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Converting Unused Sick Leave (FERS & CSRS)

Posted By Dennis Damp On In ANNUITIES / ELIGIBILITY,BENEFITS / INSURANCE,FINANCE / TIP,RETIREMENT CONCERNS | Comments Disabled
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Fortunately, the National Defense Authorization Act for Fiscal Year 2010 authorized FERS employees [2] to use their unused sick leave balances to increase their retirement annuity. Prior to this Act, only CSRS employees [3] were able to use their unused sick leave balances in their annuity calculation [4]. Until this act was passed, federal employees hired under the FERS system had little incentive to save their sick leave.

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It can be confusing when converting unused sick leave with over 2087 hours, one year of sick leave, on the books. Steven accumulated over a year of sick leave and wasn’t sure how to determine the total time he could apply for his target retirement date. If you have over 2087 hours of sick leave, subtract 2087 from the total and look up that number on the Sick Leave Conversion Chart [6] to determine the additional months and days of creditable sick leave time to add to your annuity calculation. If you are lucky enough to have over two years subtract 4174 from the total.

For example, say you have 2745 hours of total sick leave at the time you retire. Subtract 2087 leaving 658 hours of additional sick leave to account for. The sick leave conversion chart does not list every number between 0 and 2,087–there are gaps. If a figure on the chart doesn’t correspond exactly to the total hours of unused sick leave an employee has at the time of retirement, use the next highest number.

When you look up 658 on the chart, find the number closest to 658. You will find 655. Since you have 658 go to the next number on the chart which is 661. The number 661 converts to 3 months and 24 days giving you 1 year 3 months and 24 days of unused sick leave. Only years and full months of service are used for the annuity computations.

In this example you may wish to delay your retirement long enough to earn an additional full month of sick leave. The other option is that you will be able to use 24 days of sick leave before retirement and still have 1 year and 3 months to apply towards retirement. If you use more than 24 days in the example, you would lose a full month of credit and have 1 year and two months of creditable sick leave. When I retired, I left 16 hours on the books over a full month just to be safe.

Typically, those planning their retirement would select several target retirement dates and request annuity estimates from HR. Our 2020 Leave and Schedule Excel Chart [7] helps federal employees determine their estimated annual and sick leave balances for each target retirement date.  This chart can be placed on your desktop, add your earned leave each period for all leave categories. The Excel chart automatically calculates leave totals. Here are several links that can help you better understand the process:

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Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER.

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Disclaimer: Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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