Questions for fellow federal employees: CT vs OT, Sick Leave

[hellommm]

For you fellow mustachian employees who are on your way or have achieved FI, I have been pondering a couple things and would love to hear your take.

1) Compensatory Time vs Overtime Pay

My organization requires that I have 80 hours of comp time banked before I can claim overtime pay. Also, if comp time is not used for a year, it gets paid out at whatever your rate is a year later from when it was earned. I was wondering if after 80 hours, should I continue to earn comp time and wait for a higher payout a year later or should I claim overtime ASAP? My assumption is that "cash is king" so take the OT pay now, but Mustachianism in general has me questioning all of my assumptions. One consideration is perhaps what I project my taxable income will be for the current year vs the next and whether OT will push me into a new tax bracket?

2) Use or Bank Sick Leave?

Starting off in Federal service, I had decided I wanted to save as much sick leave as I could because it adds to your years of service when calculating your pension. However, seeing as we are all intending to retire early and likely won't be receiving the pension, is there any reason to bank that sick leave? On the other hand, will I want to try to use as much of it as possible prior to separating?

Thank you!

[sol]

If you work at least three five years, you will still get a pension.  It will be 1% of your high three salary times years of service, so if you work 10 years it will be approximately 10% of your salary in your second to last year of working.  Unless you're military it's not inflation adjusted, though, so if you have to wait 30 more years to collect it than it will be virtually worthless.  The federal pension system heavily penalizes early retirees.

Unused annual leave is paid out upon separation, but does not count towards your length of service.  Unused sick leave counts toward you length of service but isn't paid out.  Any leave that you actually use is both paid out (when you take it) AND counts toward your length of service.  So in general, I favor using as much of your leave as possible.  Consider it a preview of early retirement to take a week off here and there.

edit:
Your agency automatic 1% TSP contributions vest in 3 years.  Your pension vests in 5.  Your spousal death benefits fully vest at 10.

[marion10]

For US Federal employees- you need 5 years of service, not 3.

[marion10]

On sick leave- are you early in your career? Remember you have no short term disability- so if you have a serious illness or accident- you will need your sick leave. I'll leave to others to determine if it is better to use for length of service or to use it.

[hellommm]

hey all, thanks so much for the quick responses so far! i am not active duty and i'm already past 5 and i don't plan to separate until at least after 10 years. i'm pretty certain i can't just take all of my sick leave at once, but i also don't feel like i need to be so stingy with it anymore :) i sure hope i don't have any serious illness or accident either, but that is indeed a great point!

any comments on CT vs OT? i just realized that i've just made over 80hrs of CT recently so ill likely switch to claiming OT unless someone has reason otherwise?

thanks again!

[Ricksun]

Good info so far.  I'd add that that your federal pension DOES get cost of living, but SOL is correct about the erosion.   The COL doesn't start until you hit 62 I believe.   Also for CT and OT, don't expect actual time and a half depending on your salary.  If I recall, it gets calculated as 1.5x the wage of a GS 10 step 1, or your current wage, whichever is higher.

As for CT vs OT, it's really a matter of whether you want that leave buffer in case you have low annual leave. 

Note that travel comp is different and you should use this leave because it doesn't pay out.

For sick leave, it was rightly pointed out that this acts as your short term disability.  If you have kids, you'll have a lot more use for it, but don't hoard it for the purposes of added pension, as you'll be leaving workforce early and won't get benefit.  If you do come back though after leaving, it is reinstated.

Ricksun

[fattest_foot]

Unused sick leave counts toward you length of service but isn't paid out.

I believe sick leave only counts towards your service time if it's an immediate retirement (normal retirement). If you're "early" retiring, the government thinks of that like just a gap in federal service where if you were to come back, your sick leave would be restored.

I try to take as much sick leave as possible, but I just earn way too much and have too much banked that I'll likely end up with a few hundred hours unused when I FIRE. I feel guilty just using sick time as "unplanned leave" though, which is technically also fraud (not that anyone cares).

As far as OT vs CT, I kind of prefer CT just because I like having time off. If I already had 80 hours banked in CT though, I'd definitely take the OT. 80 hours of CT plus normal leave accrual would be an enormous amount of time off in a single year.

[marion10]

Yes- if you are taking "deferred" retirement then it does not count towards your length of service.
Agencies must vary on comp time- if I have comp time on the books- I must use it before I can use annual leave.

[sol]

if you are taking "deferred" retirement then it does not count towards your length of service.

Awesome.  I may have to take a loooong recovery period from some elective surgeries.

[DebtFreeinPhilly]

I will throw in on this...

Comp vs. OT? I take OT any time. My position rarely gets OT because we have LEAP so I will always take OT over Comp. I then take that OT and use the extra to fund my free-of-debt payments. This is just what works for me. Do keep in mind that $160k pay ceiling. Several feds that got hit with the election trail this year reached that by August and have essentially been working for free.

Sick Leave - I keep 500 hours in the bank at all times. Why? Its about 3 months worth which can cover me in case I get injured or a kid gets really really sick. Other than that, I use it up. Haven't taken a sick day in a few months? Bang out and enjoy the mental recovery day. Before I retire, I do plan on burning all of my A/L since it doesn't add to my service time. I just started my MMM journey so my FI date happens to coincide with my 20 year service date granting me a pension.

Read the FERSGUIDE by Dan Jamison.

[hellommm]

this is the best forum EVER

thanks all for the inputs! to add a few more bits of data, im a GS11. where i am, we don't have any locality or COLA unfortunately. i also looked at some CT that was paid out from a year ago and i was mistaken. it is getting paid out at my base salary of last year, not my current base salary. also, it is getting paid out at my hourly rate, not time and a half :( looks like OT is the easy answer for me! i plan to put it all towards savings

i rarely get sick, which is of course a good thing, so i don't often have opportunities to use my sick leave. i just checked and i've got a balance of 571.50. i like the idea of taking a mental recovery day now and then :)

i will definitely check out FERSGUIDE!

thanks again everyone!

[kimmarg]

I was under the impression that CT paid out as OT (1.5 times base) when it reaches the 1 year limit. I don't know as I've never let my comp time go that long. Another oddity is the who gets true time and half overtime. I just got promoted from GS-11 to GS-12. As a GS-11 my position was FLSA exempt and I got true time and a half overtime. Now I don't so I actually make less on OT as a GS-12 than I did as a GS-11.

 I used to take tons of comp time to build up my AL. Now that I can carry over the 240hours I usually take OT when I can.  For our office most meetings and "extra" type things are CT. If you are REQUIRED to be there they are REQUIRED to offer OT. For example if I get held beyond my shift I get OT.

Also as far as pay rates if the OT is scheduled prior to the start of the administrative week you get night differential as appropriate. (you never get Sunday differential with OT)

Basically for my first 4 years of Federal service I took all Comp Time. Once I had a big build up of AL I occasionally took OT.  The point about not having short term disability is good to remember as well. I don't know if you're male or female or if you have a family now or want one in the future but either way you can take 12 weeks off for the birth of a child.... but it is only paid if you have the AL/SL/CT built up. I was able to be fully paid for my whole maternity leave which was great.

[MMM98]

To further clarify the OT pay rules:

2.  You can only take overtime up until you hit the federal maximum salary ($160,300).  I don't know about other agencies, but my agency will give you a maximum number of OT hours per pay period based on hitting the overall GS pay cap.  For Example, a GS-14 step 5 making $135,000/yr would only be allowed to work 15hrs of overtime per biweek max, because the $25,000 of pay "space" to the pay cap is evenly distributed per biweek.

This can be and is routinely waived, most notably for deployed DoD employees to Afghanistan.  It has been done for me five times.

Second as a old Fed let me give you perspective.  OT used to pay LESS THAN STRAIGHT TIME.  You would receive GS 10 Step 1 X 150% regardless of what you earn.  At a GS12 you started to earn less.  This was changed in the mid 1990s.  Count your blessings!