Values Often Neglected - Part 1, Annual Leave
As with all the information I provide here on this site, as a public service, remember that I am neither a lawyer nor an accountant or actuary. The purpose of this information is to bring things to your attention that may require attention when considering actions during a divorce. If you are reading this, it’s very likely you need the assistance of a professional. Seek such assistance rather than relying on this information, which is based on personal experience only and must not be construed as legal advice.
Why are we even looking at annual leave when the main subject of our study is the evaluation of pensions, especially regarding their division for divorce?Well a prime reason is that to the Federal Employee, Annual Leave is certainly more than time off for vacation and personal pursuits. It’s a little bank account, and a bank account that won’t be directly covered by most pre-divorce court orders unless it is properly taken into account. Here are the somewhat convoluted rules for how much annual leave an employee accrues. The complete rules are at www.opm.gov and in the Code of Federal Regulations, (CFR), published by the US Government Printing Office and available via online search or in your local law library.
Annual Leave Rates of Accrual
|
Employee Type |
Less than 3 years of service* |
3 years but less than 15 years of service* |
15 or more years of service* |
|
Full-time employees |
½ day (4 hours) for each pay period |
3/4 day (6 hours) for each pay period, except 1¼ day (10 hours) in last pay period |
1 day (8 hours) for each pay period |
|
Part-time employees |
1 hour of annual leave for each 20 hours in a pay status |
1 hour of annual leave for each 13 hours in a pay status |
1 hour of annual leave for each 10 hours in a pay status |
|
Uncommon tours of duty** (firefighters, guards, etc.) |
(4 hours) times (average # of hours per biweekly pay period) divided by 80 = biweekly accrual rate. |
(6 hours) times (average # of hours per biweekly pay period) divided by 80 = biweekly accrual rate. |
(8 hours) times (average # of hours per biweekly pay period) divided by 80 = biweekly accrual rate. |
To simplify things, be aware that the federally employed member of a divorcing couple accrues vacation time at a fairly generous rate. The most junior full-time employee gets at least 13 paid days per year. And remember, these are calculated as hours away from duty. Weekends, Federal Holidays, special days awarded as a performance bonus, etc. are all in addition to these hours of annual leave.
>The employee has the option of taking these hours as they accrue, taking even more hours than s/he has accrued in a given year (borrowing up to the amount that will accrue in that year), or carrying the unused leave forward for later use or for cash reimbursement. That’s why each party needs to look at the leave hours available and decide how to handle leave during and after the divorce as part of the process.
To insure employees do take some vacation and to control the amount of money that might have to be paid out, the regulations limit the amount that each employee may carry forward from one leave year into the next. In general, these are the maximum amounts each employee may start the year with:
Annual Leave Ceilings
|
Maximum Annual Leave That May Be Carried Over into the New Leave Year |
Hours/Days |
|
Federal Employees Stationed within the United States |
240/30 |
|
Federal Employees Stationed Overseas |
360/45 |
|
Members of the Senior Executive Service |
720/90 |
Bear in mind that an employee may start the year with these amounts and he or then will then accrue more during the year. The leave over and above these ceilings must be used or will be forfeited at year’s end. Typically this is called “Use or Lose” leave. It’s very common for employees to be carrying the full ceiling amount and be in a Use or Lose status every year.
How much money are we talking about? Well, let’s look at a real world example. Suppose a GS-12. Step 10 employee goes to Japan for a three year tour of duty. Upon return to the US s/he might well have 360 hours on the books and during the first year back home another 240 hours will be earned. At the 2006 rate of pay for that grade/step, the employ then has over $20,000 at his or her disposal. The “other side” in the divorce needs to know about this benefit and both sides need to make informed decisions.
Annual leave accrued in an employee’s account at separation or retirement is paid in a lump sum to the employee. He or she can’t access that money while employed. But I think it’s easy to see that an employee with an extra $20K or so “on the books” needs to account for that amount somehow to the other divorcing party.
It might be appropriate to add that amount to a cash settlement, to carry forward a spouse’s share until retirement occurs, or to offset what is essentially and employee assets that is almost never looked at with something else in the settlement process. Full knowledge leads to intelligent decisions.
What should definitely be looked t from the non-employed side is protecting that asset until proper division is decided. If the employed spouse decides to attempt to ‘burn’ assets and goes on annual leave the day divorce is filed and stays on leave until all the hours are gone, that’s money neither party can use. Consideration should certainly be given to determining the amount of annual leave the employed spouse has on ‘day one’ of the divorce and making sure the employed spouse doesn’t waste this asset without the other side’s knowledge.
Related posts:
- Values often Neglected - Part 2, Sick Leave
- TSP — Thrift Savings Plan — Division and Conservation
- TSP — Thrift Savings Plan — Division and Conservation
- Proper valuation of pension plans
- Types of Retirement — Our Roadmap
Related posts brought to you by Yet Another Related Posts Plugin.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment