Sick Leave Slowdown

Legislation that would have allowed federal employees hired since 1984 to cash out their unused sick leave at retirement appears to have stalled this year in Congress. But those eligible for the benefit would be wise to hoard that sick leave a little longer since the measure's supporters are gunning for success in 2009.

The House in July passed a measure that would have allowed workers covered by the Federal Employees Retirement System (generally those hired in 1984 and after) to apply their leftover sick leave toward their retirement annuity. The measure seeks to correct a disparity between FERS and the older Civil Service Retirement System, under which employees receive credit for unused sick leave.

The sick leave provision, sponsored by Rep. James Moran, D-Va., was included in a larger bill (H.R. 1108) called the Family Smoking Prevention and Tobacco Control Act. While the legislation received overwhelming support in the House, a threat from Sen. Richard Burr, R-N.C., to block it and a veto threat from the White House -- unrelated to the sick leave provision -- helped stall the measure in the Senate.

"We're going to push hard for it [in 2009]," Austin Durrer, a Moran spokesman, said on Tuesday. "We should have a lot of opportunities to get it through the House again, and hopefully, with a robust majority in the Senate, we'll get to see some action."

Durrer said Moran would pursue all opportunities to enact the sick leave legislation through a stand-alone bill or language attached to an appropriations bill or other legislation next year.

The question is what shape the sick leave benefit would take. The provision that passed the House as part of the tobacco bill was more generous than the stand-alone bill Moran originally proposed. That measure (H.R. 5573), introduced in March, would have granted FERS retirees a one-time payment of up to $10,000 for any sick leave balance of more than 500 hours. Many federal employees argued that the original benefit did not go far enough.

The House-passed legislation, however, would have provided FERS employees retiring during the first three years credit for 75 percent of their sick leave, while those retiring later would have been able to count all their unused leave. The cost of this enhanced benefit -- estimated at $70 million for five years and $337 million for 10 years -- would have been offset by another provision of the tobacco bill that would have added a Roth 401(k) option for participants in the Thrift Savings Plan.

Jessica Klement, legislative director of the Federal Managers Association, said on Tuesday that granting FERS employees credit for unused sick leave would be the top priority for FMA and the Government Managers Coalition in the next Congress. "We'll have to figure out where we want to go … but any sort of credit is better than none," she said.

Klement said it may be possible to grant FERS employees full credit for unused sick leave in a stand-alone bill, but noted that first it would require a discussion with Moran's staff.

"We're really encouraged by the action of the 110th Congress, but we believe we can go even further in the 111th," Klement said.

Know Your Limits

The Internal Revenue Service announced on Oct. 16 that the contribution limit for all tax-exempt retirement plans in 2009 will rise to $16,500. This includes contributions to the federal government's 401(k)-style Thrift Savings Plan. If you will be 50 or older during 2009, you also can contribute up to $5,500 in additional catch-up contributions if your regular contributions for the year reach the $16,500 ceiling.