Introduction

The Deferred Resignation Program presents federal employees with a significant career decision. This guide is designed to educate employees on the financial, retirement, and benefits-related impacts of accepting or declining this offer, providing the knowledge needed to make an informed choice.

Understanding the Financial Implications

1. Income Considerations and Budgeting

  • Benefits of Accepting: Employees receive full pay and benefits while on administrative leave until September 30, 2025.
  • Challenges of Accepting: After resignation, income ceases, requiring financial planning for sustainability.
  • Action Step: Assess personal financial security, including savings, alternative income sources, and potential severance options.

2. Retirement and Pension Considerations

  • FERS and CSRS Pension Effects: Employees close to retirement should evaluate how resignation affects annuity calculations.
  • Early Retirement Eligibility: Employees may qualify for VERA, which preserves pension benefits, while those who resign might forfeit valuable service time.
  • Health Benefits Impact: Those without five years of FEHB coverage risk losing lifetime access to federal health benefits.

3. Managing Thrift Savings Plan (TSP) Investments

  • Halting Contributions: TSP contributions and agency matching will stop upon resignation.
  • Withdrawal Rules and Tax Considerations: Early TSP withdrawals could trigger penalties if taken before age 59½.
  • Next Steps: Evaluate IRA rollover options and adjust investment strategies accordingly.

4. Health Insurance and Benefits After Resignation

  • COBRA and Private Insurance: Employees must explore alternative healthcare coverage options, which may be costly.