FEDweek

Watch for Buyout Strings

The large majority of buyout payments the government offers go to employees late in their careers who use them as a sort of retirement bonus. But if you are offered a buyout, closely examine the strings that are attached before grabbing it.

Generally, if you accept an incentive payment and become reemployed with the federal government, under any appointment authority for any duration, in either a temporary or permanent status or under a personal services contract, for five years following the effective date of your separation, you will be required to repay the full (pretax) amount of the incentive payment prior to your first day of employment.

The direct rehiring restriction applies to quasi-governmental bodies such as the U.S. Postal Service as well as to part-time and temporary positions. A “personal services contract” generally includes consulting-type arrangements although not employment with a company under contract to the agency. Definitions vary from agency to agency, so check the specific provisions in advance.

Accepting a buyout offer also means giving up rights that would have accrued to the employee by staying with the agency through a reduction-in-force. These include the standard severance pay entitlement as well as various forms of reemployment assistance.

Buyout takers generally are ineligible for unemployment compensation benefits. They may continue federal insurance benefits under the same terms as anyone resigning or retiring without a buyout.

Note: If you receive a buyout and later are found to be eligible for disability retirement, you are responsible for repaying the entire amount of the buyout to the agency that paid the buyout to you. This is because disability retirement is retroactive to the date of separation and the buyout law excludes employees eligible for disability retirement.