Retirement & Financial Planning Report

One reason that so many federal employees retire around the end of the year is that they can cash in all unused annual leave to their credit at their time of retirement as a lump sum, even beyond the normal annual carryover limit—so long as they retire before the new leave year starts (which for the 2020 leave year will be January 3, 2021).

When calculating a lump-sum payment, your agency will project unused hours of annual leave forward as if you were still on the rolls. The amount will be figured on what you would have received through continued work.

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Included in that amount will be any pay raises to which you would have been entitled had you stayed on the job for an equivalent time (regular pay raises take effect with the first full pay period of the year; a raise for 2021 has yet to be determined).

The annual carry-over limits depend on whether you are a postal or non-postal employee.

Postal Service Employees—If you are a member of the Postal Career Executive Service (PCES), you can receive a lump-sum payment for an unlimited amount of unused annual leave. If you are under the Executive and Administrative Scale (EAS), which includes supervisors, managers, postmasters and other non-bargaining unit employees, you can receive a lump-sum payment for a maximum of 560 plus any earned and unused annual leave during the year in which you retire. If you are a clerk or letter carrier covered by union contracts with such organizations as APWU and NALC, you can receive a maximum lump-sum payment for 440 hours.

Non-Postal Service Employees—If you are employed below the senior executive level within the U.S. or any of its territories and possessions, you may accumulate and carry-over a maximum of 240 hours of annual leave into the next leave year, and overseas employees may accumulate and carry over a maximum of 360 hours. Senior Executive Service members may carry over up to 720 hours.

All leave years begin on the first day of the first pay period in a calendar year (which in 2020 was January 5).

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