Section Two: Retirement and Other Key Considerations During a Reduction in Force
By Michael Rogers, PhD., Sharon Ginley, Nelson Alleman, and Mike Vajda
Once you are confident that your personal record is accurate and up to date, it is time to carefully review your federal benefits and consider what comes next for you should you be separated from federal service.
1. Retirement Eligibility & Benefits
- Verify FERS/CSRS Retirement Contributions – Check that contributions are accurate for pension calculations. Compare contribution rates with the type of plan and your start date to confirm accurate contribution rates. If you had a break in service (left and later returned) during your career, request an OPF review to ensure you are in correct version of FERS (e.g., original FERS, FERS RAE or FERS FRAE).
- TSP (Thrift Savings Plan) Balance – Review your TSP account for financial planning. Consider the tax implications of withdrawals (e.g., Roth account rules early withdrawal penalties, outstanding loan balances, etc.).
- Health & Life Insurance Benefits (FEHB, FEGLI) – Check eligibility for temporary continued coverage if separated, and options to convert to a non-group policy after temporary continued coverage expires.
- FSAFEDS – Federal Flexible Spending Account Program (FSAFEDS). Limited Expense Health Care FSA (LEX HCFSA) can be utilized until the contributions are exhausted.
- Retirement Status – If you believe you are eligible for one of the retirement options listed below, request an annuity computation from your Servicing HR Office and review calculations to verify that all periods of civilian service have been included, and that salary information has been captured correctly. This will help inform your decisions.
- Normal Retirement – a combination of age and required years of service that applies for both CSRS and FERs employees.
- Voluntary Early Retirement Authority (VERA) – the opportunity to retire with compressed age and years of service, i.e., 25 years of service at any age, or 20 years of service at age 50.
- Discontinued Service Retirement – is an early retirement option available to federal employees who face involuntary separation. For example, a FERS employee who has been involuntarily separated and is 50 years old with at least 20 years of creditable service is normally eligible. Employees in this status are eligible for immediate annuity, continued participation in FEHB and FEGLI (if covered for at least the previous 5 years), survivor benefits, and COLA’s once they reach age 62.
- Minimum Retirement Age + 10 (Immediate and Postponed): If you meet your MRA and have at least 10 years of creditable service, you can retire immediately, but your annuity will be reduced by 5% for each year you are under 62. This type of separation permits the continuation of health/life insurance if covered for the previous 5 years. If you wish to minimize or eliminate the penalty, you have the option to “postpone” the onset of your pension to a later date. In this case, however, health and life insurance are not available during the intervening months.
- Deferred Retirement – An employee who leaves service voluntarily or involuntarily before meeting retirement eligibility can receive a pension later once they meet age and service requirements (normally 62 with 5 years of creditable service). If you withdraw your retirement contributions, you forfeit eligibility for deferred retirement. Health and life insurance are lost upon separation and cannot be reinstated at the time your annuity begins. However, future rights to continue these entitlements are possible if you return to service and subsequently separate under a qualifying retirement.
- Special Group Employees (e.g., law enforcement officers, firefighters, etc.): may be eligible to retire at younger ages and with enhanced benefits.
- Finally, this is a good time to ensure verify beneficiary decisions and designations are accurate.
2. Additional Considerations – consider these factors that can help inform your planning
- Voluntary Separation Incentive Program (VSIP) – provides a lump-sum buy-out payment for employees who retire (either via normal or early retirement) or choose to resign. Employees who accept a VSIP are generally prohibited from seeking re-employment with the Federal government for 5 years.
- Civilian Re-Deposits and Military Service Deposits – Examine your past public and military service experience and consider making a deposit or re-deposit to enhance eligibility and annuity calculations.
- Unused sick leave – plays an important role in calculating your retirement benefits but cannot be used to qualify for minimum retirement eligibility. For CSRS and FERS employees every 174 hours of unused sick leave converts to one month of service credit. Although this time cannot be used in computing your “high-3” average or in reaching minimum retirement eligibility, it can increase your total creditable service for annuity computation purposes. If you resign from your position, you will not receive additional credit for sick leave; however, if you subsequently return to Federal service, your sick leave balance will be recredited to your leave balance.
- Unused Annual Leave – You will receive a lump sum payout based on your annual salary and number of hours you have accumulated. If you recently transferred between Federal organizations, confirm the accuracy of your balance and accrual rate. If you are reappointed to a federal position within the period covered by your annual leave payment, you must repay your severance amount.
- Severance Pay – To qualify for severance pay, a career or career-conditional employee must meet involuntary separation criteria and have worked for the federal government for at least one year. Severance pay is based on your length of service and pay level. If you do not try to seek employment after separation, your severance may be reduced or denied. If you are reappointed to a federal position within one year of receiving your severance, you must repay your severance amount.
- Unemployment Benefits – Check with your state to see if you qualify for unemployment, and how benefit amounts are calculated, maintained, and when they expire.
- FERS Supplement – also known as the Special Retirement Supplement, is a temporary monthly payment paid to federal employees retiring under FERS before reaching age 62 and becoming eligible for Social Security. It’s designed to bridge the income gap until Social Security benefits begin.
3. Carefully Consider Next Steps – If you want to continue your Federal career or start a new career path outside of the government there are several things to consider:
- Reemployment Priority List – provides that employees who have been separated by RIF or other qualifying circumstances can be considered for reemployment in a similar position within one year. If you reject an appropriate job offer you will be removed from the list.
- Career Transition Assistance Plan (CTAP) – gives priority hiring status to current career or career-conditional who have received a RIF removal notice, have at least a fully acceptable performance rating, and meet the qualifications for internal agency vacancies.
- Interagency Career Transition Assistance Plan (ICTAP) – provides priority hiring for career or career-conditional employees who were separated involuntarily for reasons other than performance and conduct and are seeking a position in another agency. Employees must apply for positions on USA.JOBS.gov at or below their previous grade level and meet qualification and eligibility requirements to receive priority consideration.
- Priority Placement Program (PPP) (For DoD Employees) – allows RIF-affected DoD employees to be matched to new vacancies.
- Explore Private Sector or State and Local Government – You have accrued valuable skills, expertise, and experience in your Federal position that is transferrable in the broader market. Take the time now to make sure your resume concisely and accurately reflects your skills and capabilities. Consider a cover letter to provide a personal and tailored introduction to potential employers. Private sector resumes tend to be no more than three pages while a curriculum vitae is a more comprehensive document used in academic contexts. Generally, this means that more comprehensive information in Federal resumes (to fully document requirements) may need to be summarized. In doing so, use adjectives to indicate the scale and magnitude of responsibilities and achievements and consider aligning your description with the needs of the position and the organization. Private sector resumes should include hyperlinks including email address, LinkedIn profile, and best phone number.
- Touch base with Friends and Professional Contacts – Now is the time to utilize your network of peers, friends, and family. They can be instrumental in opening new doors and exciting opportunities that you might not have otherwise considered.
4. How to Check & Correct Records
- Request a copy of your Electronic Official Personnel Folder (eOPF) via your agency’s HR portal.
- Access your Agency’s self-service portal to review and verify your personal benefits and payroll data.
- Review your most recent SF-50 (Notification of Personnel Action) for accuracy.
- Check Leave and Earnings Statements (LES) for pay, deductions, and retirement contributions.
- Contact HR immediately to correct any errors, as corrections take time.
