A: Voluntary Separation Incentive Pay, or VSIP, is commonly referred to as a buyout. It is a payment of up to $25,000 to encourage eligible employees to separate from service voluntarily (either by retirement or resignation) to avoid or minimize the need for involuntary separations due to RIF, base closure, reorganization, transfer of function, or workforce restructuring. The buyout payment is equivalent to an employees severance pay entitlement up to a maximum of $25,000 (before taxes). Buyouts are used at management's discretion and are not an employee entitlement.
Q: What is VERA?
A: Voluntary Early Retirement Authority (VERA) is a management tool used for downsizing or to restructure the workforce to meet mission objectives. Reasons for approving VERA include substantial delayering, reduction in force (RIF), reorganization, or transfer of function (TOF). VERA may be based on occupational series or grade; skills, knowledge, or other factors related to a position; organizational, geographical, nonpersonal and objective factors; or a combination of these factors.
Q: Are Medicare payments deducted from Annuity payments?
A: No only from a paycheck earnings while working.
Q: Are there any penalties imposed if you take TSP withdrawals before age 59 ½.?
A: The IRS requires a 20% tax to be taken if you withdrawal funds from you TSP account. As outlined in the TSP 536 Tax Notice a 10% penalty is also imposed unless the following occurs:
- Paid after you separate from service during or after the year you reach age 55;
- Annuity payments;
- Paid as substantially equal payments over your life expectancy.
Q: When will the FERS Annuity Supplement start?
A: At the employees Minimum Retirement Age (MRA)
Q: What is the reduction for a CSRS early out and is it per month or per year?
A: The reduction is 2% per year
Q: Is the FEGLI Life Insurance for Option C carried up to a certain age in retirement or is it for life?
A: It continues based on your election at retirement.
Q: What State do not have taxes taken from an Annuity check?
A: There are about 6 or more states that do not deduct taxes but, it is best to contact your Tax comptroller office for your state to determine the amount or the exemption if any.
Q: When can I change my beneficiary information?
A: You can change your beneficiary information at any time. After retirement changes should be sent directly to OPM.
Q: Am I eligible for VSIP if I am receiving Workers' Compensation?
A: Based on recent guidance, the answer is yes. Generally, an employee on long term compensation would likely be ineligible based on the fact that this employee might have a disability on the basis of which such employee is or would be eligible for disability retirement. However, an employee who is receiving workers compensation is eligible for VSIP. If such an employee is approved, the Department of Labor, Office of Workers' Compensation Programs (OWCP) will be notified prior to the employee being paid a voluntary separation incentive. OWCP will interrupt compensation payments for the number of weeks equal to the VSIP amount. Additionally, if an employee who has returned to light duty accepts a buyout, the one year bar on DoD employment, and five-year repayment requirement applies. In this situation, the employee would retire or resign and the compensation would cease. If compensation is subsequently reinstated, then as previously stated, OWCP will interrupt compensation payments until the total amount of the VSIP is repaid.
Q: If approved for both VERA and VSIP, can I go to work as a NAF employee and still keep my full monthly retirement amount and the full VSIP amount?
A: You may go to work for NAF without a reduction of your salary or retirement check, but there are employment restrictions, if you receive separation incentive pay (VSIP). You must repay the entire incentive (to include any withholdings), if you return to the Federal Government as an employee, or under a personal services contract, within five (5) years of separation, unless a waiver is granted. In addition DoD employees are not allowed by DoD policy to return to DoD for one (1) year after separation, even if they repay their incentive, unless a waiver is granted.
Q: If I am retired military and not entitled to severance pay, am I eligible for VSIP?
A: Yes, if you meet all of the eligibility requirements for VSIP.
Q: Employees that receive VSIP and accept employment with the Federal Government within a period of 5 years must repay the entire amount of the incentive. Since the employee is taxed on the $25,000 and only receives an average of approximately $16,000, which amount is to be repaid and can the repayment be made in installments? Also during the year of repayment, is the $25,000 deductible on personal income taxes?
A: The entire amount must be repaid and it may be repaid in installments, which is deducted from your paycheck. These arrangements are made at the time you return to Federal employment prior to the 5 year limit. In addition, to the 5 year restriction, you may not return to DoD rolls or enter into a personal services contract for 1 (one) year following separation, even if you repay the incentive. You must direct your tax questions to the Internal Revenue Service at 1-800-829-1040.
Q: Can I go directly to work for the contractor, if I retire with VERA?
A: There are no employment restrictions when an employee chooses to retire under VERA. The only restriction involves a DoD employee who accepts Voluntary Separation Incentive Pay (VSIP). That employee must repay the incentive if he or she returns to the Federal Government as an employee, or under a personal services contract, within five years unless a waiver is granted by the applicable waiver granting authority. In addition, a DoD employee who accepts VSIP is not allowed by DoD policy to return to DoD for one year after separation even if they repay their incentive unless a waiver is granted.
Q: Does seniority determine which employee (two employees in same competitive area and series) gets VSIP if only one voluntary separation (VERA) versus two separations is needed to retain an employee scheduled for release from Federal Service. Does supervisor personal preference or other circumstances, i.e. age, health of junior employee, etc. influence the VSIP decision?
A: To answer your question, you must first understand that VSIP and VERA are two entirely different incentive programs. First, VERA allows for eligible employees to take an early retirement, with VERA targeted to a specific number of positions in selected series and grades. If two employees, both in the same competitive area, series and grade are eligible for VERA and apply to the open window announcement and only one VERA can be approved, then the civilian service computation date (SCD) will be the determining factor in the approval process.
Secondly, VSIP is a payment of up to $25,000 to eligible employees who will leave the rolls voluntarily, thus reducing involuntary RIF separations. Employees who apply for VERA must also apply for VSIP, if interested. If VERA is approved for only one employee and that employee has also requested VSIP, then a second determination as to whether that employee will receive VSIP in conjunction with VERA will be made. The approval of VSIP must meet stringent criteria and is subject to the availability of funds. Please see additional information regarding VSIP/VERA under the Question/Answer Topic VERA/VSIP.
Q: If I'm selected to receive VSIP and previously withdrew my retirement money, can I keep the VSIP or will it go back to the retirement system?
A: You will keep the money.
Q: If I apply for VERA/VSIP and it is approved and the final decision reverses the initial decision, am I required to accept early retirement.
Q: If you are eligible for VERA and are approved, will you be entitled to the $25,000?
A: No. You must also apply for VSIP and you are entitled up to $25,000 or the amount designated by your agency.
Q. I am a full time/permanent employee and eligible for VERA. If I accept a temporary position at another installation/command, is there some procedure/waiver/terms of employment agreement for maintaining my eligibility for VERA once the temporary position expires?
A. If you accept a "temporary" position at another installation, you are no longer considered an employee. Therefore, all eligibility for VERA or other incentives offered at your installation becomes void.
Q. If I retire under VERA, can I later return to work for another government agency? What are the circumstances for re-employment if any? Can I go back to work as a temporary employee?
A: An annuitant under either the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) may be reemployed in any position for which they are qualified. Reemployed annuitants may be hired on either a temporary or a permanent position. A nondisability annuity will usually continue during reemployment, but the amount of salary the employee receives will be reduced by the amount of the employee's annuity. An annuitant whose annuity continues while he or she is reemployed serves at the will of the appointing officer. A reemployed annuitant may be separated at any time at the discretion of the appointing officer, regardless of the appointment type. However, if you are separated and receive an incentive, generally, employees who return to Federal employment within five years from their separation from DoD cannot return to work for the Federal Government without repaying the incentive. In addition, an employee separating from DoD may not return within one year, unless a waiver is granted at the Component Assistant Secretary level, even if they repay the incentive.
Q. If I retire under VERA, how does this affect my ability to do contract work directly with the federal government.
A. If you retired and did not receive any DoD incentives, it does not effect your ability to enter into a personal services contract with the Federal government.
Q: Will Voluntary Separation Incentive Pay (VSIP) or "buyouts" be offered to employees to separate voluntarily? If so, how do they qualify or apply for such an incentive?
A: Voluntary Separation Incentive Pay (VSIP), commonly referred to as a "buyout" is a lump-sum payment or installments of up to $25,000 paid by DoD to encourage employees to leave the rolls either by resignation, optional retirement or early retirement. Normally, VSIP is targeted at employees in specific grades and series to help avoid reduction in force (RIF) and minimize involuntary separations. Interested employees apply during the open window period.
Employees are eligible to apply for VSIP provided they are
(1) U.S. Citizens,
(2) eligible for either voluntary early retirement, optional retirement or resignation;
(3) serving under an appointment without time limitation and
(4) have been continuously employed by the Federal Government for at least 12 months. VSIP is not automatic for eligible employees.
Approval of VSIP applications is contingent upon management's ability to identify how civilian reductions can be minimized and cost savings achieved through the use of VSIP authority. Reemployed annuitants, employees with a pending or approved application for disability retirement, or employees in receipt of a specific RIF notice are not eligible for VSIP.
Q: How is the maximum incentive payment allowed determined?
A: The incentive payment under the authority will be the lesser of $25,000 or severance pay. If an employee's severance pay computation is more than $25,000, the full incentive of $25,000 will be authorized. Severance pay is determined as follows:
One week of basic pay times each full year of creditable service up through 10 years:
__________ x _______ = __________ plus
Two weeks of basic pay times each full year of creditable service beyond 10 years:
__________ x _______ = __________ plus
25% of applicable amount (1 weeks pay or 2 weeks pay) times each full 3 months of creditable service beyond the final full year:
__________ x _______ = _________ plus
Age adjustment allowance of 2.5 percent for each full quarter of a year employee is over 40 years of age at retirement:
__________ x ________ = __________
Total (maximum amount of severance pay may not exceed one year's salary (52 weeks)): __________
Note: The weekly rate of basic pay for employees with variable work schedules (i.e., part-time) is determined based on the weekly average for the last position held by the employee during the 26 biweekly pay periods immediately preceding separation
Q: Can an employee accept VSIP and also accept a job offered by the winning contractor?
A: Yes, an employee may take VSIP then go to work for the contractor. However, once accepting VSIP, the employee no longer has the Right of First Refusal. The Right of First Refusal is only for those employees adversely affected by RIF and in receipt of a specific RIF notice. Once in receipt of a RIF notice, an employee is no longer eligible for VSIP.
Q: What is VERA and will it be offered to affected employees?
A: Voluntary Early Retirement Authority (VERA) permits employees to retire earlier than otherwise eligible thereby reducing the adverse impact of a reduction in force. Activities generally identify or target positions open for VERA to preclude losing needed skills.
Q: Who is eligible to apply for VERA?
A: To be eligible for VERA, employees must have at least 20 years of creditable service and be at least age 50 or have 25 years of creditable service at any age by the date of separation. In addition, the employee must serve in a position covered by an offer by the agency; serve during a time period designated by the agency in which voluntary early retirements are offered; apply during the designated window period and receive approval from the agency making the offer of early retirement. The law prohibits VERA for employees: who have not been on DoD rolls 31 days prior to the date DoD authority for VERA was requested from OPM; on time-limited appointments -- temporary and term; and with a final notice of involuntary separation for misconduct or performance.
Q: How does an employee apply for VERA?
A: An employee applies with the appropriate form(s) to a VERA open window announcement. The announcement establishes the period during which early retirements are offered and also specifies the targeted occupational series and grades to which VERA applies.