Author Topic: Use or get paid out PTO  (Read 20709 times)

StetsTerhune

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Use or get paid out PTO
« on: July 06, 2015, 09:04:53 AM »
My current plan is to quit my job effective April 1st 2016. By my calculations I have 28 days of PTO (Paid Time Off) that can be used before then, but only 7 days need to be use before then. So I have an extra 21 days that I can either use as vacation in the next 9 months, or I can save and get as a lump sum pay out when I quit.

I know this is a totally personal choice and I just need to decide what's more valuable to me -- taking the days as vacation to "get me to the finish line" or getting an extra month of salary when I quit. But I'm curious to hear other's thoughts on this and what they're thinking/have done.

clifford4970

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Re: Use or get paid out PTO
« Reply #1 on: July 06, 2015, 09:07:13 AM »
My opinion is to take the payout at the end.

If you decide you need a day off, or have something come up, then you have PTO to use.  But nothing like an extra 21 days of pay.  You are going to work till April anyway.  Might as well make your PTO work for you.

waffle

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Re: Use or get paid out PTO
« Reply #2 on: July 06, 2015, 09:22:34 AM »
Depends on your benefits situation. If you get paid out the PTO will your company treat it as normal income and give you a 401k match (probably not)? Personally I would try to arrange it so that you use it at the very end (extending your time with the company) instead of having it paid out at the end. This would keep your benefits going longer so you could stay on the company insurance and get your 401k match. Then at the end of your month long vacation come back to work for a week or two and then quit.

lil_miss_frugal

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Re: Use or get paid out PTO
« Reply #3 on: July 06, 2015, 09:22:54 AM »
I would personally cash out the time. That's exactly what I did when I quit my old job for another position earlier this year. I had already taken a week vacation because I had so much PTO so I didn't feel the need to take another "just because" vacation. My PTO cash out was a GREAT addition to my last pay check so it was definitely worth it.

ender

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Re: Use or get paid out PTO
« Reply #4 on: July 06, 2015, 09:23:05 AM »
The entire point of quitting your job is to be FIRE, right? That means you have things you'd rather do than work.

Do you really not have anything that you want to do for the four+ weeks you could take off in the next year?

FIPurpose

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Re: Use or get paid out PTO
« Reply #5 on: July 06, 2015, 09:23:58 AM »
I would say take the time when you want. All of it. You'll have plenty of days off after April 1st, so don't stress yourself out over a couple weeks pay. I assume that money is likely dwarfed by your investments ;)

Zamboni

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Re: Use or get paid out PTO
« Reply #6 on: July 06, 2015, 09:38:45 AM »
I would take the time off. 

Besides the symbolic beauty of quitting on April Fool's Day, why not just officially work until May? That way you still get the benefit of that pay while also being able to relax much more along the way. Plus, you'll probably even accrue another day or two of vacation pay in the process of staying slightly longer, not to mention the potential retirement match issue others have noted.

Now, if work continually pesters you (or piles up) to the point where you can't really relax while you are supposed to be on vacation, then just leave as planned in April and take the big payout at the end.

StetsTerhune

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Re: Use or get paid out PTO
« Reply #7 on: July 06, 2015, 12:57:15 PM »
Interesting to me that opinion is fairly split.

April 1st is a "set date" because my company's bonuses are paid in mid-march and I'm planning to give 2 weeks notice the moment said bonus hits my bank account, so I wouldn't use my PTO to keep working till May, but I might need it to last til I can get that bonus.

I
The entire point of quitting your job is to be FIRE, right? That means you have things you'd rather do than work.

haha, it is true that by definition on April 1st I'm declaring that a week off is worth more to me than a week's salary. On the other hand, it's not the day to day "work" that bothers me about my job, it's the month to month chain and lack of freedom. So I'm not sure how to really balance the value of a day's salary vs. a day of work.

NorCal

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Re: Use or get paid out PTO
« Reply #8 on: July 06, 2015, 01:02:32 PM »
If you go the payout route, you will sometimes get a slightly better deal by taking an extended vacation at the end of your time rather than an actual payout.

For example, you can carry your benefits into another month.  My prior employer would also match 401k funds on the PTO time, but not on a payout.

Your employer may be different. 

iris lily

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Re: Use or get paid out PTO
« Reply #9 on: July 06, 2015, 01:36:24 PM »
I quit effective April 1' 2015. Had quite a but of PTO, about 10 weeks. I put it all into my 401-equivalent plan. There was no company match, but the tax savings is still a good thing, I think.

iris lily

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Re: Use or get paid out PTO
« Reply #10 on: July 06, 2015, 01:37:56 PM »
If you go the payout route, you will sometimes get a slightly better deal by taking an extended vacation at the end of your time rather than an actual payout.

For example, you can carry your benefits into another month.  My prior employer would also match 401k funds on the PTO time, but not on a payout.

Your employer may be different.

I only thought about that aspect after I gave notice, but yea, that's something to factor.

Jouer

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Re: Use or get paid out PTO
« Reply #11 on: July 06, 2015, 01:50:10 PM »
I would take the payout...because after April 1, you'll have every day off.

I'm a red panda

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Re: Use or get paid out PTO
« Reply #12 on: July 06, 2015, 01:57:22 PM »
Depends on your benefits situation. If you get paid out the PTO will your company treat it as normal income and give you a 401k match (probably not)? Personally I would try to arrange it so that you use it at the very end (extending your time with the company) instead of having it paid out at the end. This would keep your benefits going longer so you could stay on the company insurance and get your 401k match. Then at the end of your month long vacation come back to work for a week or two and then quit.

I've never worked anywhere that allowed "terminal leave" like you describe.  I've seen a few places be nice to long term employees and let them take 2 months of vacation and then come back and work one more week, but taking vacation until day 0 wasn't an option. 

And I've NEVER seen PTO treated as salary as far as 401k match. That would be amazing.


Me, I'd take the payout, but I'd also make sure they payout all of it. Some places limit your payout to less than what you are allowed to carry each year.

expectopatronum

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Re: Use or get paid out PTO
« Reply #13 on: July 06, 2015, 02:09:40 PM »
Check to make sure you can actually do this. You may have to give a certain amount of notice to be eligible, or they may cap it at ____ hours, or some other B.S. fine print.

At my company, I would actually take the vacation. They keep changing the policy (3 years, 3 changes in PTO policy), making planning ahead rather futile. People who saved have gotten more screwed than those who haven't. Caps are reduced, rollover rules are changed, etc. Even at DH's company, they had "forced vacation". So I guess a certain amount of this decision is risk-based. I don't trust people anymore and would just take time off.

That aside, if you're sure it'll work out the way you want, I'd take the payout unless you need/want another vacation, only because you'll be FI after that and it would be a nice bonus. I don't think there's need to take it "just because", but any reason would be good enough for me. I'd take my birthday off and get drunk before noon, for instance. :)

nobody123

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Re: Use or get paid out PTO
« Reply #14 on: July 06, 2015, 02:19:30 PM »
April 1st is a "set date" because my company's bonuses are paid in mid-march and I'm planning to give 2 weeks notice the moment said bonus hits my bank account, so I wouldn't use my PTO to keep working till May, but I might need it to last til I can get that bonus.

I'd be careful about that.  I've worked at a place that will not pay out a bonus if there is a resignation already on file.  I would wait until the Monday following the official "we've awarded you your bonus as of March 15th" announcement.

Personally, I'd use whatever days I felt like using prior to that point and then cash out the rest. 

waffle

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Re: Use or get paid out PTO
« Reply #15 on: July 06, 2015, 02:20:40 PM »
Depends on your benefits situation. If you get paid out the PTO will your company treat it as normal income and give you a 401k match (probably not)? Personally I would try to arrange it so that you use it at the very end (extending your time with the company) instead of having it paid out at the end. This would keep your benefits going longer so you could stay on the company insurance and get your 401k match. Then at the end of your month long vacation come back to work for a week or two and then quit.

I've never worked anywhere that allowed "terminal leave" like you describe.  I've seen a few places be nice to long term employees and let them take 2 months of vacation and then come back and work one more week, but taking vacation until day 0 wasn't an option. 

And I've NEVER seen PTO treated as salary as far as 401k match. That would be amazing.


Me, I'd take the payout, but I'd also make sure they payout all of it. Some places limit your payout to less than what you are allowed to carry each year.

If you don't tell them you are quitting then its just a nice long vacation... You come back and give your two weeks notice if you are feeling generous or just quit if you want to be a bit mean.

I've never seen PTO when used normally not treated as regular income. When I take a week of vacation my paycheck stays the same and so does the 401k match. The only difference is that on the pay stub its noted that the pay cam from using so many hours of PTO.

mskyle

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Re: Use or get paid out PTO
« Reply #16 on: July 06, 2015, 02:36:02 PM »
I have done the "take 3-4 weeks off, then come back and work two days" thing - got me an extra month of health insurance and 401(k) contributions. I actually gave my notice two weeks before I went on vacation, but I was ready for whatever and lord knows there was no possibility of a bonus one way or another.

I say "take vacation" starting April 1st, then come back and give your two weeks notice. If you're willing to burn bridges, anything is possible!

benjenn

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Re: Use or get paid out PTO
« Reply #17 on: July 06, 2015, 02:43:31 PM »
I'm being paid for 40 days of unused vacation time (2 years worth) at the end of this month when DH & I are FIREing.  I am losing 120 days of unused sick leave that I won't get paid for (10 years worth at one sick day earned per month).  We can't use the vacation days to extend our time (and benefits) before leaving so I'm just gonna take the money and run.  I'll be working another 17 days after today.  My final paycheck with be equivalent to 3 months pay instead of one.  That makes it worth it to me.

teen persuasion

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Re: Use or get paid out PTO
« Reply #18 on: July 06, 2015, 07:49:49 PM »
DH had a bit of PTO but tons of sick time left when he put in his resignation last June.  He'd looked into the payout rules beforehand.  Sick time got cashed out at 50%, and he had the option to put it in his 401k, so we calculated how much room he had left in it (minus a tiny bit to capture the match at a possible future employer), roughly 50% of that total.  We asked that it be paid out over 5 paychecks, so that the tax bite was minimal (smaller chunks vs. lump sum).  The take home (after nearly maxing his 401k) was equivalent to what his take home would have been if he'd finished out the calendar year there.

Just after the last payment, he learned that they changed the sick time payout rules, capping it at $2500.  Lol.

Mrs.LC

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Re: Use or get paid out PTO
« Reply #19 on: July 06, 2015, 07:59:51 PM »
You don't need to obsess over this now. If you need time off, take it. If not then you will have a big check at the end. My boss insisted that I stay on the payroll to help train my replacement whenever they found someone. I received a couple dollar per hour raise to do this. They failed to realize that when I was paid out for about 230 hours of vacation time it was paid at the higher rate. I did go back for about four hours a few weeks after leaving to train the newbie. Was worth it to get all that extra $$ for vacation pay!

FarmerPete

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Re: Use or get paid out PTO
« Reply #20 on: July 07, 2015, 06:23:09 AM »
When I quit my job, I had about 5 weeks of vacation pay when all was said and done.  If it was me, I would try to extend my employment to get the extra health benefits and whatnot.  Really though, this is all personal choice.  What is important to you?  Not going in to work, or extra money?  What would you do with the money?  Maybe take a nice "I'm retired!!!!  trip to Europe"?  If it was me, I would absolutely take it as a payout or extend my time working to basically get the extra money out of your employer.  Now on the other hand, you haven't mentioned sick time.  Do you have much left?  I see a lot of Fridayitis in your future!  Better start burning it as fast as you can without needing a Doctors note...or go to http://www.bestfakedoctorsnotes.net/ or one of their competitors.  :-)  I see a surgery coming up in your future!!!

I'm a red panda

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Re: Use or get paid out PTO
« Reply #21 on: July 07, 2015, 07:03:10 AM »
If you don't tell them you are quitting then its just a nice long vacation... You come back and give your two weeks notice if you are feeling generous or just quit if you want to be a bit mean.

I've never seen PTO when used normally not treated as regular income. When I take a week of vacation my paycheck stays the same and so does the 401k match. The only difference is that on the pay stub its noted that the pay cam from using so many hours of PTO.

If you work somewhere that is going to approve that nice long vacation.  I have 20 days of vacation banked right now, at times I've had up to 40.  It is almost impossible to get more than 10 days approved of vacation at any one time.  Getting 20 would be next to impossible. 

PTO is treated as regular income, but separation payout for PTO I've never seen that way.  I've only left 4 jobs though, so someone might do it.


(I've also never been paid out for sick time...  My last company only did that if you were over 50. Which seemed like crap. It wasn't grandfathering certain people in from a previous policy; new hires got it too, as long as they were over 50 when they left.)

RunHappy

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Re: Use or get paid out PTO
« Reply #22 on: July 07, 2015, 07:44:13 AM »
I would personally use it.  If you choose to get it paid out it will be subject to taxes, etc.  Why would you want to pay taxes on vacation time?

I'm a red panda

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Re: Use or get paid out PTO
« Reply #23 on: July 07, 2015, 08:06:30 AM »
I would personally use it.  If you choose to get it paid out it will be subject to taxes, etc.  Why would you want to pay taxes on vacation time?

You don't pay taxes on your salary?

expectopatronum

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Re: Use or get paid out PTO
« Reply #24 on: July 07, 2015, 08:16:23 AM »
I would personally use it.  If you choose to get it paid out it will be subject to taxes, etc.  Why would you want to pay taxes on vacation time?

...Yeah, so, the only difference between my PTO and my salary is that I have to be in the office to receive one of them. They are both taxed, unless I'm missing something...

StetsTerhune

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Re: Use or get paid out PTO
« Reply #25 on: July 07, 2015, 08:44:53 AM »
Check to make sure you can actually do this. You may have to give a certain amount of notice to be eligible, or they may cap it at ____ hours, or some other B.S. fine print.

I definitely need to do this. I was under the impression that I would get paid out everything, but I can't find anything on the internal HR site, and I'm wary about calling and asking HR this particular question this far out. On the plus side though, my profession is a pretty small one and as long as I quit without burning any bridges, I can be pretty sure that my boss will work hard to not burn any bridges with me and would let me take adjust my last day to take extra PTO if need be.

April 1st is a "set date" because my company's bonuses are paid in mid-march and I'm planning to give 2 weeks notice the moment said bonus hits my bank account, so I wouldn't use my PTO to keep working till May, but I might need it to last til I can get that bonus.

I'd be careful about that.  I've worked at a place that will not pay out a bonus if there is a resignation already on file.  I would wait until the Monday following the official "we've awarded you your bonus as of March 15th" announcement.

I'll definitely be careful with this. Bonus in bank account, full announced, fully everything, then wait a couple of days, then give 2 weeks notice. I'm basically staying an extra 3 months  to get the bonus, so I'm going to be very, very sure that I get it.

I would personally use it.  If you choose to get it paid out it will be subject to taxes, etc.  Why would you want to pay taxes on vacation time?

You don't pay taxes on your salary?

I think RunHappy is referring to not being "taxed" on the enjoyment I'd get for a day off, vs. being taxed on the payout. So the choice is between taking a day off pre-retirement and getting paid out (for the sake of discussion) $400 salary after I retire. The $400 payout is taxed, the enjoyment from my day off can not be taxed.


expectopatronum

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Re: Use or get paid out PTO
« Reply #26 on: July 07, 2015, 08:55:03 AM »
Depending on how they play the rules, maybe it's a good plan of attack to just consider it extra if you do manage to get the payout. I don't know if I'd make any financial plans around it just in case. I guess this is why I end up taking my PTO. Here, I never know when it'll just decide to vanish.

We had an employee that only worked here for 6 months. I'm wondering what ended up happening to his PTO. The day that we were paid our annual bonuses, he left at lunchtime (literally after the pay stub was handed out) due to a "family emergency" and never came back. He said his aunt had died, which we all believed until 5 days later he said he would have to quit his job because he "didn't know long he'd have to be gone". No one believed my theory that it was total horseshit until they saw him the next week at a local bar, when he was supposed to be "out of the country", and then tagged in a Facebook post at his former workplace...which it looks like he returned to. (The fact that he had a stay at home wife and a kid didn't make it any more believable.) Despicable.

RunHappy

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Re: Use or get paid out PTO
« Reply #27 on: July 07, 2015, 10:18:27 AM »


I would personally use it.  If you choose to get it paid out it will be subject to taxes, etc.  Why would you want to pay taxes on vacation time?

You don't pay taxes on your salary?


I think RunHappy is referring to not being "taxed" on the enjoyment I'd get for a day off, vs. being taxed on the payout. So the choice is between taking a day off pre-retirement and getting paid out (for the sake of discussion) $400 salary after I retire. The $400 payout is taxed, the enjoyment from my day off can not be taxed.
[/quote]

Exactly what I meant.  Thanks!

iris lily

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Re: Use or get paid out PTO
« Reply #28 on: July 07, 2015, 10:41:05 AM »
...
I've never worked anywhere that allowed "terminal leave" like you describe.  I've seen a few places be nice to long term employees and let them take 2 months of vacation and then come back and work one more week, but taking vacation until day 0 wasn't an option. ...

The government job I had would allow this. Sad, but true. I didn't explore it because I only vaguely was aware of it, but really, I think it's unethical and the administration shouldn't allow it. At least there were not 401 type contributions involved.

But if it's copacetic,  take advantage, I guess.


mandy_2002

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Re: Use or get paid out PTO
« Reply #29 on: July 07, 2015, 03:50:28 PM »
With my current company, the long timers have a bit of an agreement with their vacation.  They basically agree on a retirement date (their final day plus vacation time plus one) and start the paperwork.  They go on vacation the day after they plan to retire, come back for one day, and then are done.  We staff up as if they weren't there that last day, because it really is a formality (they basically sit around and talk about all the sitting around they did the last month(s).  You can't take the vacation if you don't come back after. 

At my company, you can also get credit for holidays, so you could get an extra day with the Easter holiday (my company gets one day, I know many don't).

StetsTerhune

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Re: Use or get paid out PTO
« Reply #30 on: July 08, 2015, 02:27:08 PM »
I finally managed to find it in my employee handbook, and I definitely can be paid out for all the PTO I have left. I'm assuming not 401K match so that's 3.5% less, not a huge deal.

I'm planning on traveling internationally immediately upon quitting (for at least a year), so my current thinking is I'll save as much PTO as I can stand and take the pay out. I figure there's not much point in taking days off + paying to go somewhere when I'll be traveling all the time after retirement.

Plus I can't quite get over the notion of how long that extra 21 days salary could last me while traveling. I know I need to mentally shift to the notion of living off my investments at some point, but there's something very comforting about the fact that between the bonus the month before and the PTO payout that I'll get upon retiring, I can live for at least a year. Maybe two years depending on where I end up traveling mostly. I know there's no difference between invested earnings and earned earnings, but it still feels different.

Gone Fishing

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Re: Use or get paid out PTO
« Reply #31 on: July 08, 2015, 03:08:23 PM »
I originally set my retirement date for July 4th of this year, but later extended it to April 1st 2016.  I was saving my vacation for a payout (based on accrued hours or about 2 weeks worth), but since we have a use it or lose it policy, I will now have to use 4 weeks between now and the end of the year (looking forward to it!).  I will probably save the 5 days or so that I will earn between Jan 2016 and April 2016 for a small payout.  Not sure if I get a 401(k) match on the payout or not, but interestingly enough, if I use the vacation normally, I would get the match plus earn vacation on my vacation.  Not much on only 5 days, but it could be some real $$ for someone with a big pile of vacation time saved up.   

StetsTerhune

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Re: Use or get paid out PTO
« Reply #32 on: July 08, 2015, 07:25:21 PM »
I originally set my retirement date for July 4th of this year, but later extended it to April 1st 2016.

Love that we have the same projected retirement date!!! It's a date that makes a lot of sense in a lot of ways, I wonder how many of us there are.

expectopatronum

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Re: Use or get paid out PTO
« Reply #33 on: July 09, 2015, 07:35:20 AM »
Travel for a year...*sigh*. Man, I'm so jealous! That's good news about the policy though.

But, also, if something comes up (like Christmas with your family, or a wedding you want to go to, or whatever...), that to me could definitely be worth it. You can travel all you want when you're retired, but some opportunities only come once.