U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Involuntary Retirement and "Early-Out" Retirement

Introduction

This information sheet discusses what your benefits will be under CSRS and FERS if you must retire involuntarily because of a reduction in force, reorganization, transfer of function, or similar circumstance, or you choose to retire early under a voluntary "early out" opportunity. (These provisions do not apply if you are separated because of misconduct or delinquency or if you refuse a reasonable offer of another position.)

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CSRS

Under CSRS if you retire involuntarily, you are eligible for an immediate annuity at any age with 25 years or more of service, or age 50 with 20 years of service or more. Your benefit will be reduced 2% for each year that you retire under age 55. This is a permanent reduction that will be applied to your entire annuity, including your payments after you reach age 55. The same rules apply for early voluntary retirements.

FERS

Under FERS, if you retire involuntarily, you are also eligible for an immediate annuity at any age with 25 or more years of service, or at age 50 with 20 years of service or more. The difference between CSRS and FERS in this case, however, is that your FERS annuity is not reduced if you retire before age 55. However, you would not begin to receive the Special Retirement Supplement until you reach your Minimum Retirement Age (55-57). This benefit continues until age 62. The same rules apply for early voluntary retirements.

Special Transfer Rules

If you transfer to FERS and retire involuntarily, you are eligible for an immediate annuity at any age with 25 or more years of service or at age 50 with 20 or more years of service. Your retirement benefit will be calculated using the CSRS formula for your years of service under CSRS, and the FERS formula for the years after you transfer. Any CSRS Offset service will be converted to FERS. The CSRS portion of your benefit will be permanently reduced by 2% for each year that you are below age 55 when you retire. No reduction will be applied to the FERS portion of your benefit but you will not begin to receive a Special Retirement Supplement until your Minimum Retirement Age. The same rules apply for early voluntary retirements.

Transfer Considerations for Involuntary Retirees and Early Voluntary Retirees

Whether or not you may be involuntarily retired should not be a key factor in determining which retirement plan you choose. You should be aware of the differences between CSRS and FERS, however.

If you meet the age and service requirements and retire early, your CSRS benefit will be reduced if you are under age 55; your FERS benefit will not. However, the CSRS retirement benefit is larger than the FERS benefit to begin with. Even with the reduction, the CSRS benefit is likely to be larger than the FERS benefit. This is especially true if you retire below your Minimum Retirement Age under FERS, because your Special Retirement Supplement will not be paid until you reach your Minimum Retirement Age. FERS COLA's do not begin until age 62, but CSRS COLA's start immediately.

If you think you may leave Government service involuntarily and you will not meet the age and service requirements for early voluntary or involuntary retirement, FERS is probably the better choice, as it is in general for those who do not plan to retire from the Federal service. This is especially true if transferring to FERS could give you eligibility for an MRA + 10 retirement, which could allow you to keep your Federal health and life insurance as a retiree.