Hey all,
I’m currently in the process of separating and I have 36 days of accrued leave. I’m trying to figure out how selling back leave actually works.
Specifically:
- How do I initiate selling back leave? Is it automatic during separation or do I need to submit something?
- Is leave sell-back handled through finance, IPPS-A, or part of final out-processing?
- How is it paid out (lump sum vs part of final paycheck)?
- Is it taxed differently than normal pay?
- Are there any caps or limitations I should be aware of?
It's an involuntary separation, so terminal leave is out of the question.
Thanks in advance.
How do I sell back accrued leave when separating? (~30 days)
byu/medhern inMilitaryFinance
Posted by medhern
1 Comment
Selling back leave is a common move during separation, especially when terminal leave isn’t an option. While it’s a great way to get a final “bonus” on your way out, there are some specific financial and administrative hurdles to clear.
1. How to Initiate the Process
Selling back leave is not automatic. You must request it as part of your separation processing.
* The Paperwork: You typically initiate this through your command’s administrative office or Personnel office (S-1/PSDs). You will likely need to sign a Leave Sell-Back Statement or ensure it is correctly annotated on your separation orders/paperwork.
* The Check-out: During your final out-processing, you will meet with a Finance representative. This is the “gatekeeper” moment where you verify the exact number of days being sold.
2. Management (Finance vs. IPPS-A)
While systems like IPPS-A (Army), NSIPS (Navy), or MyFSS (Air Force) track your leave balance, the actual payout is handled by Finance (DFAS).
* Your admin office submits the transaction, but Finance performs the final audit of your Leave and Earnings Statement (LES) to ensure the days are actually available before cutting the check.
3. Payout and Timing
* How: It is paid as a lump sum.
* When: It rarely arrives with your final paycheck. Usually, Finance holds your final pay for a “final audit” (to check for any debts or overpayments). You can expect the leave sell-back to be deposited 2–6 weeks after your official separation date.
4. Taxes and Value
This is where people often feel “short-changed.”
* Calculation: You are paid for your Basic Pay only. You do not get BAH, BAS, or any special pays.
* The Tax Rate: Leave sell-back is considered “supplemental wages” by the IRS. It is usually withheld at a flat rate of 22% for federal taxes, plus any applicable state taxes.
* Reality Check: If you sell 30 days, don’t expect a full month’s worth of your current “take-home” pay. Expect roughly 70-75% of your base pay after the heavy withholding.
5. Caps and Limitations
* The 60-Day Career Cap: You can only sell back a total of 60 days in your entire military career. If you sold 10 days during a previous reenlistment, you can only sell 50 now.
* Involuntary Separation: Since you mentioned this is involuntary, double-check your separation code. In almost all cases, you are still entitled to sell your leave, provided you aren’t being discharged under conditions that specifically forfeit pay and allowances (like a Dishonorable Discharge).
Pro-Tip: The Final LES
Keep a copy of your very last LES before you lose access to MyPay. If there is a discrepancy in the payout, that document is your only evidence to get DFAS to fix it.