Understanding the rules around accruing and carrying over annual leave is essential for federal employees as they approach retirement. Annual leave serves as a valuable benefit, allowing you to take time off for vacations, relaxation, personal needs, or family emergencies. With proper planning, you can maximize your leave balance and receive a significant lump sum payment when you retire.
How Annual Leave Is Accrued
Federal employees, whether under FERS or CSRS, accrue leave at the same rates (with adjustments for part-time workers based on hours worked):
- Fewer than 3 years of service: Earn 4 hours of leave per biweekly pay period, equating to 13 days annually.
- 3 to 15 years of service: Earn 6 hours per pay period or 20 days per year.
- 15+ years of service: Earn 8 hours per pay period, totaling 26 days annually.
It’s important to note that accrual rules don’t impact retirement eligibility or how your retirement benefits are calculated.
Carry-Over Limits and the “Use-It-or-Lose-It” Policy
The amount of leave you can carry over from year to year varies depending on your employment category. For most GS employees, the limit is 240 hours. Any hours beyond this limit must be used before the end of the leave year or they will be forfeited.
According to OPM, the leave year begins on the first day of the first full biweekly pay period in January and ends just before the same day in the following year. Since payroll schedules can vary by agency, it’s wise to confirm the specific dates with your agency to avoid losing leave unnecessarily.
Retiring Before the Leave Year Ends
If you retire before the end of a leave year, you’ll receive a lump sum payment for any unused annual leave in your account. This includes any hours above the carry-over limit, as long as your retirement occurs before the new leave year begins. This payment can provide financial support while you wait for your first interim annuity payment, which can sometimes take a month or longer to process.
Get Personalized Advice
To fully understand how to make the most of your federal benefits, consider consulting an FRC® trained advisor who can guide you through the process and help you create a retirement plan tailored to your needs.
