Benefits Barter: The Power of a Paid Time Off Conversion Program
Workspan Daily
July 03, 2025

Financial services company Goldman Sachs Ayco recently analyzed the benefits and compensation offerings at more than 400 client companies and found those respondents are increasingly allowing employees to convert paid time off (PTO) into an equitable cash value directly applied toward:

  • Student loan payments
  • 401(k) accounts
  • Health savings accounts (HSAs)
  • Charitable contributions, including donating time to other employees
  • 529 plan contributions
  • Monetary payouts

In addition, the Goldman Sachs Ayco report showed more than 25% of these companies have a PTO purchase program, which allows employees to buy and sell their vacation days. The most common amount allowed for conversion is up to five days (40 hours).

The motivation for such novel uses of unused PTO can be easily found, said Maegan Wells, a vice president and corporate benefit specialist at Goldman Sachs Ayco.

“Companies are looking for ways to provide more value by expanding the benefits they already offer,” she said. “[The option to convert unused PTO] gives employees the ability to focus on the financial aspects of their lives that they want to improve on and invest in.”

If you’re thinking about starting a PTO conversion program at your organization, there are several benefits to explore, along with some legal considerations.


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Building Flexibility

PTO conversion programs can improve an employee’s financial well-being by providing a pay and investment options for those who may not use their entire allotment, Wells said.

According to Wells, young employees may find it attractive to exchange unused PTO days for student loan payment funds, while older employees, who may want to prioritize retirement savings, may see value in swapping unused days for 401(k) contributions.

“We even see some companies allow PTO to be donated to other employees or converted to charitable contributions,” she said. “The real key here is that the conversion opportunity provides benefits to employees no matter what their financial goal is.”

As budgets get squeezed, adding a PTO conversion option can allow an organization to increase flexibility and compensation options for their employees, said Rob Whalen, the co-founder and CEO of BNFT, a benefits platform solutions company.

“PTO itself is an earned benefit, so it is already included in the employee’s [total] rewards package,” Whalen said. “The difference is giving employees a choice in how they use those accrued earned benefit dollars.”

Enabling employees to directly cash out PTO time, Whalen said, can help employees who are experiencing a sudden financial hardship.

“The employees can now access this accrued value before accessing their earned wages from the weeks’ hours worked, so they do not create a cash flow issue when emergencies arise or go for a payday loan,” he said. “This helps employees bridge those unforeseen moments in life.”

Conversion Concerns

Before implementing a PTO conversion program, Wells said employers need to think about the legal considerations centered on state-by-state paid leave law as some states and municipalities may have laws that limit or regulate such programs.

Additionally, since PTO payouts are generally considered taxable income, they are likely to be accounted for during tax season, and if PTO is converted to 401(k) contributions, the process should follow Internal Revenue Service (IRS) rules and plan document provisions.

After organizations deliberate on the legal aspects, Wells said they should also consider their company culture to determine if a PTO conversion program is a good fit and if their employees would actually utilize this type of benefit.

Likely, the biggest key to a quality PTO conversion launch is determining the extent of any third-party involvement, such as payroll and benefits, a human resources information system (HRIS), and retirement plan administration providers, which could add headaches beyond just the cost of the program.

“The more options provided for conversion [also] increases the administrative complexity and coordination,” Wells said. “These programs may not be able to be done in-house.”

Wells also noted there is a fine line between allowing for flexibility with a PTO program and unintentionally increasing employee burnout.

“Ultimately, PTO should be utilized by employees to unwind and recharge,” she said. “The idea of utilizing PTO conversion should be geared toward the extra PTO that some employees may leave on the table.”

To ensure employees are using their PTO, Wells suggested employers put a restriction on the number of days and hours they allow their employees to convert.

“Most often, this limit is equivalent to five days/40 hours or 10 days/80 hours,” she said.

Will This Trend Continue?

Whalen said he believes the convertible PTO wave is “just getting started.”

“As companies continue to address their employees’ needs, they will seek benefits that are more flexible and cost-effective, meeting employees where they are in their lives,” he said.

Marina Galatro, an executive HR consultant at insurance brokerage firm NewFront, agreed the PTO conversion trend will likely be embraced by more organizations.

“When we think about a total rewards strategy, I feel like it’s been quite stagnant for some time, and there hasn’t been this shiny, new object that gets employees excited,” she said. “I think PTO conversion could be that shiny, new object [especially for newer employees] because not everyone may be currently looking for paid parental leave or caregiver leave as a benefit.”

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