On February 11, President Trump signed an Executive Order directing federal agencies to implement the Department of Government Efficiency’s workforce optimization initiative. As a result, agency leaders have been instructed to prepare for large-scale reductions in force (RIFs).
RIF Regulations
While the goal of a RIF is to enhance government efficiency and performance, strict legal guidelines determine which employees will be affected. The four key retention factors, considered in the following order, include:
- Tenure and type of appointment
- Veterans’ preference
- Total creditable federal civilian and uniformed service
- Performance ratings, which can add years to your creditable service
How a RIF Impacts Your Benefits
If you are involuntarily separated from a permanent position, you may qualify for severance pay—provided you have at least 12 continuous months of federal service and are not eligible for an immediate annuity. Severance pay eligibility is forfeited if you decline a job offer that meets all the following conditions:
- Located within the same commuting area
- Offered by the same agency
- No more than two grades below your current position
Severance pay is calculated based on years of federal service:
- One week of pay per year of service for the first 10 years
- Two weeks of pay per year of service beyond 10 years
- An age adjustment of 2.5% for employees over 40
The maximum severance payout is 52 weeks. This is a lifetime maximum, so if you have previously received severance pay, that amount could affect your benefit. Payments are issued on the same schedule as regular payroll.
Leave and Insurance Benefits
Employees covered by annual leave laws will receive a lump sum payout for any unused accrued leave. If you are close to retirement, you may be able to use your accrued leave to qualify for retirement benefits.
Unused sick leave is not paid out but will be restored if you return to federal service.
Your health and life insurance coverage continues at no cost for 31 days after separation. After this period, you can extend FEHB for 18 months (or 36 months for dependents) by paying the full premium plus a 2% administrative fee.
Retirement Contributions and Refunds
If you are not eligible for an immediate annuity, you can request a refund of your retirement contributions. To qualify for a refund, you must:
- Be separated for at least 31 consecutive days or transferred to a position that does not require retirement deductions for at least 31 days
- Not be reemployed in a retirement-deductible position at the time of your request
- Be ineligible for an immediate annuity within 31 days of separation
- Not be restricted from receiving a refund due to a court order
- Notify your current and/or former spouse(s), if applicable, about the refund request
A Federal Retirement Consultant® can help you explore your options and create a financial plan if you are impacted by a reduction in force.
