If you’re planning to separate from service in 2021, the end of the month is always a great date to retire. This year, Friday, December 31st, gives you three excellent advantages worth celebrating when you ring in the new year.
End Of The Leave Year
If you haven’t taken any leave in the 26 leave periods of 2021, you can receive a lump sum payment for every hour of unused annual leave you have to your credit if you’ve completed 80 hours before you retire. Otherwise you won’t get credit for any annual leave you would have earned during that final pay period.
Since you will receive this lump sum payment after your retirement date, it will be taxable as income in 2022, not in the 2021 tax year.
The 2022 Pay Raise
With annual raises being paid starting with the first full pay period of a new year, your lump sum leave payment will be paid at the 2022 pay rate. How much will the raise be? The White House has proposed a 2.7% pay raise for civilian employees that experts predict will soon be approved.
Keep in mind, you’ll receive your lump sum payment for unused annual leave shortly after your retirement date. These funds come in handy because most retiring employees do not receive their first full CSRS or FERS annuity check until at least two months after they retire.