Before we begin our discussion, let’s try to understand some important rules and issues concerning FERS, CSRS, and CSRS Offset employees. To start, let’s make the confusion regarding “Trans” FERS employees. “Trans” FERS employees are who have served at least five years under the CSRS and who voluntarily took transfers to FERS. Most of such employees volunteered for assignments during the two FERS “open seasons,” i.e., in 1988 and during the latter half of 1998. Such employees are subjected to FERS rules vis-à-vis retirement eligibility and are also eligible to receive two annuities, one based on the number of years served under CSRS and the other depending on the number of years served under FERS.
Effective date of retirement and issuance of the first annuity check
An important point to note here is that the “date of retirement” and the “effective date of retirement” are not the same. Another important aspect to note is that the date of issuance of the first annuity check will depend upon the date of retirement. According to the CSRS rules, if a CSRS employee (including the Offset CSRS employees) retires on the first, second, or third day of the month then his/her retirement becomes effective from the very next day. Let us understand this with the help of an example. Suppose a CSRS employee retires on 3rd of January, now, in this case, his/her effective date of retirement will be 4th of January. In this case, the date of issuance of the first annuity check will be 1st February. But this is not the only rule. According to another rule, regarding the employees who retire in the last four days of a month, the effective date of retirement will be the first of the next month, and the date of issuance of the annuity check will be the first of the month after that. Again, let’s take an example of an employee who retires on 27th January. Now, in this case, the effective date of retirement will be 1st of February, and the date of issuance of the first annuity check will be 1st of March.
Rules regarding the FERS employees, including “Trans” FERS employees, determining the effective date of retirement and the date of issuance of the first annuity check are different. In the case of FERS employees, there are no separate provisions determining the effective date of retirement as we saw in the case of CSRS employees. Accordingly, irrespective of the date on which a FERS/”Trans” FERS employee retires, the effective date of retirement will be established as the first of the next month, and the date of issuance of the first federal annuity check will be the first of the month after that. Let’s understand this with a classic example. Assuming that a FERS/”Trans” FERS employee retires on January 1st then the effective date of retirement will be 1st of February and the date of issuance of annuity check would be 1st of March. But what if he/she retires on 31st of January? In this case, too, the effective date of retirement would come out to be 1st of February, and the date of issuance of the first annuity check would also remain 1st of March.
Treatment of unused annual leave when retiring
All retiring employees are paid in lump sum for their unused annual leaves. This lump sum payment is credited to the same bank account of the retiring employee in which regular paychecks are credited. In most of the cases, this payment is made within 10 to 40 days of the date of retirement.
As we saw in the above discussion, in some cases, once the employee has retired, it can take as long as two months for the first annuity check to arrive. Hence, it becomes important for the agencies to speed up the process of payment for the unused annual leave hours. There is no denying the fact that a retired employee will have to some bills in between the dates of his/her retirement and issuance of the first annuity check. The lump sum payment for the unused annual leave hours can be used to meet any unforeseen or immediate expenditures during this period.
Now let’s come to the point of accruing the full amount of annual leave hours for the last pay period. It should be noted here that an employee must be in “employee status” for his/her entire last pay period of work to be eligible for this. For example, if an employee happens to retire even a day before the official end of the pay period, then he/she won’t be eligible for accruing the payment of annual leave hours for the last pay period.
A lot of employees enquire about the best day of the pay period to retire so that they can accrue the benefits of unused annual leave hours for the last pay period too. The answer in most of the cases, where employees work from Monday to Friday on a bi-weekly payroll schedule, is second Saturday of the pay period. This holds true in most of the cases, but there are two expectations. The first exception is for employees working on an Alternate Working Schedule (AWS). In this case, if an employee can retire on the second Friday of the pay period and still accrue the unused annual leave hours for the last pay period. The second exception is for those employees who plan to retire before the beginning of the new leave year i.e. retiring at the end of the ongoing leave year. Some employees plan this so that they can receive their first annuity check on February 1st. There is a huge benefit in doing so. An employee who retires at the end of the leave year effectively maximizes the carryover from the previous leave year of 240 hours in addition to not using any annual leave in the current year. Such employees get paid for as much as 448 hours of unused annual leave hours. If you too plan to retire in such a way, then the best date for retirement would be – Jan 3 for CSRS/CSRS Offset Employees and Dec 31 for FERS/”TRANS” FERS Employees.
A major point to be kept in mind is that most of the agencies don’t allow more than 240 hours of unused annual leave hours to be carried over into the new leave year. This is also known as “the use or lose policy.”
As we have discussed all the major points, let’s take a look at the following table, which shows some of the best dates for retirement for CSRS/CSRS Offset and FERS/”Trans” FERS employees during 2017 and 2018. In the next section, we have also mentioned the guidelines that were kept in mind while formulating this table.
Except for Dec. 31, 2017, Jan. 3, 2018 and Dec. 31, 2018, the dates are the official end of a pay period (the second Saturday of the pay period).
For CSRS and CSRS Offset employees, the best day to retirement is within the last three days of the calendar month or the first three days of the next month. For FERS employees (including ”Trans” FERS), the day of the month is within the last three days of the month.
The main reason of CSRS/CSRS Offset and FERS/”Trans” FERS employees wanting to retire either within the first three days of the month or during the last four days of the month is simple i.e. to receive the first annuity check as soon as possible (within four to 5 weeks).
The dates shown in the table below were determined based on OPM’s 2017 and 2018 leave year calendars used by most federal agencies.
|Leave Year: Beginning Date to Ending Date||Best Dates to Retire
CSRS/CSRS Offset Employees
|Best Dates to Retire
FERS/”Trans” FERS Employees
|2017||1/8/2017 to 1/6/2018
(26 pay periods)
|Jan. 3, Apr. 1, Apr. 29, Sept. 2, Sept. 30 and Oct. 28||Apr. 29, Sept. 30,
Oct. 28 and Dec. 31
|2018||1/7/2018 to 1/5/2019
(26 pay periods)
|Jan. 3, Feb. 3, Mar. 3, Mar. 31, Apr. 28, Sept. 1 and Sept. 29||Mar. 31, Apr. 28, Sept. 29 and Dec. 31|