Plan On Retiring Very Soon? Here’s What You Need To Know

For those of you that are eligible for retirement or are getting ready to retire, there are some need-to-know rules and dates.

Though there isn’t an official best date for separating from federal service, a significant new of employees seem to prefer doing so at the very end of the year or the very beginning of one. We can go over some reasons as to why it is a more popular time to retire.

Those under the Federal Employees’ Retirement System (FERS), the latest you can retire, is the last day of any month you plan to retire so that you can be on the annuity roll the very next month. The latest you can retire in the year is December 31, so that you can be on the annuity roll in January. If you miss the deadline by just a day, you will not be on the annuity roll until February.

Those who are under the Civil Service Retirement System (CSRS), you can retire up to the 3rd of whatever month and will be on the annuity roll that month.

This means if you retire by January 3 next year, you will also be on the annuity roll in January. How the amount of this month’s annuity will be prorated to not include you on the days you were not on the roll.

Keep in mind that most agencies’ last pay period for 2019 ends on December 21. Those under FERS that work up until the 31st or those under CSRS that work until one of the first three days in January will not get any credit for annual or sick leave as you finish a pay period to get the credit. However, you will receive extra pay for the days you worked.

Also, the 2019 leave year ends on January 4 of next year, which means you will receive a lump sum of any unused annual leave. This includes leave that goes over the annual carryover limit. Those hours of leave will be pushed ahead, just as if you were on payroll still. Meaning that if there is an increase in pay next year, by time of leave that categorizes under the pay raise will be paid at that higher pay.

If you retire at the end of the year, you will be facing fewer taxes for the following year because you will be earning less income and Lso, some portion of your pension will be exempt from taxes. A portion of the annuity is after-tax contributions that you made into the retirement fund during your career.

Lastly, if you decide to retire around the end of the very beginning of the year, be aware that the time to process your retirement may take longer than usual due to the surge of retirement applications put in during this period. This means that you will be receiving interim retirement checks longer than the normal timeframe.