Annual leave accrual rates
How fast you earn annual leave depends on a single number: total years of federal service (not just FERS time — CSRS, military buyback, and qualifying non-federal service counts). There are three tiers:
| Years of service | Rate per pay period | Full year |
|---|---|---|
| Less than 3 years | 4 h/PP | 104 hours (13 days) |
| 3 to 15 years | 6 h/PP* | 160 hours (20 days) |
| More than 15 years | 8 h/PP | 208 hours (26 days) |
* The 3–15 tier earns 6 hours for each of the first 25 pay periods, then 10 hours in pay period 26.
Use-or-lose and the 240-hour ceiling
Annual leave that exceeds the carryover ceiling at the end of the leave year is forfeited — that is the "use-or-lose" rule. For most General Schedule employees the ceiling is 240 hours (30 days). SES members and employees posted overseas have a higher ceiling of 720 hours.
The leave year ends on the last day of the last full biweekly pay period in January — typically the last Saturday in January. Any balance above the ceiling on that date is gone unless your agency approves an Exception to Use-or-Lose (EUL) because it directed the cancellation of your previously approved leave. EULs are narrow; don't count on one.
The safe strategy: check your projected year-end balance in October or November and schedule any excess leave before the year closes. The calculator above flags the at-risk hours automatically.
Lump-sum payout at separation
When you separate from federal service — whether by retirement, resignation, or otherwise — you receive a lump-sum payment for all accumulated and accrued annual leave. This is one of the most commonly misunderstood benefits: the lump-sum covers your full balance, including any hours above the use-or-lose ceiling that would have been forfeited had you stayed employed.
The payment is calculated at your hourly rate (annual salary ÷ 2,087) times your leave balance on the effective date of separation. It is paid as ordinary wages and fully taxable. The estimate in the calculator uses your current hourly rate; the actual payment accounts for any scheduled pay adjustments during the period the leave would have covered (e.g., a COLA or within-grade increase).
Turning unused sick leave into retirement credit — the 2,087-hour rule
Sick leave is not paid out at retirement, but FERS employees don't lose it either. Under a rule that became permanent in 2014, 100% of your unused sick leave is converted into additional creditable service for the purpose of calculating your annuity. The conversion factor is 2,087 hours = 1 year of service.
For example, 1,044 hours of unused sick leave adds exactly 6 months to your creditable service. At a 1.0% multiplier and a $100,000 High-3, that is an extra $500/year in pension — for life.
Two important limits apply:
- Computation only, not eligibility. Sick-leave credit counts toward your years of service for the pension formula, but it cannot be used to satisfy the service requirements for retirement eligibility — MRA+30, age 60+20, etc.
- No strategic accumulation game. Because sick leave converts independently of annual leave, there is no reason to hoard annual leave to avoid taking sick time. Both balances contribute to your retirement picture differently.
The FedHorizon Timeline shows the full lifetime dollar value of your sick-leave credit alongside your pension, FERS supplement, and TSP projections.