QUESTION: If I have sick leave left, should I exhaust it before I go on disability retirement? What about annual leave?
ANSWER: It is probably best to exhaust your sick leave before going onto disability retirement. There are at least two ways to do this. First, you can use up your sick leave once you have been awarded disability retirement, holding your retirement annuity in abeyance until you have exhausted your sick leave. Second, you can use all of your accumulated sick leave in advance, beyond the amount necessary for OPM to approve your application. You can do this by leaving just enough sick leave to get you through the process. The problem here is that no one can guess how much time OPM will take to come to a decision.
The advantage of using up your sick leave, no matter how you do it, is that you will be paid at your full salary for your time on sick leave instead of being paid at the lesser rate of the disability retirement annuity. While the unused sick leave of CSRS employees is credited to time in service and may have potential value for retirement purposes (this is not so for FERS employees), it's still usually much more profitable to exhaust sick leave first, thereby recouping it in the form of dollars.
Annual leave is different. You should exhaust any "use or lose" annual leave before going onto disability retirement. However, there is no special reason (except perhaps for tax purposes) to exhaust any other accrued annual leave, since you will be paid a lump sum for any annual leave remaining in your leave account when you go onto disability retirement.
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