Today, we address the importance of sick leave. Initially, sick leave allows employees to miss work due to sickness or to seek for medical attention. Nowadays, the reasons why sick leave is granted have evolved to include bereavement, funerals, adoption, and family care. What’s more, sick leave hours can be used to increase an employee’s annuity.
Subsequently, any unused sick leave hours are aggregated into retirement months. For CSRS retirees, every month of unused sick leave increments their annuity by 0.6%. This means that for six months of unused sick leave, your annuity increases by 1%. Likewise, 12 months of sick leave increase an employee’s annuity by 2%. For FERS retirees, a year of unused sick leave increases annuities by 1% or 0.833% for every month. However, if one retires at age 62 with 20 years of service the multiplier changes from 1% to 1.1%.
Annuities depend on the number of full years and months in service. So, unused sick leaves that don’t make up an entire month determine the amount of credit you get. In case you do, remaining sick leave days are added to your retirement hours. In computing retirement periods, a day is reckoned as being 5.797+ hours. To arrive at this figure, the OPM divides the number of hours in a work year (2,087/360=5.797). Why is that so? It is because twelve 30 day months are used to ascertain annuities. However, any days that don’t make up a full month are not used in reckoning annuities.
Even so, FERS employees with a CSRS clause in their annuity, have their FERS sick leave transfer maximum days credited to CSRS annuities. Any other hours above the transfer maximum are credited to the FERS annuity.
Unfortunately, sick leave can’t be used to claim retirement eligibility. Typically, it only applies where you’ve met the requirements of age and service years. Unused sick leave days are not credited where one leaves federal service before eligibility and applies for a deferred annuity.
In case you re-join federal service, sick leave hours are typically re-credited. Even so, if you receive a full salary and annuity, upon retiring you won’t receive any credit for unused sick leaves as well as any other while in service. This is because there is no recomputation of your annuity to cater for the new service period.
Withdrawing from the TSP
You have several withdrawal options that you can choose from. Partial withdrawals are allowed in a single payment. You can also make a full withdrawal with any one or any combination of the following methods:
- A single (lump sum) payment
- A series of monthly payments
- A life annuity (Thrift Savings Plan Lifetime payment options).
A combination of any of these three full withdrawal options is called a “mixed withdrawal.” You can have the Thrift Savings Plan transfer all or part of any single payment or, in some cases, a series of monthly payments, to a traditional IRA or an eligible employer plan by completing the TSP-70 form. Payments to you can be deposited directly into your checking or savings account using electronic funds transfer (EFT).
If you are a married Thrift Savings Plan participant (even if you are separated from your spouse), spouses’ rights apply to annuity purchases. If you are a married FERS or uniformed services participant with a total account balance of more than $3,500 and you are making a full withdrawal of your account, your spouse is entitled by law to an annuity with a 50% survivor benefit, level payments, and no cash refund. If you choose any other withdrawal option or combination of options by which your entire account balance is not used to purchase this particular type of annuity, your spouse must sign the statement on your withdrawal form that waives his or her right to that annuity.