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Annual Limitation on Aggregate Pay

Annual aggregate compensation is limited to the rate payable for level I of the Executive Schedule at the end of the taxable year and means the total of:

  • Basic pay under 5 U.S.C. Chapter 51 (total amount of pay received at the rate fixed by law or administrative action for the position held by an employee, but before any deductions and exclusive of additional pay of any other kind). For prevailing rate employees, basic pay includes night and environmental differentials.
  • Locality-based comparability payments under 5 U.S.C. 5304 or special pay adjustments for law enforcement officers under section 404 of FEPCA.
  • Incentive awards and performance-based cash awards under 5 U.S.C. Chapters 45 and 53.
  • Premium pay established by or under 5 U.S.C. Chapter 53, Subchapter IV (night and environmental differentials for prevailing rate employees).
  • Amounts in excess of the payable rate for level I of the Executive Schedule paid in a lump-sum from the previous year.
  • Premium pay under 5 U.S.C. Chapter 55, Subchapter V.
  • Other similar payments authorized under 5 U.S.C., excluding: (1) overtime under the Fair Labor Standards Act; (2) severance pay under 5 U.S.C. 5595; (3) back pay due to an unjustified personnel action under 5 U.S.C. 5596; and (4) annual leave lump sum payments under 5 U.S.C. 5551 or 5552.
  • Recruitment and relocation bonuses under 5 U.S.C. 5753.
  • Retention allowances under 5 U.S.C. 5754.
  • Supervisory differentials under 5 U.S.C. 5755.
  • Foreign post differential under 5 U.S.C. 5925.
  • Danger pay under 5 U.S.C. 5928.
  • Nonforeign area post differential under 5 U.S.C. 5941(a)(2).
  • Remote worksite allowance under 5 U.S.C. 5942.
  • Physicians comparability allowance under 5 U.S.C. 5948.
  • Continuation of Pay under 5 U.S.C. 8118.

Statute. With the exception of a retention allowance, an employee may not be paid any part of a discretionary payment if, when combined with basic pay, it would cause aggregate compensation actually received for the calendar year to exceed the rate for Executive Level I for that year.

Discretionary payment means a payment whose amount is not fixed in advance by law or regulation by virtue of the geographic location and/or pay system of the position held by an employee or the nature of work assigned to an employee and which an agency has discretion to pay or not to pay to a particular employee, including, but not limited to:

  • Retention allowances
  • Physicians comparability allowances
  • Supervisory differentials
  • Incentive awards
  • Performance awards
  • SES Presidential rank awards
  • Premium pay under 5 U.S.C. Chapter 55, Subchapter V (other than annual premium pay)
  • Premium pay under 5 U.S.C. Chapter 53, Subchapter V
  • Recruitment bonuses
  • Relocation bonuses

At the time that a discretionary payment is authorized, the employee's pay will be projected through the last pay period of the calendar year to ensure that the balance of discretionary and nondiscretionary payments payable, when added to the total of discretionary and nondiscretionary payments already made in the calendar year, does not exceed the statutory limitation.

Nondiscretionary payments may not be discontinued or deferred for any period of time in order to make a discretionary payment that would otherwise cause an employee's pay to exceed the statutory limitation in the calendar year.

Nondiscretionary payment means a payment whose amount is fixed in advance by law or regulation by virtue of the geographic location and/or pay system of the position held by an employee or the nature of work assigned to an employee and which an agency does not have discretion to pay or not to pay to a particular employee, including, but not limited to:

  • Basic pay
  • Locality-based comparability payments
  • Special pay adjustment for law enforcement officers
  • Cost-of-living allowance
  • Danger pay allowances
  • Post differentials
  • Annual premium pay under 5 U.S.C. 5545
  • Remote worksite allowances

Deferred Payments: If the estimated aggregate compensation due an employee after deferral of a discretionary payment exceeds the rate in effect for level I of the Executive Schedule at the end of the calendar year, all nondiscretionary payments (other than basic pay) will be discontinued if continuing such payments would cause aggregate compensation actually received by the employee during the calendar year to exceed the Executive Schedule level I limitation.

Estimated aggregate compensation means the agency's projection of the aggregate compensation an employee actually will receive during a calendar year based upon the total amount of:

  • Basic pay
  • Nondiscretionary payments
  • Discretionary payments
  • Any lump sum payment of excess amounts from a previous calendar year

Payment of Excess Amounts: Amounts in excess of the payable rate for level I of the Executive Schedule in a calendar year shall be paid to the employee in a lump-sum at the beginning of the following calendar year. The amount so paid shall be considered part of the employee's aggregate compensation for the new calendar year. If the employee transfers to another agency or leaves the Federal service, the agency responsible for making the payment is the agency that employed the individual when the excess amount was created.

Exception: The following conditions permit payment of excess aggregate compensation without regard to the calendar year limitation: (1) Upon the death of an employee, the excess amount is payable immediately; and (2) If the employee separates from the Federal service, the entire excess amount is payable following a 30-day break in service.

If the individual is reemployed in the Federal service in the same calendar year as separation, any previous payment of an excess amount shall be considered part of that year's aggregate compensation for the purpose of applying the limitation of the rate then payable for level I of the Executive Schedule.

NOTE: See Overtime Rates in Part II of this Handbook for the biweekly premium pay limitation and its application.

5 U.S.C. 5307
5 C.F.R. 530.203