Perhaps the least-understood form of federal retirement eligibility is discontinued service retirement, or DSR. As the name implies, it applies when your federal service ends involuntarily—for example, because of a RIF, transfer of function outside your commuting area, a downgrade more than two levels, or agency lack of funds—you may be eligible for a discontinued service retirement.
First, to qualify as a DSR, that separation has to be against your will and without your consent; if your agency makes a reasonable offer of another position, you won’t qualify. Nor will you qualify if you were separated because of delinquency or misconduct.
Second, you have to be eligible to retire under these rules: age 50 with 20 years of service or any age with 25 years of service. If you are just short of meeting the requirements and have some annual leave to burn, you can use it to meet them.
To start the ball rolling, your agency has to give you a specific written notice stating that it intends to separate you from the service, the specific reason for its planned action, and the proposed effective date. That notice will be attached to your retirement application when it is sent to OPM.
If you later come back to work for the government, your annuity will stop but you’ll receive the full salary of your new position; any health benefits and/or life insurance coverage you carried into retirement will end but you’ll be able to enroll as an employee with no break in continuity (as long as your new position offers those benefit); and, if you were covered by CSRS or CSRS Offset and were off the rolls for more than three days, you’ll be offered the opportunity to transfer to FERS.
ask.FEDweek.com: Early Retirement from Federal Job