The Reason Many Federal Employees Retire When Their Year Ends

After 2021 and the beginning of 2022, the Office of Personnel Management received its regular influx of retirement applications. OPM received 35,549 new retirement benefit claims in the first three months of this year. OPM’s Retirement Operations Center had 36,349 outstanding claims in its inventory at the end of March. It takes 128 days to process situations that require longer than 60 days.

When waiting for your retirement paperwork to be processed, it’s wise to hope for the best but plan for the worse. Anecdotally, I’ve heard several tales of waits, and stats suggest that those delays have gotten worse in the last two years.

For government employees, the conclusion of the leave year has always been the most popular time to retire. The rationale for this is that if a retiree retires after the leave year, which is near the end of the calendar year, they will receive the maximum lump sum yearly leave payment.

The following are the advantages of retiring on December 31 under the Federal Employees Retirement System and on December 31 or January 1, 2, or 3 under the Civil Service Retirement System or CSRS Offset:

● While you wait for your retirement pension application to be completely adjudicated, receiving a lump-sum distribution of vacation time provides some cash on hand to meet living expenses. Most fresh retirees will get temporary or partial pension payments while their retirement is being processed.

● Because yearly leave is not subject to retirement or insurance deductions, the deductions from this payment are lower than those from a regular biweekly income.

● Employees who depart before the end of the current leave year would be compensated for any remaining vacation time in their account. It might include a “use it or lose it” policy for yearly off. You will not lose the yearly leave above the transfer limit if you resign before the new leave year begins.

● Employees must use all of their “use or lose” annual leave before the new leave year begins or risk losing everything except the 240-hour carryover allowance for most federal employees. Here’s how someone leaving on December 31, 2022, might be compensated for 448 hours of unclaimed yearly leave: Carry 240 hours over from 2021 to 2022; earn eight hours of annual vacation per leave period (for workers with 15 or more years of service), and don’t use accumulated leave in 2022. Each eight-hour accrual is added to the annual leave amount transferred over from 2021.