Best Dates to Retire - CSRS / FERS: 2014 and 2015
Previous columns on MyFederalRetirement.com discussed the recommended best dates for CSRS and FERS employees to retire during 2009 through 2014. This column discusses the best dates for CSRS and FERS employees to retire during 2015, with an updated discussion for best retirement dates during 2014.
Before presenting these dates, it is important to review some rules and issues that employees covered by the Civil Service Retirement System (CSRS) (including CSRS Offset employees) and employees covered by the Federal Employees Retirement System (FERS) (including TransFERS* employees) should be aware of:
• Effective date of retirement and issuance of first annuity check.
CSRS employees (including CSRS Offset employees) who retire on the first, second or third day of the month will have their retirement become effective on the next day and their first retirement check will be dated the first day of the next month. For example, if a CSRS or CSRS Offset employee retires Jan. 3, 2014, then the employee's retirement becomes effective on Jan. 4, 2014 with the first annuity check being dated Feb. 1, 2014. If a CSRS/CSRS Offset retires on the fourth through the last day of a month, then the employee's retirement becomes effective the first day of the following month with the first annuity dated the first day of the month thereafter. For example, if a CSRS/CSRS Offset employee retires on Jan. 11, 2014 (the end of the 2013 leave year at most federal agencies), then the employee's retirement becomes effective Feb. 1, 2014 with the first CSRS annuity check dated Mar. 1, 2014.
For FERS-covered employees, no matter which day in the month a FERS employee retires, the employee's retirement becomes effective the first day of the following month. The first annuity check will then be dated the first day of the following month. For example, if a FERS-covered employee retires Jan. 11, 2014, then the employee's retirement becomes effective Feb. 1, 2014 and the first annuity check will be dated Mar. 1, 2014.
• Treatment of unused annual leave at the time of retirement.
All retiring employees are paid in a lump sum payment for any unused annual leave hours on the day of their retirement. The lump sum payment will be directly deposited into the same bank account that the employee's paychecks are directly deposited in. Most agencies directly deposit the lump sum annual payment within two to six weeks of the employee's retirement date. Many retiring employees use their lump sum annual leave payment to pay their bills until they receive their first full annuity check. The deposit of the first full annuity check could take as long as three to eight months after the employee's retirement date.
An employee must be in "employee status" for the entire last pay period of work in order to accrue the full amount of annual leave hours for that last pay period. An employee who retires before the end of a pay period (for most employees, that is before the second Saturday of a pay period), will not accrue any annual leave hours for the last pay period the employee worked. This assumes that the employee has a Monday through Friday work schedule.
In selecting the best days to retire during 2014 and 2015, the issue of accruing the full amount of annual leave hours for the last pay period worked should be considered. Since most federal employees work a Monday to Friday 80 hour, bi-weekly payroll schedule, it is assumed that the best day of the week to retire is a Saturday, the last day of the pay period. The first day of a new pay period (which for most employees on a Monday to Friday work schedule) in which the employee will no longer be in employed status, is also a good day to retire.
• Treatment of unused sick Leave at the time of retirement.
Prior to a law change effective Oct. 28, 2009, only retiring CSRS and CSRS Offset employees were eligible to add any unused sick leave hours to their service time for the sole purpose of calculating their CSRS annuities. Note that unused sick leave cannot be used for retirement eligibility purposes, however. Unused sick leave is used only for CSRS or FERS annuity computation purposes. Before Oct. 28, 2009, FERS employees did not receive credit for unused sick leave. As a result, FERS employees who retired before Oct. 28, 2009 forfeited all of their unused sick leave hours as of the day of their retirement. But the law changed effective Oct. 28, 2009 with Congress deciding to "phase-in" the unused sick leave hours benefit for FERS employees. In particular, those FERS employees who retire before Jan. 1, 2014 get credit for 50 percent of their unused sick leave hours as of the day of their retirement. FERS employees who retire on Jan. 1, 2014 or later will get credit for 100 percent of their unused sick leave hours on the day of their retirement (like CSRS/CSRS Offset employees).
With this information in mind, the following table presents the best dates for CSRS and FERS employees to retire during 2014 and 2015. The dates presented were selected under the following guidelines:
- The dates are the end of a pay period (Saturday) or the first day of a new pay period (Sunday); and
- For CSRS /CSRS Offset employees, the day of the month selected is within the last three days of the month or within the first three days of the following month. For FERS/TransFERS* employees, the day of the month selected is within the last three days of the month selected. The reason behind retiring within the last three days of a month or within the first three days of the following month is to allow receipt of the first annuity check within four to five weeks of the employee's retirement date.
The dates selected in the table are determined from the Office of Personnel Management's 2014 and 2015 leave year calendars:
IMPORTANT EDITOR'S NOTE: An update to this column has been published here: http://www.myfederalretirement.com/public/1312.cfm
* TransFERS employees are employees with at least five years of CSRS service who voluntarily transferred to FERS during one of the two FERS "open seasons" held in 1987-88 and 1998. Upon retiring, these employees receive both a CSRS annuity and a FERS annuity but follow FERS retirement eligibility rules even though they are also receiving a CSRS annuity.
About the Author
Edward A. Zurndorfer is a Certified Financial Planner, Chartered Financial Consultant, Chartered Life Underwriter, Registered Health Underwriter, Registered Employee Benefits Consultant and Enrolled Agent in Silver Spring, MD -- and the owner of EZ Accounting and Financial Services, an accounting, tax preparation and financial planning firm also located in Silver Spring, MD. Zurndorfer is also is an instructor at federal employee retirement seminars throughout the country and writes numerous columns and books on federal employee benefits.