United States

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency 

Benefits Administration Letter 

Number 21 - 102 Date: 04-29-2021

Subject: The American Rescue Plan Act of 2021 - Emergency Paid Leave Effect on 

Retirement 

Background 

The American Rescue Plan Act of 2021 (ARP), Public Law 117-2, was signed into law 

on March 11, 2021. Sections 4001, 7103, 7104, and 8008 of the Act establish a new 

category of paid leave for certain Federal employees based on COVID-19-related 

qualifying conditions. Emergency Paid Leave (EPL) may be used by a covered employee 

only during the “qualifying period,” which began on March 11, 2021, and ends on 

September 30, 2021. Under each of the four EPL authorities, Congress established an

EPL Fund. Each Fund remains available through September 30, 2022 (to make 

reimbursements to agencies for payments for leave used during the qualifying period) 

unless the Fund is exhausted before that time. If the Fund is exhausted, payments of paid 

leave under this authority will cease. 

Guidance

OPM has issued a memorandum to agencies providing guidance on EPL under the Fund 

it administers. (See Compensation Policy Memorandum 2021-15 at 

https://www.chcoc.gov/content/covid-19-emergency-paid-leave.) 

If agency headquarters staff have questions about this or any pay and leave policy, they 

may contact the Pay and Leave office at pay-leave-policy@opm.gov. 

Section 4001(c)(4) of ARP governs how OPM must treat EPL for purposes of calculating 

retirement benefits: 

(4) Calculation of retirement benefit. — Any paid leave provided to an 

employee under this section shall reduce the total service used to 

calculate any Federal civilian retirement benefit. 

Sections 7103, 7104, and 8008 of ARP, covering employees of the Federal Aviation 

Administration (FAA), Transportation Security Administration (TSA), and Veterans

Administration (VA) (title 38 employees), have identical provisions regarding calculation 

of retirement benefits. 
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These provisions require OPM to reduce the total service used in the calculation of an 

annuity by the total hours of leave paid from the EPL Fund. EPL remains creditable 

service for determining an employee’s total service credit for the purpose of establishing 

eligibility for a retirement annuity benefit and for determining an employee’s standard 

rate of basic pay for purposes of calculating his or her high-3 average salary computation. 

This BAL provides instructions for documenting employee records so that OPM and 

agencies may properly calculate retirement benefits. 

Retirement Deductions

Basic pay generated by EPL is subject to retirement deductions and contributions in the

same manner as basic pay generated by other types of paid leave. The total hours of EPL 

an employee receives will reduce the total service used in the annuity calculation. EPL 

remains creditable for establishing eligibility to a retirement annuity benefit and for 

purposes of computing a retiree’s high-3 average salary. (Note: If retirement 

contributions and deductions are not withheld from basic pay generated by EPL because 

an employee is ineligible for retirement coverage, the affected service will not be 

creditable for establishing eligibility to a retirement annuity benefit or for computing the 

high-3 average salary. EPL hours received during a period of non-deduction service may 

reduce the total service if the employee later becomes eligible for retirement. For nondeduction service, apply CSRS and FERS deposit rules.)

Note: 5 U.S.C. 8334 and 8422 require the employing agency to deduct retirement 

deductions from an employee’s basic pay. Section 4001(c)(4) of ARP mandates that EPL 

hours are not creditable in the retirement annuity computation. OPM does not have the

authority to change these requirements.

Employee Personnel Records

Please use the attached worksheet (Attachment 1) or a similar document to record an 

employee’s dates of EPL, EPL hours received, and total EPL hours. Agencies must place 

the worksheet in the employee’s Official Personnel Folder (OPF) for permanent storage

to ensure EPL hours are recorded for retirement annuity estimates and so that agencies 

can provide the EPL hours the employee used to the payroll office at retirement, if 

necessary. 

Agency Transfers

The American Rescue Plan of 2021 created four emergency paid leave authorities for 

OPM, FAA, TSA, and VA with separate funds. OPM states in its EPL guidance that, if 

an employee moves from a position covered by one of those other authorities to a 

position covered by the OPM-administered section 4001 authority, hours of emergency 

paid leave granted under those other authorities may not be counted towards the biweekly 

limit or the aggregate limit. OPM’s EPL guidance also notes that, for VA employees 

who are covered by both the VA Fund (section 8008) and the OPM Fund (section 4001)

and for whom VA seeks reimbursement from the OPM Fund, any emergency paid leave 

granted under the VA authority will not be counted in applying the biweekly limit or the 
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aggregate limit under the OPM authority. This means that an employee may exceed the

aggregate limit (600 hours of EPL for a regular full-time employee) if they receive EPL 

under more than one authority. 

Employee Payroll Records

To reduce the total service used in the calculation of annuity by the total hours of EPL,

payroll providers must annotate the separation and transfer or retirement Individual 

Retirement Record (2806/3100) in remarks column (4) with EPL hours used by an 

employee during creditable periods of service. The data entered in column (4) must

reference Public Law 117-2 with the total EPL hours used by an employee. 

EPL hours received under non-deduction service need to be separated from EPL hours 

received under CSRS/FERS deduction service. EPL hours received while subject to nondeduction service will not reduce the total service used in the calculation of annuity. The 

hours of EPL received under non-deduction service need to be documented on the 

Individual Retirement Record (IRR). Generally, non-deduction service performed on or

after January 1, 1989, is not creditable for any retirement purpose under FERS. 

Example: An employee receives 100 EPL hours under non-deduction service, then 

converts to a FERS career conditional appointment on 6/1/2021 and receives another 200 

hours of EPL. The EPL hours need to be separated on the IRR to ensure the 100 EPL 

hours received under the non-deduction service do not reduce the employee’s total 

service. 

PL 117-2—200 hours FERS

PL 117-2—100 hours Non Deduction

Agency Guidance

Agency guidance to employees using EPL should note the effect paid EPL has on the 

retirement annuity benefit. Agencies should inform employees of the impact EPL will 

have on their retirement benefits before employees receive EPL hours. 

Example: EPL will reduce an employee’s retirement annuity calculation by the total 

hours of EPL received. 600 hours of EPL will reduce the total service of a retirement 

annuity benefit by 3 months and 14 days. 

Retirement Estimates

When preparing a retirement estimate, ensure that the EPL hours are subtracted from total 

service before computing the estimated retirement annuity. Agencies should inform 

retiring employees that the total service in their retirement annuity computation will be 

reduced by the number of EPL hours used.
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Example 1: If an employee retires with 30 years of service and during 2021 received

348 hours of EPL, OPM must compute the years of service as 29 years and 10 months in

the retirement annuity calculation. 

• Based on the 2087-hour chart, 348 hours of EPL converts to 2 months. 

• The 2 months of service time paid through EPL remain creditable for purposes of 

qualifying for retirement and for computation of the high-3 average salary.

• The employee remains eligible for an MRA+30 retirement even though the 

computation only includes 29 years and 10 months of service. 

Example 2: If an employee retired under disability annuity provisions with exactly 18 

months of total creditable service, but received 522 hours of EPL, the employee would 

continue to satisfy the18-month eligibility criteria necessary to establish entitlement. 

• Based on the 2087-hour chart, 522 hours of EPL converts to 3 months. 

• The 3 months of EPL will be subtracted from total service used in the 

computation when the disability annuitant is eligible for the earned rate. 

Example 3: If an employee retires at age 62 with 20 years of service, and during 2021 

received 522 hours of EPL, OPM must deduct the number of EPL hours received, and 

compute the employee’s total service as 19 years and 9 months in the retirement annuity 

calculation. 

• Based on the 2087-hour chart, 522 hours of EPL converts to 3 months. 

• The 3 months of service time paid through EPL remain creditable to qualify for 

retirement and for the high-3 average salary calculation. 

• The employee remains eligible to receive the 1.1% formula in the annuity 

calculation. 

Example 4: If an employee retires at age 60 with 20 years of service with a high-3 average 

salary of $50,000, and the employee received 522 hours of EPL during his or her high-3 

average salary period, OPM must reduce the employee’s total service by the amount of EPL 

hours. The employee’s average salary computation would remain the same. 

• Based on the 2087-hour chart, 522 hours of EPL converts to 3 months. 

• OPM would reduce the total service by 3 months and calculate the annuity based on 

19 years and 9 months. 

• The high-3 average salary would not be reduced by the 3 months of EPL. 

1% of $50,000 x 19 years and 9 months (19.750000) = $9,875 

$9,875/12 = $822 monthly annuity (rounded down to the next lower whole dollar amount) 

Example 5: If an employee retires with 30 years of service, and during 2021 received 600 

hours of EPL, OPM must reduce the retirement annuity calculation by the 600 EPL hours. 

• Based on the 2087-hour chart, 600 hours of EPL converts to 3 months and 14 days. 
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• The retirement annuity calculation would be based on 29 years and 8 months. 

An employee covered by FERS retires at age 57 with 30 years of service and a high-3 

average salary of $75,000: 

1% of $75,000 x 30 years of service = $22,500 

$22,500/12 = $1,875 monthly annuity (rounded down to the next lower whole dollar 

amount) 

If the same employee received 600 EPL hours in 2021: 600 EPL hours converts to 3 months 

and 14 days. 

30 years – 3 months 14 days = 29 years and 8 whole months for the annuity computation. 

1% of $75,000 x 29 years and 8 months (29.666667) = $22,250. 

$22,250/12 = $1,854 monthly annuity (rounded down to the next lower whole dollar 

amount). 

In this example, the employee would lose $21 a month in retirement benefits for receiving 

600 EPL hours. 

If you have questions about this or any retirement issue please contact Benefits Officer 

Development & Outreach at benefits@opm.gov or call 202-606-0788.

Kenneth J. Zawodny, Jr. 

Associate Director 

Retirement Services