When is the Best Date to Retire in 2017?

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By on September 26, 2017 in Retirement with 0 Comments

Close up of a portion of a calendar with a date circled in red and 'time to retire' written on the circled date

Best day to leave, use or lose leave and exigencies of the public business – These three topics are somewhat related and are the topic of quite a bit of conversation as we approach the end of the year. We’ll take a look at them both individually and collectively in this article.

“Best” Date to Retire

When considering the “best” day to leave federal service, most people look at it through the lens of retirement; that is, the reason you are separating from federal service is the fact that you are retiring.  When this is the case, you will want to look at the date your annuity commences so as to limit the time that you are not being paid (either due to your salary or due to your retirement annuity).

FERS

A FERS annuity commences the first day of the month after your last day on the rolls, so the “best” date to separate would be the last day of the month.  If you retired on November 30, your annuity would begin on December 1 and you would receive your first annuity payment on or about January 1.

CSRS

A CSRS annuity commences on any of the first three days of the month following your last day on the rolls.  If you retired on November 30, it would commence on December 1.  If you retired on December 1, it would commence on December 2.  If you retired on December 2, it would commence on December 3.  If you retired on December 3, it would commence on December 4.  In all cases, the first payment would be received on or about January 1.

Pay Periods

You are not required to retire at the end of a pay period. Let’s use the pay period that ended on September 2, 2017 as an example.

If a FERS employee had worked to the end of the pay period their annuity would commence on October 1 and they would be paid on or about November 1. The FERS employee would have been better off retiring on August 31, as their annuity would commence on September 1 and they would be paid on or about October 1 – a full month earlier.

If it were a CSRS employee who worked to the end of the pay period, they would have been OK; their annuity would begin on September 3 and they would receive their first payment on or about October 1.

If you were simply separating from federal service, rather than retiring, you would not have to worry about the date your annuity starts and you would likely retire at the end of a pay period.

Annual Leave and Separation from Service

Because many people choose to retire near the end of the year, the matter of annual leave payments come into play.  When an individual separates from the service (by any means, not just by retirement), they are paid in a lump sum for their outstanding annual leave balance; a balance that can include use or lose leave as long as the individual separates by the end of the leave year.  As we know, the leave year ends on a different date each year.

A chart found on the OPM website lists the following dates for the end of the leave year up through the year 2020.

Leave Year End of Leave Year
2017 January 6, 2018
2018 January 5, 2019
2019 January 4, 2020
2020 January 2, 2021

If a FERS employee wanted to get the largest possible lump sum leave payment, and still receive an annuity for the month of January, they would retire on December 31 in all of these years.

On the other hand, a CSRS employee would likely choose to retire on January 3 in leave years 2017, 2018 and 2019, but would choose January 2 in leave year 2020 in order to avoid losing any annual leave balance over the carry-over ceiling.

An employee who was not retiring would separate on the last day of the leave year, whenever it fell, to obtain the largest lump sum leave payout.

Use or Lose Balances

Let’s now look at a situation where an employee isn’t planning to retire at the end of the year and has a large use or lose balance that they are planning on using over the holidays, but they become ill and are placed on sick leave, or their leave is cancelled due to a national emergency (e.g., natural disaster, terrorist attack, etc.).

Do they just lose their annual leave that was over the ceiling?  Not necessarily; OPM has procedures for restoring forfeited annual leave.

According to OPM, “agencies may consider restoring any excess annual leave that was forfeited due to an exigency of the public business or sickness of the employee only if it was scheduled in writing before the start of the third bi-weekly pay period prior to the end of the leave year (emphasis in original).

The start date of the third bi-weekly pay period is:

Leave Year Start of Third Pay Period Prior to Leave Year End
2017 November 25, 2017
2018 November 24, 2018
2019 November 23, 2019
2020 November 21, 2020

“Exigency” means an urgent need or demand.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2018 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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