Deferring Annual Leave

Texa$aver participants can defer unused annual leave payments to their 401(k) and/or 457 plan account upon termination. The IRS allows deferred compensation plans to defer all or a portion of the lump sum compensation that is paid within the 2 1/2 months following separation from service. Contact your HR or Payroll department before your last day of employment.

If you defer only a portion of your unused annual leave amount to your Texa$aver 401(k) or 457, you will receive a check for the remainder, which will be taxed. Maximum annual deferral limits apply.

No, you can only defer your unused annual leave payment to a Texa$aver 401(k) or 457 plan account. (Some higher education institutions allow you to defer annual leave to other deferred compensation programs.)

Yes. Federal income tax, Social Security, and Medicare taxes are withheld from the payment. Taxes are not withheld when you deposit the money into a Texa$aver account.

Yes. You must enroll in a Texa$aver plan account prior to leaving employment.

The deferral can take up to 75 days from your termination date to post to your Texa$aver account.

To defer your unused annual leave payment you will need to communicate this option to your benefits coordinator, human resources office, HHS Employee Service Center (for HHS Enterprise employees), and/or payroll office as part of the exit process at your agency/institution.