Retire after last pay period in 2026

[cookiehoo]

i would like to retire with my last day being 12/29/26. This would be after the last day of the pay period ending 12/26/26 and getting paid 1/1/2027 and then my last day of 12/29/26 with my unused AL be paid on the next pay period. I asked human resource if I did this, would my unused AL be counted as income for 2027. I was told that it would be counted as income for 2026. Does anyone know if this is true? My assumption is that I would just have to wait until the next pay day which would be 1/15/2027 to get paid for the one day that I worked on 12/28/2027 in addition to my AL. Or does human resources not wait for the end of that pay period and send out final checks on 12/29/2026 my last day. I have sent human resources an e mail but not heard back yet.

Thanks for any help.

 

[JPH543]

As far as IRS is concerned, the date it is issued is the year it is counted towards. So, it matters what date the payment has on it even if it is issued later after a processing period. If is dated 1/1/27 then its 2027 income. If it's dated for 12/29/26 its 2026 income.

I retired from the military on 31 Dec 2024, and my last payment was held for auditing, sold leave etc. and I didn't get it till mid Jan but it was dated for 31 Dec and was on my 24 taxes.

Not sure which you prefer, but honestly, I would have liked for it have been in the following year so less on that last active 24 W2, since I didn't work for most of 25.

 

[Valkyrie]

• December 31, 2026: The end of the calendar year and pay period. A popular; your annuity starts January 1, 2027, with virtually no gap.
• January 9, 2027: The end of the 2026 leave year and a pay period. Similar to January 10, 2026, this maximizes annual leave payout and provides a bit more salary before retiring. Annuity begins February 1, 2027.
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• https://dailyfed.com/2026/01/maximizing-your-federal-retirement-the-best-dates-to-retire-in-2026/

 

[James48843]

Hey- if I had to do it over again I’d probably wait until 90 days into the new year, to capture the increase in the “high three”.

Just saying- don’t let one day and a lump sum put you into a higher tax bracket for the last year, and not take advantage of a bump up on the high three

Congrats on making it to retirement- good luck!