Retirement and 20 day medical leave payout
My company offers certain retirees who were employed before 1/1/1983 an option of being paid for 20 days of unused sick leave. When compared to other options allowing for conversion of unused sick leave into health insurance premiums, the 20 days option is not at all lucrative. However, we are told that even if we elect NOT to take the 20 days option we are in constructive receipt of that benefit and taxes will be withheld on our final two paychecks. We’re now being told that the 20 day option is not part of our cafeteria plan and it is therefore a taxable event. Can this be accurate? If I NEVER receive any income from this option, how can I be deemed to have constructively received it? I am getting nowhere with my HR department.
This situation sounds confusing. Your sick leave appears to be a grandfathered benefit. Consider asking these questions:
If I accept the payout, on what date will it be paid out and how much will be paid?
If I don’t accept the payout and am in constructive receipt of the payout, will I be paid that same amount anyhow, a different amount or no amount?
(If you are paid no amount, then ask them to explain how the taxes are calculated)
If none of the options they provide sound good to you, can you take the time off instead, as paid time off? Sick leave can be used to care for family members, yourself, time off for surgery and numerous other family and health reasons. Ask them what options you have for using that sick leave time off.
While we can’t provide legal and tax advice, we encourage you to schedule time with your HR rep to ask more questions, and if all else fails, hire an attorney to help you figure out your options.