Saturday, March 19, 2016

Termination Pay Or Terminal Leave? - What You Should Know.




























One of the options at retirement that teachers have is to "cash in" their available sick days by either applying for termination pay or terminal leave.  In both cases for every 2 sick days, 1 day is credited.  This is commonly known as "2 for 1".  For example if the teacher has 100 sick days in their Cumulative Absence Reserve (CAR), they are credited with 50 days of pay if taken as termination pay or 50 days of service for terminal leave.  Here are some of the things you need to know before you make that decision.

Termination Pay:

If you decide to take termination pay, you will receive three lump sum payments annually for a total of one half the days you had in your CAR at the time of retirement or resignation/termination. To apply for termination pay you need to download the form from the DOE website or ask your payroll secretary for form OP44, if you are a rotating ATR or were terminated and the school is uncooperative, then please call Amy Arundell at UFT headquarters and she will assist you in obtaining and completing the form.  You must submit the  QP44 form at least one month (30 calendar days) before asking for termination pay.

The OP44 form is essential since the DOE will not automatically pay you for your available CAR days without a completed form and you don't want the DOE to keep your money.

Finally, you will need to pay income and Social Security taxes on the year that you receive the lump sum payment.  However, the payments will not affect the earnings limitations on either NYS public employment or Social Security.

Terminal Leave:

You are allowed to go on leave before officially retiring and use up half of the days in your CAR.  If you decide retiring is not for you, then, as long as you still have days remaining in your CAR, you can get your position back with the remaining CAR as the starting point.  However, there are some limitations that one needs to know before choosing the terminal leave option.

Terminal leave cannot extend beyond one semester.  Any remaining CAR will automatically be converted to termination pay. Moreover, You must decide by May 31st if you take terminal leave in the second semester (February) to rejoin the workforce, otherwise, your decision is irrevocable and you will be considered retired.  The same goes for the first semester (September), if you do not return to service by December 31st, you are considered to have retired.  You cannot apply to be reinstated in either January or June.  To return to service you must contact the DOE and UFT since an application must be filled out before you can begin working again. Once your CAR is exhausted, your terminal leave is over and you will have officially retired.  Remember, you must submit your QP40 form at least one month (30 calendar days) before you apply for terminal leave.

If you become ill during your terminal leave period, contact the DOE and UFT and apply to have your terminal leave converted to sick leave, subject to the approval of the medical bureau. Finally, there is no limitation to how many times you can take terminal leave, providing you have the available CAR days in your bank.

During the time you are on terminal leave you will be considered an active member with full pay and benefits as well as accumulating CAR days,  pension credits, and still contribute to the TDA.  If you decide to take terminal leave during the second semester and intend to retire, you can send a check to the Teacher's Retirement System to fully fund your TDA for the rest of the year.  For example if you are allowed to contribute $24,000 to the TDA but only will contribute $18,000, then before June 26th send a check for $6,000 to TRS to fully fund your annual TDA contribution.  The one limitation is that you must have made at least $24,000 to take advantage of this.  Otherwise, you are limited to the earned income made before you take terminal leave.  Finally, once you retire there are no TDA contributions allowed.

 Form QP40 is available online from the DOE website or the payroll secretary.  For rotating ATRs who are unable to obtain the form,  contact Amy Arundell at UFT headquarters and she will assist you in applying for terminal leave.

Whether you choose termination pay or terminal leave, remember the DOE can and does reject applications for either if you don't complete the QP44 or the QP40 forms at least one month before you retire.

Note:  If you decide to come back under terminal leave, you will be placed in the ATR pool, unless your Principal requests you back and excesses another, less senior, teacher.


56 comments:

Anonymous said...

chaz, thanks for clarifying how the two programs work. I was always confused why some people took one or the other. Now I understand the difference and which mode of payment is best for me. Terminal leave, here I come in 2018.

Anonymous said...

Our principal frowns on teachers returning from terminal leave to resume work. I really don't think she has the right to do this, but all the teachers retiring are afraid to go against her.

Anonymous said...

What if your anniversary date is Nov? Can you do terminal leave for the start of fall? When do you have to give notice that you want to do terminal leave for the fall?

Also, have you heard about the rumors that the state may offer tiers 1,2,3 an incentive to retire? I don't know if the city or teachers are involved, but legislation is back in the Assembly.

Anonymous said...

Chaz, I plan to retire in a few years, God willing. I hope to have near the maximum 200 days by then. My anniversary date is October 1. October 1 is when I will have the 25 years completed as part of my 25/55 plan. My question is do I have the option of taking both Termination Leave and Termination Pay? In other words, Can I finish up in June a few months shy of my 25 years of service, get my summer checks, and use 20 or so Termination Leave Days for the month of September following to hook me up to my 25 years of completed service on October 1. Then, after October 1, begin getting Termination Pay for my remaining 80 days of CAR credit? Please advise. Thanks

Anonymous said...

Terminal pay is usually better because you get pension checks and car checks at same time. Terminal leave gives u full pay, added pension time, and tda contributions. It is only a clearly better deal if it takes u to a qualifying event. Am I missing something?

Chaz said...

Yes. If you want both, you can apply for terminal leave in June and start it in September and officially retire after October 1st and receive the rest of your CAR as termination pay in three yearly lump sums.

Anonymous said...

Do you have to be 55 at the beginning of terminal leave? For example, I turn 55 the end of October 2018 (I currently have 165 days in my CAR) and am in my 30th year. Can I begin terminal leave in September 2018 when I am 54 (with enough days to retire well after my 55th birthday) or do I have to take it starting after I turn 55 in October 2018?

Also, must you begin terminal leave at the beginning of a semester? I recall a colleague who took terminal leave in the middle of the term (I could be wrong, however...)

This was very informative. Thanks!

Anonymous said...

I'm never going to make it until 2022 (when I turn 62) but G-d willing, I'm going to try to make it until 2020. Would it be better to return in the fall of 2020 to get some more time under my belt, and then take terminal leave during the 2nd semester of the 2020-2021 school year to get more time? I figure we'll get the last of the retro (hopefully) then and it will pad up my income enough to make up for the penalty.

This is indeed very informative- I always thought I'd want to get paid for the unused CAR days, but lately I've changed my mind.

Chaz said...

No, you can be 54 as long as you reach your 55th birthday by the end of your terminal leave.

You can take terminal leave at anytime of the school year.

Anonymous said...

If anyone is apply for OP44 or OP40, you must submit it 30 calendar days before you want your termination leave/pay is to begin. I know people who did not give their 30 calendar day notice and the DOE reject their application.

Anonymous said...

Can you take terminal leave to furfill 25 years if not 55 and wait?

Chaz said...

Anon 5:33

Thanks, I forgot to state that in my post and have since corrected it.

Anonymous said...

30-days: School calendar or real calendar?

Chaz said...

30 calendar days, not school days.

Anonymous said...

if you are not 55 years of age can you take terminal leave for years of service ?

Anonymous said...

How do they calculate how much you make per day? I've never understood that and it always seams way off. Thanks.

Anonymous said...

If the formula for your termination pay 1/2 of your car, does each day equal your annual gross divided by 180? Also, is it the average daily salary of your whole career or your FAS? Finally, if I retire on Oct 1st, wouldn't terminal pay for the month of Sept be simply me paying my own salary? Thanks in advance!

Anonymous said...

If you take terminal leave for say 50 days, do holidays counted against the 1/2 car? Such as Jewish holidays in Sept, etc? Thanks!

Chaz said...

Anon 10:50

It depends on your Final Average Salary at the time you take terminal leave.

Anon 11:50

Its calculated as 1/200, which the union won as a grievance back almost twenty years ago. As for the other, its your FAS.

Anon 2:41

Holidays do not count, its 50 days when school is in session.

Anonymous said...

Thanks Chaz. Does the 1/200th of your yearly salary formula also work for days docked?

Anonymous said...

In this anti-teacher climate, for the life of me I cannot understand why anyone would stay after the age of 55. I plan on retiring at 55 even though I will only have 18 years in. I'll have my health benefits and around $1000 a month for life. I do not want to stay and deal with petty tyrants masquerading as 'leaders.' Students are cellphone addicts now with the lowest level of respect I have ever seen.

What is the price of your health and well-being? Use your working years to get alternative income in place. With full health benefits and a guaranteed $1000-$2000 a month, depending on your years in at 55, how can you not get yourself set?

I need lots of money, you say. Downsize now in your working years. Save and invest. Sell your superfluous junk. Make financial goals. Pay off debts. Sell the big house for a co-op. Whatever you can do, just don't let yourself become a shriveled up, broken retiree at 60, 65 or 70 who is cash rich but on death's door with years of regret. All we have is time, and it is running out. What price is your sanity?

Chaz said...

Anon 9:26

Try to finish your 20th year. Your pension goes up by almost 10%, not including the raises for the extra two years. Moreover, your pension hit at 55 would be 28% while at 57 it would be only 22%.

nyamyj said...

If terminal leave carries me to the end of Fall semester (Jan. 31, 2018), are you saying I may contribute money to my TDA for the remainder of 2018, although I will retire? My 55 birthday is Jan. 17,2018, but I wanted to retire at the end of Jan. 2018 so I may receive July pay.

Chaz said...

Yes, but only if you send a check to TRS for your 2017TDA contribution by January 31st.
Once the semester is over, you will be considered retired and no TDA contribution is allowed.

Anonymous said...

Chaz, your retirement and pension articles are very informative and I have learned quite much from them. I look forward to your next article, maybe on what pension max is and is it good idea?

Anonymous said...

For the person with 18 years push it out to 20 years. At 18 it is 1.67 for 18 years. 20 will be 2.oo. For 20 years push it out. Don't take less than you are owed

Milty said...

I am currently contributing 24,000 to the TDA annually. If I start terminal leave in September of 2016 and finish terminal leave in January of 2017, only approximately 12k (5 months worth) will have been taken out from September 2016- January 2017. How much more can I send to the TDA?

Milty said...

I am currently contributing 24,000 to the TDA annually. If I start terminal leave in September of 2016 and finish terminal leave in January of 2017, only approximately 12k (5 months worth) will have been taken out from September 2016- January 2017. How much more can I send to the TDA?

Chaz said...

Here is the issue. The TDA is for a calendar year not the school year. Therefore, unless you state otherwise, the TRS will take out only $2,000 for the two January checks, the 15th and 31st checks. While you can theoretically contribute $24,000 for the year, you would need to send a check to TRS before you are off payroll to add to your TDA.

In other words, you would need to sent the TRS a check for $22,000 if you want to fully fund your TDA for the 2017 calendar year.

Milty said...

Can I send the TRS the 22K to fully fund 2017? It seems like a GREAT deal, earning 7% fixed in the TDA instead of getting nearly nothing in a savings account. Also, am I correct when I say that by taking terminal leave in January of 2017, instead of retiring in June of 2016, essentially I am putting approximately an additional 36k in the TDA which earns 7%. That seems like a terrific perk of terminal leave vs, termination pay. THANK YOU!!!!

Chaz said...

Based upon the rules your conclusion is correct.

Milty said...

One more thing (and I know you are not an accountant-lol). That 22k check that I would send in to the TDA is net salary. It has already been fully taxed. Once it is sent in and becomes part of the TDA, wouldn't it be taxed AGAIN (since withdrawals are taxable) when I later withdraw money from the account. Thus, that 22k would be taxed twice. ?????? THANK YOU SIR!!!

Chaz said...

The 22K would not be taked onty the 7% interest would be when you take it out. The tax is only on the TDA appreciation, not the amount you contribued.

Milty said...

Traditionally, on a tax DEFERRED annuity, when you make a withdrawal the initial contribution plus the interest / earnings are taxed. Is it different with this additional 22k?

Chaz said...

Only the interest (appreciation) is taxed since you already paid taxes on the money you put into the TDA.

Milty said...

i have spoken to several people at the TRS. All say you CANNOT finish out the year in contributions by sending a check to TRS to make the yearly maximum. You can only make contributions on earnings. Earnings stop when terminal leave is over. All say you cannot send them a check for the difference. ???????????

Chaz said...

All you have to do is make $24,000 in earnings to contribute $24,00 in your TDA for that calendar year. If you are at maximum that would be in mid-April.

Milty said...

So, to reiterate, contributions can only be made on earned income. I was planning on taking terminal leave from September 2016 through January of 2017. So I CANNOT mail the TRS a check for February-December 2017. Is that correct? Thank you very much.

Chaz said...

That's correct. However, you can mail the TRS a check for your January earned income.

A case can be made that your July checks should also be considered earned income since they are based upon the first semester.

Chaz said...

Good luck convincing TRS that the July checks are earned income however.

emwills said...

Is there a minimum amount of days you can take for terminal leave. I want to take 2 days which I know means I will use 4 days and take the rest of my days as terminal pay.

Paul said...

I understand that the application for Terminal Leave must be made 30 school calendar days prior to commencement of the leave. Thus application for Terminal Leave to commence on Sept. 1 must be made by June 1. Does a principal have the right (power) to grant a Terminal Leave application for Sept. 1 made by August 1st?

Paul said...

I understand that the application for Terminal Leave must be made 30 school calendar days prior to commencement of the leave. Thus application for Terminal Leave to commence on Sept. 1 must be made by June 1. Does a principal have the right (power) to grant a Terminal Leave application for Sept. 1 made by August 1st?

Anonymous said...

I have my anniversary date that I hit 30 years of service this November 30, 2016 but I don't turn 55 until March 14th of 2017. I have 59 days in my bank. What would be the best time to start my terminal leave so I can retire as early as possible? I was thinking that I should start on February 1st 2017 and use 26 days of terminal leave? Is there anyway I can leave earlier? I understand that you can't use terminal leave in two different semesters so I see February 1st, the beginning of the second semester the earliest I can leave.

Anonymous said...

Chaz, if I retire in January, 2017, can I fully fund my TDA contributions for the rest of the year by sending the TRS a check

Chaz said...

Anon 7:37

No. You can only contribute that amount of income you earned in 2017. That is January and July money only. However, if you take terminal leave that is considered earned income so think about taking terminal leave to continue to contribute to your TDA.

Anonymous said...

To take terminal leave, what exactly are the requirements?
Must you be at least 55?
Must you have at least 25 years of service?
so if you are 54.5 years of age and you have 24.5 years of service, can you take terminal leave if you reach 55 within that time period?

if you want to leave with 20 years, can you get terminal leave or do you just get a check?
Thank you for your invaluable service! The info on this blog is very hard to find elsewhere.

Chaz said...

You can take terminal leave at anytime no matter the age, or experience.

Maureen Kennedy said...

Hi Chaz,
I am interested in retiring after the new year. I just read your blog (it was great). I am interested in paying the full TDA amount for the year. Currently, I pay 2000 per month in TDA contributions for a total of 24, 000 per year.

You make reference to a situation where one could retire during the 2nd semester and supplement the full yearly TDA contribution out of pocket. Please explain the caveat of needing to make 24, 000. Would I have to make the 24,000 starting Feb 1st, the beginning of the 2nd semester ? I am confused.

Maureen Kennedy said...

Hi Chaz,
I am interested in retiring after the new year. I just read your blog (it was great). I am interested in paying the full TDA amount for the year. Currently, I pay 2000 per month in TDA contributions for a total of 24, 000 per year.

You make reference to a situation where one could retire during the 2nd semester and supplement the full yearly TDA contribution out of pocket. Please explain the caveat of needing to make 24, 000. Would I have to make the 24,000 starting Feb 1st, the beginning of the 2nd semester ? I am confused.

Chaz said...

You can only contribute the earned income you make in January. Maybe July as well but no more than 2 months.

Anonymous said...

Hi Chaz, I know this is an old thread, but I have a couple of questions. I see that principals have to approve terminal pay. What are the chances of a principal denying terminal pay? (My principal hates me~!) Also, I went for a consultation recently (not my final) and was told that because of the contractual raises and longevity raises that I will be getting in the near future, as well as the lump sum, my final average salary will have to be my last highest FIVE years instead of three years! That will include a yearly salary of 86K from five years ago that will make my pension much lower than an average of my last 3 years! This is so unfair!

Madi said...

I plan on taking Terminal Leave. My days end the day before Thanksgiving.

What would be considered my first day of retirement? Thursday, November 23 or Monday, November 27th?

If it is Monday, November 27th would I get paid for Thanksgiving day and Black Friday?

Paul Cuccio said...

Chaz:

Thank you for this informative blog. My retirement date is September 19th, 2017, I plan to make Sept 30 my retirement date, just in case TRS is off by a few days.

In giving 30 days notice, I was told July and august doesn't count. example , if you ae retiring Sep. 1st, you must notify the Principal June 1st.

I already gave my Principal notice of terminal Leave effective September 5th, 2017 (start of the new school year) My issue is that I am confused as to the timing of handing in my OP 40 and Op 44

I want to take Terminal leave (OP 40) up to september 30th 2017 then take Terminal pay(Op 44) as of October 1st, 2017

Can you please tell me the dates I should hand in each form based on the dates I supplied to you.

Thank you
Paul C.

Steve said...

If I apply now for the Fall semester, and change my mind over the Summer, can I apply to be reinstated prior to the beginning of the school year?

nyamyj said...

Since we lose half our days why not use the 10 sick days we are allowed for the year without explanation right before terminal leave date to get out 2 school weeks sooner? Would that be a problem?