Recently, an ad on Facebook (no doubt targeted at me because of my federal employee relationships) invited federal employees age 60 and older to attend a federal benefits training. Of course, these financial advisors are interested in older feds about to retire (hey, I was a financial advisor for 22 years before retiring and letting my licenses lapse – I get it).
In reality, by that point, there aren’t a lot of things employees nearing retirement can change about their employment that will have much of an impact (other than working to age 62). There’s a much greater opportunity to make a difference by reaching those who are farther from the retirement finish line where even small tweaks can matter.
This article is for those who are looking to maximize their benefits in a simple, easy-to-implement fashion. Let’s look at something manageable: your annual leave, something you’ll want to pay attention to no matter where you are in your federal career.
Annual leave is available to full- and part-time employees and can be used for vacation, personal business, or emergencies. With the prior approval of your supervisor, you can take annual leave as soon as it’s accrued.
You accrue annual leave based on your years of service, as follows:
| Employee Type | Less than 3 years of service | 3 years but less than 15 years of service | 15 years or more of service |
| Full time | 1/2 day (4 hours) per pay period | 3/4 day (6 hours) per pay period, except 1 1/4 day (10 hours) for last pay period | 1 day (8 hours) per pay period |
| Part time | 1 hour for each 20 hours in pay status | 1 hour for each 13 hours in pay status | 1 hour for each 10 hours in pay status |
You are encouraged to plan for and enjoy your annual leave. Often, early in your career when you’re only accruing 104 hours per year, it’s pretty easy to use up that annual leave. If you have unused annual leave at the end of the pay year (January 11, 2025 for this year), you may roll over up to 240 hours of that annual leave for use the following year.
“Use or Lose” Annual Leave
When you’re just starting as a fed, it will take a few years and the combination of not using all your annual leave and accruing more hours the longer you work to get close to that limit of 240 hours. If you reach that point, you’ll want to pay attention to something known as “use or lose” annual leave.
Say you are approaching the end of the year and you have 250 hours of unused annual leave. Since you can roll over up to 240 hours, you have 10 hours that are “use or lose” (not counting what you’ll accrue before the end of the year). If you don’t schedule leave for at least the amount over 240 hours, the hours simply evaporate. You earned them, but you don’t get to use them!
There is a deadline for scheduling this use or lose time each year that’s typically about a month before the end of the calendar year (this year’s deadline is November 30, 2024). The rollover is automatic as long as it’s 240 hours or less. Pretty straight-forward so far, right? If this is all you understand, you’re fine.
But, what happens to your unused hours of annual leave at the end of your career? Do they evaporate? No! Unlike unused sick leave which adds to your creditable service and ultimately, your pension, annual leave gets paid out at your current hourly rate whether you retire or just leave for another career.
For example, if your annual salary is $100,000 at the end of your career, your hourly rate is $47.91 ($100,000/2087). If you retire on December 31 and don’t take any annual leave that final year of employment, you would accrue 200 hours, and if you’d rolled over 240 hours from the prior year, you would be paid out for a total of 440 hours at $47.91/hour. That would be a gross amount before taxes of ~$21,000! A nice parting gift at the end of your career.
There’s one line of thinking that suggests you should get to the 240-hour rollover amount as soon as possible. If done earlier in your career when you’re likely making less, say $50,000/year, you accrue the hours at $23.96/hour but get paid out at your much higher rate at the end of your career. I’m not sure if that’s worth it, but you can decide.
Another thought is that if you’re going to work for the federal government for 25-30 years, you’ll need plenty of downtime. Using that annual leave along the way can make the time go more quickly. When paired with the eleven federal holidays employees enjoy each year, even new employees can take 24 paid days off per year.
Annual leave is one of the many great benefits federal employees have, and you get to decide the best way to use that benefit.
