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By: FEDweek StaffThe federal government in recent years has not offered a lot of buyouts—also known as voluntary separation incentive payments—but they still occur.
The purpose is to avoid involuntary separations resulting from RIFs, reorganizations, and transfers-of-function. If you are offered a VSIP, you can accept it even if you aren’t eligible to retire, although as a practical matter most buyouts are taken into retirement—either by someone who already was eligible but was continuing to work, or under early-retirement terms.
To be eligible for a VSIP, you must be serving in an appointment without time limit, have been employed by the federal government for at least three years, be in a position your agency has targeted, and get an okay from your agency to accept the offer.
You won’t be eligible for a VSIP if you are:
• a reemployed annuitant;
• an employee with a disability such that you are or would be eligible for disability retirement;
• someone who:
– has previously received a VSIP
– was paid, or is to be paid, a student loan benefit within 36 months of separation
– received, or will receive, a recruitment or relocation incentive, within 24 months of separation
– received, or will receive, a retention incentive within 12 months of separation
Assuming that you qualify for a VSIP, and your agency approves your accepting it, how much money would you be entitled to receive? It would be the lesser of the amount of severance pay you’d be entitled to, or an amount determined by your agency, not to exceed $25,000.
Note: A special authority that was in effect over several years allowing a $40,000 maximum for Defense Department employees lapsed as of September 30, 2021. There have been proposals to reinstate it.
Since leaving your agency to take a VSIP is a voluntary action, you wouldn’t be eligible for both severance pay and the VSIP.
Before you accept a VSIP, you need to understand that with rare exception, you can’t return to the government for five years. If you do, you’ll have to repay the gross amount of the VSIP before your first day of reemployment. Here’s what that means. If you are entitled to a $25,000 buyout but, after state and local taxes and FICA are taken out, you only receive, say, $18,000. But you’d still have to repay the entire $25,000. And you’d be responsible for settling the overpayment of money withheld after you make the repayment.
Report: Early out, buyout, reduction in force (RIF)
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