave year with 240 hours of carry over and didn’t take any annual leave. I accumulated an additional 200 or so hours that final leave year. Then when I retired, just before the end of the leave year, I had an annual leave pay out of about 420 hours. Sweet!
my plan is to retire end of December 2028. i’ve been carrying a balance of 240 hrs of AL at end of each year. max is 240 + 208 but will take at least about a week off plus a few days my last year so figure about 390-400 hrs to cash in. yes it will get taxed, no way around that
As letter carrier at the post office you can carry over 440 hours every year of annual leave. In the beginning of the year, we get our five weeks and one day 208 hrs advanced in our 3rd check. so it would make more sense to just use up your leave the year before down to your max and hang around for three more pay periods and leave when you get that advance with 608 hrs.
Your advanced annual leave can only be used *provided* you're going to work the entire year.
Be careful there.
Its "advanced" you havent earned it. Its not yours.
Retiring end of 2025, hoping to cash out about 50 hours of annual leave :)
I'm saving time off awards. You can't get paid for them. You can't transfer them to a new agency. By the time I retire, I'll have around 40 days worth of time off award leave. So I won't use any annual leave that last year, so I'll get the full 56 days, and still take off 8 or more weeks that year. (Maybe 4 of them just before retirement.)
I work for the post office. We get 520 hrs this year
Use it.
Not only might there be a delay in your pension, there might be a delay in accessing your TSP.
Max a Roth IRA for 10 years. That will have you 70k to use.
In my opinion it’s better to use your leave. I retired 12/30/23 with 420+ hours of A/L only to have half of eatin up by taxes. Hopefully I’ll get a decent amount back with my 24 filing, however it was very disappointing to have saved & saved A/L only to have half be withheld or paid into taxes. Therefore I would have been better off to have used a large sum of my leave in my opinion.
Thank you for this insight. I had a friend that retired and said the same thing. The check was not as big as he thought it would be because of taxes.
Hey buddy.... I'm trying to plan myself and have pretty close to what you have when I do retire 12/31/2026. Without going into your personal finances....can you provide an example on the "Amount of Taxes" that was taken out?
@@jt2quick I retired the end of 2023. It was the usual percentage taken out of each pay period while working. It was normal payroll taxed, around 40% for me.
@@jt2quick a little more than 40% of my 420+ hours lump sum. In the end it seems as though a person would be better off to use leave over the last year or so instead of having such a large chuck taken out. I had 10+ months of sick leave, so I had to widdle that down to a little over 10 months to not lose sick. I always heard your lump sum payment would bridge the gap before the first monthly payment starts. I actually started getting my interim payments prior to my lump sum payment. In the end I only received two interim payments prior to OPM finalizing my retirement. So not much of a wait at all for me.
@@morganjen1962 Thanks for that info, Morgan....give me food for thought and some planning.
Post office we can Carry 520 hours. I will cash that in. I have already saved it.
Yes we do. That will be a nice last paycheck before pension and social security.
I did hear however that the 520 came during covid and it might go back to 440 but we can cash some out every year rather than losing it which seems fair.
Me too
Great video and thank you for sharing. This is extremely common for those in the military about to retire. It is called "terminal leave". Terminal leave isn't a technical term, but it's the same concept of using all of your saved leave at the end of your career or of your term of service. In the military though, all affairs will be taken care of before the "terminal leave" starts so there wouldn't be a requirement to come back to the office to check in. Sure, each case may vary, but it's so commonplace in the Army (I can't speak for the other services) that it's nearly a sure thing if one wants it. And yes, it comes with those same perks as you mention it. It is the better play financially than to sell back any leave.
In some cases, taking extended annual leave would cause problems. We had projects due all the time, so there's no way I could have done that. Very commonplace in the military, though.
@@morganjen1962 I think the point would be that the leave is terminal, meaning that all parties understand and agree that the federal career is ending. The individual going on leave wouldn't be involved in any projects anymore since they are retiring. The office workload isn't a factor. No one can say, "oh, I can't retire yet because we're too busy or I have such and such project due". I think the premise is that a "terminal leave" option should be able to apply in federal positions just as much as in military.
It might be a good tidbit to add scenario if person retires at end of the year and moves from state with taxes to state without tax.
Thank you, very informative video! Quick question, so if there is a situation where we accumulate use or lose leave a year out before retirement, if we start off with 240 and accumulate use or lose throughout the year. Is there a possibility of get 240 plus whatever you accumulate during the year before retirement? Like now I have 240 that I didn’t take last year and have 108 hours that I need to take or I would lose it. So would it be where we get 348 hours of pay?
Yes, as long as you don't spill over to a pay period in the next leave year and lose the 240...
Does the pay out include COLA?
I am planning to retire at the end of this year under the old CSRS system. I am still debating whether to do so on 12/31 or since I am under CSRS, I can hold off a few days till 1/3. Either way, I will be in the last pay period of the leave year, and my retirement will begin in January.
I will have 440 hours of lump sum annual leave.
If I hear you correctly, my lump sum annual will be paid at the new year's pay rate.
You have to be on the books in the pay period the new rate is effective in order for you to have your lump sum paid at the new rate. But by then, your "use or lose" will have expired.
Great video!
Glad you enjoyed it
You should be careful about painting with a broad brush, some people get sick leave paid out at 40%. You should check your CBA.
Retiring at the end of the year though with use or lose AL you wind up paying more taxes when you file your tax return. I'm an RN for the VA i carry the max AL every year which is 685 hours for nurses. I'm trying to figure out then what is the best month for someone like me to retire.
Once you leave the uniformed services, you’ll no longer be able to make retirement contributions. So isn’t it better to use up most of the annual leave so to get the TSP match, extend time of service for social security and FERS?
I dont belive , that true , If you have a elegable retirement account , from a new job you can put money in, look into it. If you are going strait to a new job for example.You can roll over money from eligible retirement plans, such as a 401(k), 403(b), or traditional IRA, to your existing TSP account. There are multiple advantages to rollover contributions to the TSP, and you can use this option even after you retire. ,,just dont touch it !!!
When you retire at USPS annual leave carryover is 520 hours.I will have 639 when I retire at the end of leave year 2024.Will I get paid for the amount over the 520?
Great question. If you retire before the end of leave year, your extra hours will count.
Great video. What if I had leave restored from the previous year and I also carry over 240 hours of leave and earned an additional 240 throughout that year. be then paid out the three aforementioned totals when I retire at the end of that year?
You'll definitely get benefits for that.
Thanks for the informative video once again. Now that I see other comments about it, having 2nd thoughts on selling or using my potential accumulated leave. Been carrying over 240hrs every year now over 3 years and have till 12/31/2026 when I ETS....now..wondering which would more....financial sense based on other people's experiences... keep them videos coming.
What's ets?
@salsaverde3521 ooh sorry about that... reverted to my military days.. ETS.. Expiration Term of Service
Retiring at the end of this year with 440hrs of annual.
I have a carry over of 360 per yr. Earn 208 per yr. I'll get 568 hrs paid out.
31 December retirement question. Will the payout be computed using the January pay rate or the December (preannual raise) rate?
Here's a great video about that:
ua-cam.com/video/6i4rFDr1wOs/v-deo.html&ab_channel=HawsFederalAdvisors
Take your sick leave liberally as you get close to retirement.
I’m retiring at 62 years + whatever gets me to the end of the PPE date.
Never thought about taking my annual leave at the end. Interesting. Will have to think about that. I will have 250 hours when I plan to retire. Take leave in place + new leave earned or lump sum it. Good idea.
I prefer to save sick leave for the pension bonus - more added value than taking fake sick days.
@winterversion It really doesn't help that much but you do you
@@salsaverde3521it comes out to be a little over a 5% bump in my pension. Not life changing, sure, but I prefer it over "liberal sick leave" before retirement.
But…with an end of year retirement, you won’t get the new pay rate/raise for January.
I thing the GS field does , look into it, , WG do not so we just go when ever , get debt free and live like no one else
Title 5 CFR - Administrative personnel - Chapter 1 OPM - subchapter B - CSR. PART 550 Pay Administration (General) - para 550.1204
What if you’re retiring on December 31 and you want to maximize putting most of your annual leave lump sum payout into your TSP basically filling up the 2025 limit of $23,500 since it would be paid out in January? Can you do this?
I believe you cannot contribute to TSP with A/L lump sum payout.
The 2025 leave year begins on January 12, 2025 and ends on January 10, 2026. I plan to retire in 2025 with 448 hours of unused annual leave (240 + 208 use or lose). Will I save more money on tax if I retire on January 10, 2026 than on December 31, 2025? And will there be a chance I would lose 208 hours of use or lose?
Great question. We would love to sit down with you and have a zoom meeting to better help answer your question. Feel free to schedule a meeting with us here: app.hawsfederaladvisors.com/whatservicemakessense
Can someone tell me if the annual leave payout is taxed like an award or is it taxed like normal wages (can be exempt with a change on the W4)
I hope someone replies because that is a good question. Being taxed like an award may not be worth saving so much AL
240 hours is what I want to hold on to
How does this work if one has "use or lose" leave? Will that amount of "use or lose" be paid out? For example, if one has 240 hours of annual leave accrued plus 63 hours of "use or lose" and retires before the "lose" date. Will 303 hours of leave be paid?
Great question. Here is a great article about that:
www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/leave-year-beginning-and-ending-dates/
Going out on “Terminal Leave” isn’t allowed for Federal Employees.
@eandrgoodwin
Right, it's not called terminal leave for civil since you have to come back on last day... but the concept is the same, assuming your boss oks it, you're on leave at the end.
@@sfjarhead4062yeah, I looked into that. Apparently your boss could get into trouble for approving that!
One reason I read for not allowing Terminal Leave is that a Civil Service employee can withdraw their retirement application all the way up to their departure date, so your employer can’t hire your replacement until they’re sure you’re gone! So letting someone use up all of their leave before they retire delays that hiring process.
To manimize your use/lose leave isn't it correct to retire at the end of the pay year? This year being January 11th, 2025???
Your use-or-lose AL will expire on 31 December of the calendar year.
@@morganjen1962 That is incorrect the end of the leave year is no necessarily December 31 and rarely is. For the next several years, it is some time in early January.
You are correct, the end of the leave year coming up is Jan 11. It varies year-to-year. He has other videos about the value of leaving at the end of the month so that your pension is effective the first day of the following month, so you just have to do calculate what works best for you.
I plan on leaving “pun intended “ at the end of the year with 480 hours
Max is 448 unless you are in the post office had to leave in March because I was using to much. 😊
@@scottgold1054where are you getting 448 from?
If you don't have any money saved or at least one year of savings .. then you are not ready to retire... because when you are retire.. you will get a greatly reduce amount to live off. It best to use your Annual Leave and take off and get your full salary amount and save that money !! When you retire you shouldn't have any leave left.
What do us millennials do when social security run out in 10 years?
Here's a great video about that:
ua-cam.com/video/OOk8FIHTs3Q/v-deo.html&ab_channel=HawsFederalAdvisors