Deferred resignation round 2? Help federal employees navigate their options! Plus – a 2025 Federal Retirement Checklist

At least 3 federal agencies were recently given deferred resignation or “buyout” offers. Employees at the Small Business Administration (SBA) reportedly have until April 7^th, the deadline at the US Dept. of Agriculture (USDA)is April 8^th, and the personnel at HUD (Housing and Urban Development) were given until April 11^th. Like the original buyout offered to most of the civilian federal workforce at the end January, this second round would extend pay and benefits until the end of the fiscal year (9/30/25) and any decision to retire before that deadline will override their resignation status. Also, their retirement benefits will continue to accrue during this deferred resignation period. However, there are a number of considerations to make regarding if the delay is even advantageous for the employee.

Figuring Out an Individual Federal Worker’s Situation

Knowing the different types of situations federal employees might be experiencing these days is crucial when helping them figure out their financial situation.

Not Even Close to Retirement – Federal employees younger than their retirement age, with at least five years of service, can defer their retirement until their 62. With at least one year, they can alternatively take a refund of their pension contributions. (A federal employee may want to walk away from federal employment now but may want to come back later under what they may feel are better conditions in the future. It is possible for many of these federal employees to come back to federal civil service later and still be able to count their previous years of service toward their future retirement.)

VERA/VSIP – Some agencies are offering “early-out” retirements through the Voluntary Early Retirement Authority (VERA), but the window to accept these offers is often not open long. Some include a one-time lump sum taxable bonus (VISP) if they accept, the OPM maximum for this bonus is $25,000 but if the agency as well contributes, it can exceed this limit with OPM approval.

Discontinued Service Retirement  (DSR) – If a federal worker was separated from their job through no fault of their own, such as from a Reduction in Force (RIF), they might be entitled to a DSR. The eligibility rules for a FERS DSR are equivalent to those of a VERA/VSIP (25 years of service at any age or age 50 + 20 years of service). The main difference between a DSR and a VERA is that the former is involuntary and not offered by the agency, but rather administered by OPM directly.

Immediate, Deferred, and Postponed Retirement under FERS – If feds are already eligible for a FERS pension, they might be considering leaving service. If they are under their minimum retirement age (MRA) and have at least 5 years of service, then they can defer their retirement but this will mean surrendering their FEHB health plan. If they are at least their MRA, but younger than 62, and have 10+ years of service, a postponed (MRA+10) retirement is an option where they don’t collect the pension until reaching 62, but can rejoin FEHB at that time if eligible. Lastly, an immediate retirement is an option for anyone who is MRA with 30 years, 60 with 20 years, or 62 with 5 years.

Key Topics when Talking to Feds Facing Potential RIF:

Download personal records from online HR portal, eOPF. If hit with a reduction in force, employees might find themselves locked out of government computer systems upon receiving notice of the RIF. They should obtain copies of personal records while they still have access. Most importantly, the SF-50, which documents service and pay history, as well as their compensation statement that details income deductions and net income. Federal workers should also confirm their mailing address is current on their HR records.

There might be programs made available to them should their position be eliminated due to an RIF. These reassignment plans can assist with transitioning to a different job in the federal space, whether that’s within their current employing agency or at a different one. Finding out whether or not their occupation is considered excepted or competitive service is significant as it can affect their eligibility for such assistance.

Make sure their TSP is properly allocated and review withdrawal options should they leave their federal job. When exiting federal service, employees can rollover their retirement savings from the thrift savings plan to an IRA, or withdraw the funds (although this may incur age-based penalties). If eligible for retirement under FERS, review what options are available to them, which may include deferring or postponing their pension benefit. Are they a civilian employee with previous military service? Making a deposit for military time now can save them time and money down the road.

If a client loses their federal job due to an RIF, they might be able to keep their health insurance benefits for at least 18 months with a TCC (temporary continuation of coverage).

Need help with navigating federal benefits? Explore our services!

Retirement Checklist for Federal Employees

Refresher: The Special Retirement Supplement (SRS)

The SRS is a benefit available to federal retirees under FERS who are not yet able to claim Social Security benefits because they are under age 62. The supplement is not available to those who defer or postpone their pension. In most cases, the benefit becomes available upon reaching one’s MRA. This means any federal worker retiring with a DSR or VERA, who is younger than their MRA (~57), won’t be eligible for the SRS until they are that minimum age.

We’re Here to Help!

We can help you and them understand all these things and more with our support service. If you are using our services, thank you! If not, send me an email at cassie@fedotpions.co or schedule a call with me using my calendar link https://calendly.com/cassie_/-30, and let's see if we can help you and your federal employee community navigate through this tumultuous time.  

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