ProFeds Founder, Chris Kowalik, helps federal employees understand what happens to their unused annual leave and sick leave if they are RIF’ed.
Key takeaways:
- Rules for annual leave payout
- Rules for use of sick leave
- What to do to not lose any leave
To Watch on YouTube, CLICK HERE
Additional Resources:
- Link to full RIF training series: FedImpact.com/RIF-training-series
- Sick Leave Conversion chart: FedImpact.com/2087-chart
- Local workshop locations and dates: FedImpact.com/attend
- To be introduced to a local financial professional: FedImpact.com/request-to-meet
Subscribe and listen to episodes below or on your favorite podcast apps such as iTunes, Spotify, iHeartRadio, Audible, Amazon Music and YouTube!
Please GIVE FEEDBACK on this episode (and submit ideas for future episodes).
Transcript of this episode coming soon:
Originally released on 2/3/2025
*******************
Some federal employees are a little bit concerned about how annual leave and sick leave gets paid out during a RIF. So today's episode is going to talk all about that. In the grand scheme of things, this might seem like a little bit of a minor issue, but definitely important to a lot of people.
Hi, I'm Chris Kowalik of ProFeds, and welcome to the FedImpact Podcast, where we offer candid insights on your federal retirement.
Reduction in Force – Will I Lose My Annual Leave and Sick Leave?
Let's start with annual leave, right? Both of them are going to be paid very differently as normal, but here looking at annual leave, let's talk about how it's paid out when someone separates or retires.
Annual Leave Payout
Essentially, the number of hours of annual leave that someone has is multiplied by their hourly rate of pay, and then it's paid out in lump sum. That is exactly how it will happen regardless of how someone exits federal service, whether they retire, they took the deferred resignation, they are leaving with no pension at all. Their annual leave will always be paid in that manner.
Rules For Sick Leave
Sick leave on the other hand, the payment of that or the utilization of that leave, that unused sick leave will depend largely on whether someone is eligible for an immediate pension. So a version of an immediate pension, there's lots of different kinds.
We have full eligibility meaning someone met the normal eligibility rules to be able to retire. If someone has reached their minimum retirement age, somewhere between 55 and 57, depending on the year that they were born and has at least 10 years of service and decides to go at that time, that's a version of an immediate pension.
Then we have the VERA, which is the early out and the discontinued service retirement, which is the involuntary version of the early out. All of those are versions of an immediate pension. And if someone gets one of those pensions, their unused sick leave will be converted to years, months, and days using a special calculation and added to their years of credible service.
All of someone's years, months, and days of actual service plus military time plus their sick leave would all be used to calculate their pension. If you're not quite sure how that conversion works, please don't try to do government math, okay? I assure you it'll be frustrating to you.
We're going to give you the link to the 2087 chart. You can find it through OPM, and it's way easier if you go to our site because we give you the quick link so you don't have to go search for it on OPM. You're still going to end up on OPM from our site, but you'll at least be able to get there much faster. You can certainly go to the show notes in today's episode and see that link directly. We'll also tell you how to get those show notes if you're not familiar with that.
What to do to not lose any leave?
Here's the deal, we talked about if there's an immediate pension that you're going to receive, how sick leave is applied. But what happens if there's no immediate pension? Well, unfortunately, sick leave is simply lost.
If you leave outright from the federal government and have no pension available to you, or you leave at an age in which you're eligible for a pension, meaning you're vested for a pension of at least five years of service, but you have not met the proper age to be able to retire, you have a deferred pension and sick leave is never included in deferred pension calculations.
Here's the deal. If you are not going to leave the government with a pension that is payable to you right away, you need to go ahead and use your sick leave. If you get that notice from your agency, or even perhaps sooner, you might consider using that sick leave so that you don't end up not getting that benefit that you've earned.
Get Connected & Next Steps
There's always so many little complexities. In the grand scheme of things this probably seems like a pretty small one for most of you, given that you have much bigger decisions that you're making. But leave always is top of mind for feds of how it's calculated. And remember to get the 2087 chart, that Sick Leave Conversion chart. You can go to the show notes for today's episode.
You can also, if you're not quite sure how to get to the show notes, you can text the word “podcast” to 224-444-6144. You'll have a link to the podcast. You can see all of the podcasts and all of the show notes. And of course, for this one, be able to see the 2087 link. Well, I hope today's episode has been helpful to you. Again, always lots to think about, but I'm glad that you're here to be able to get this information.
*********************************
For an introduction to a financial professional in our network: FedImpact.com/request-to-meet
View all podcast episodes: FedImpact.com/podcasts
Find a comprehensive retirement workshop for your area: FedImpact.com/attend
