Annual Leave: Payout vs. Extending Service

Analyze the financial trade-offs between taking a lump-sum payment or using terminal leave to extend your service date and maximize your benefits.

The Big Question: Take the Payout or Extend Your Career?

You can receive a lump-sum payout for unused annual leave, or you can use that leave to stay on the payroll longer (often called "terminal leave"). While on terminal leave, you continue to earn salary, TSP contributions (including the 5% match), and accrue more leave, which increases your creditable service and your FERS pension.

This is subject to supervisor approval. This tool helps you see the financial difference so you can have an informed conversation.

A Note on "Use or Lose" Leave: If your supervisor denies a timely request for terminal leave and it results in you forfeiting "use or lose" leave, this may constitute an administrative error. If leave forfeiture is due to an exigency of public business, sickness, or administrative error, you may be entitled to have it restored. Address this with your agency immediately.

Pro-Tip: The 100% TSP Contribution Strategy

A powerful strategy is to save enough cash to live on during your terminal leave period. Then, change your TSP contribution to the maximum possible amount (e.g., 90-100% of your gross pay). For those final paychecks, nearly your entire salary will go directly into your Traditional TSP, tax-deferred, supercharging your retirement balance while you are still receiving the 5% government match.

Your Retirement Details

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Important Disclaimer: This calculator provides estimates for educational purposes only. Terminal leave is subject to supervisor approval. A request to retire can typically be withdrawn up to your final day of service. Please consult with your HR department and a qualified financial professional.