A reduction in force (RIF) is the formal process agencies use to release employees when positions are cut; under OPM rules effective September 2, 2026, retention is ranked by performance credit plus veterans' preference points, and agencies may offer VERA early retirement at age 50 with 20 years or any age with 25 years, and VSIP buyouts of up to $25,000 (OPM, retrieved 2026-10-11).
Three acronyms tend to arrive together in the same agency email: RIF, VERA, and VSIP. One is a layoff process. One is an early retirement window. One is a cash incentive to leave. They interact, and the order in which you understand them can change what you decide.
The rules changed this year. OPM issued new RIF regulations that took effect September 2, 2026, replacing decades of seniority-weighted retention with a performance-weighted system. This guide explains the new order, VERA and VSIP eligibility, discontinued service retirement, severance pay, and the 2025 to 2026 events that brought these terms into everyday conversation.
Think of a restructuring as a building with three exits. VERA is the side door for people old enough or long-serving enough to retire. VSIP is a cash envelope handed out at certain doors. RIF is the process that decides who must leave when not enough people use the doors on their own.
01What is a reduction in force?
A reduction in force is the formal process an agency must use when it releases a competing employee from their competitive level by separation, demotion, furlough of more than 30 days, or a reassignment that requires displacing someone, because of lack of work, shortage of funds, reorganization, or similar reasons (OPM, retrieved 2026-10-11).
A RIF is a position-based action, not a disciplinary one. OPM's guidance says performance ratings influence retention standing but do not turn a RIF into a performance-based action (OPM, retrieved 2026-10-11).
- Competitive areaThe organizational and, where used, geographic boundary within which employees compete. Creating or materially changing one within 90 days before notices requires OPM approval.
- Competitive levelA group of interchangeable positions in the same grade, series, and duties, set from official position descriptions.
- Tenure groupCompetitive service and excepted service employees are placed on separate retention registers and do not compete against each other.
- Retention standingYour rank on the register, fixed as of the date you receive your specific RIF notice.
- Assignment rightsThe right of a released employee to be placed in a qualifying lower-standing position, replacing the old bump and retreat rights.
02What changed in the RIF rules on September 2, 2026?
OPM published final RIF regulations on August 3, 2026, effective September 2, 2026. RIF notices issued before September 2 follow the old rules; notices issued on or after that date follow the new ones (OPM, retrieved 2026-10-11).
- Performance comes first. Within each tenure group, employees are ranked by total performance credit, including veterans' preference points, from highest to lowest.
- Tenure and seniority break ties. If totals are equal, tenure subgroup I ranks ahead of subgroup II, then the earlier service computation date ranks first.
- Bump and retreat replaced. A single assignment right lets a released employee with a current rating of Level 2 or higher be assigned to a qualifying position held by a lower-standing employee, generally with a qualification assessment.
- Some employees excluded. Initial probationary and trial-period employees, temporary appointees of one year or less, and Schedule C and Schedule G employees do not compete.
- Notice stays at 60 days. Competing employees generally get at least 60 days of specific written notice; OPM can approve a shorter period, but not under 30 days.
03How is RIF retention order calculated now?
Your performance credit comes from your three most recent ratings of record in the four years before RIF notices issue, converted to points. Veterans' preference points are then added (OPM, retrieved 2026-10-11).
| Rating of record | RIF points |
|---|---|
| Level 5, Outstanding | 7 |
| Level 4, Exceeds Fully Successful | 5 |
| Level 3, Fully Successful | 3 |
| Level 2 or Level 1 | 0 |
| Veterans' preference subgroup | Points added |
|---|---|
| AD: compensable service-connected disability of 30% or more | 5 |
| A: every other preference eligible | 3 |
| B: not preference eligible for RIF | 0 |
Missing ratings are handled by formula: with two ratings, the average of the two stands in for the third; with one, that rating counts three times; with none, the modal rating for your position's pattern is used (OPM, retrieved 2026-10-11).
Worked example: two employees on one register
- 01
Employee 1
Ratings of 4, 4, 3 equal 5 + 5 + 3 = 13 points. Not preference eligible: 13 total.
- 02
Employee 2
Ratings of 3, 3, 3 equal 9 points. Preference eligible in subgroup A: 9 + 3 = 12 total.
- 03
Result
Employee 1 ranks higher. Under the old rules, tenure, veterans' preference, and length of service carried more weight, and the outcome could have been different.
- 04
A tie
If both had 13, the one in tenure subgroup I would rank first; if still tied, the earlier service computation date would.
Your record, not our example
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04What is VERA, and who is eligible?
VERA, the Voluntary Early Retirement Authority, lets an agency offer early retirement to employees in specific positions during a restructuring. Eligible employees can retire at age 50 with at least 20 years of creditable federal service, or at any age with at least 25 years. At least 5 years must be civilian service (OPM, retrieved 2026-10-11).
The agency must request VERA and get OPM approval, with a plan that explains which positions are covered and why. Some agencies, including the Department of Defense, have their own VERA authority and do not need OPM approval (OPM, retrieved 2026-10-11). You must be in a covered position and separate by the end of the offer window.
05Is a VERA annuity reduced?
A FERS VERA annuity has no reduction for retiring before 55. If you are a CSRS-to-FERS transferee, the CSRS portion of your annuity is reduced by one-sixth of 1 percent for each month you are under 55, which is 2 percent a year (OPM, retrieved 2026-10-11). Standard reductions, such as for a survivor annuity, still apply.
The bigger catch is the FERS supplement. If you retire under VERA before your Minimum Retirement Age, the supplement does not start until you reach your MRA, and it stops at 62. So a 52-year-old taking VERA with an MRA of 57 may wait about five years for the supplement (OPM, retrieved 2026-10-11).
A smaller annuity started early is still a smaller annuity for life. VERA trades years of service you would have earned for time you get back.
06What is a VSIP buyout?
A Voluntary Separation Incentive Payment is a lump sum an agency can offer to encourage employees to retire or resign. The payment is the lesser of the severance pay you would receive or an amount the agency head sets, not to exceed $25,000 (OPM, retrieved 2026-10-11). Federal, state, Social Security, and Medicare taxes may be withheld, so the amount you receive is lower.
- Repayment if you return. If you take paid federal work, including personal services contracts, within 5 years, you must repay the full VSIP before starting. OPM can waive this in limited cases.
- Not for everyone. Reemployed annuitants, people who would qualify for disability retirement, employees with a removal decision for misconduct or poor performance, and anyone who has received a prior federal VSIP are ineligible.
- Recent incentives block it. A student loan repayment in the last 36 months, a recruitment or relocation incentive in the last 24 months, or a retention incentive in the last 12 months makes you ineligible.
- Agency authority varies. Agencies with their own VSIP authority, such as the Department of Defense, operate under their own rules.
Source for the list above: OPM VSIP page, retrieved 2026-10-11. In February 2026, a bill to raise the VSIP maximum to half of an employee's annual salary, H.R. 7256, cleared the House Oversight and Government Reform Committee (FedSmith, retrieved 2026-10-11). We found no record of it becoming law as of 2026-10-11, so the $25,000 cap still applies.
07What is discontinued service retirement?
Discontinued service retirement (DSR) is an immediate annuity for employees who are involuntarily separated, for example by RIF, and meet the same age and service tests as VERA: age 50 with 20 years, or any age with 25 years, including at least 5 years of civilian service (OPM, retrieved 2026-10-11).
DSR does not apply to separations for cause, meaning misconduct or delinquency. You also lose eligibility if you decline a reasonable offer, which OPM defines as a written offer of a position in your agency and commuting area that you qualify for and that is no more than two grades or pay levels below your current one (OPM, retrieved 2026-10-11). The FERS reduction and supplement rules are the same as for VERA.
08How does severance pay work?
Severance pay is for employees who are involuntarily separated, not for inefficiency, have at least 12 months of continuous service, and are not eligible for an immediate annuity (OPM, retrieved 2026-10-11). If you can retire on DSR, you cannot receive severance.
The formula has two parts. The basic allowance is one week of basic pay for each full year of service through 10 years, plus two weeks for each full year beyond 10, plus 25 percent of the applicable amount for each full three months beyond the last full year. The age adjustment adds 2.5 percent of the basic allowance for each full three months of age over 40. The lifetime total cannot exceed 52 weeks of pay (OPM, retrieved 2026-10-11).
Worked example: why the VSIP cap usually binds
- 01
Service
22 full years. Basic allowance: 10 weeks for the first 10 years plus 24 weeks for the next 12 = 34 weeks.
- 02
Age
Age 52 is 12 years, or 48 quarters, over 40. 48 x 2.5% = 120% added. 34 x 2.2 = 74.8 weeks.
- 03
Cap
Severance cannot exceed 52 weeks.
- 04
Weekly pay
At $100,000 a year, about $1,917 a week. 52 weeks is roughly $99,700.
- 05
VSIP
The lesser of the severance figure or $25,000: $25,000, before taxes.
09What happened with federal workforce reductions in 2025 and 2026?
Several events since early 2025 brought these programs into the news. Stated factually, with dates:
| Date | Event |
|---|---|
| Late January 2025 | OPM emailed a deferred resignation offer to federal employees; a federal judge paused the deadline, then declined to block the program in February 2025 (NPR, retrieved 2026-10-11) |
| October 1 to November 12, 2025 | A 43-day lapse in appropriations, during which some agencies issued RIF notices |
| November 12, 2025 | The continuing resolution that ended the shutdown barred RIFs through January 30, 2026 and voided RIF actions taken from October 1, 2025 to enactment (FEDweek, retrieved 2026-10-11) |
| February 2026 | H.R. 7256, to raise the VSIP maximum, cleared House committee (FedSmith, retrieved 2026-10-11) |
| August 3, 2026 | OPM published final RIF regulations (OPM, retrieved 2026-10-11) |
| September 2, 2026 | New RIF rules took effect for notices issued on or after this date (OPM, retrieved 2026-10-11) |
Litigation over specific actions has continued. For your own situation, your agency's notices and HR office are the authority.
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10What should you do if a RIF, VERA or VSIP is announced?
Get your facts straight before the window closes. Offers often come with short deadlines, and some choices cannot be undone.
- 01
Pull your SF-50s and ratings
Confirm your tenure group, veterans' preference, service computation date, and last three ratings of record.
- 02
Get a retirement estimate
Ask HR for an annuity estimate under VERA or DSR, including when the FERS supplement would start.
- 03
Check FEHB and FEGLI
Confirm you meet the five-year rules to carry both into retirement.
- 04
Count your leave
Unused annual leave is paid as a lump sum at separation, and unused sick leave adds to your annuity service.
- 05
Compare the paths
Retiring under VERA, taking VSIP plus VERA, waiting for DSR, or staying each have different income, health coverage, and tax results.
11Moving forward when restructuring comes
Restructuring decisions are made fast, often under deadlines measured in weeks. The people who come through them best usually did the homework before the email arrived: they knew their service dates, their FEHB status, and what an early annuity would actually pay.
From here, use the retirement application guide for the paperwork if you decide to go, the leave guide to understand your payout and sick leave credit, and our sick leave conversion tool to see what your balance adds. The SF-50 guide shows where your service dates live.
FFEBA is an education organization. If you want someone to look at your own numbers, we can match you with a Federal Retirement Consultant (FRC), a professional trained on federal benefits. The FRC designation is listed with FINRA. The first review is free, nothing is booked until you choose a time, and you are never obligated to work with anyone we introduce. Get matched with an FRC.
12Questions federal employees ask
How is RIF retention decided under the new OPM rules?
For RIF notices issued on or after September 2, 2026, employees in each tenure group are ranked by performance credit from their three most recent ratings of record, plus veterans' preference points. Tenure subgroup and then service computation date break ties (OPM, retrieved 2026-10-11).
Who is eligible for VERA?
When an agency has OPM-approved early retirement authority, employees in covered positions can retire at age 50 with at least 20 years of creditable service, or at any age with at least 25 years. At least 5 years must be civilian service (OPM, retrieved 2026-10-11).
How much is a VSIP?
A VSIP is the lesser of the severance pay you would be entitled to or an amount the agency sets, up to $25,000. Taxes are withheld, and you must repay it in full if you return to paid federal work within 5 years (OPM, retrieved 2026-10-11).
Will there be a VERA or VSIP in 2026?
Only agencies can say. VERA and VSIP are offered agency by agency, usually for specific positions and windows, and most agencies need OPM approval. Watch for an announcement from your own agency's HR office.
Is a FERS VERA annuity reduced for age?
No. FERS has no age reduction for VERA or discontinued service retirement, though any CSRS component for a transferee under 55 is reduced 2 percent per year. The FERS supplement does not start until you reach your Minimum Retirement Age (OPM, retrieved 2026-10-11).
Can I get severance pay if I am eligible to retire?
No. You cannot receive severance pay if you are eligible for an immediate annuity when you are separated. Severance is for involuntarily separated employees who cannot retire on an immediate annuity (OPM, retrieved 2026-10-11).
Reviewed by the FFEBA education team. Last reviewed October 2026.
Sources
- U.S. Office of Personnel Management, Memorandum: Final Regulations on Reduction in Force (September 2, 2026) and RIF Basics attachment, retrieved 2026-10-11
- U.S. Office of Personnel Management, Voluntary Early Retirement Authority, retrieved 2026-10-11
- U.S. Office of Personnel Management, Voluntary Separation Incentive Payments, retrieved 2026-10-11
- U.S. Office of Personnel Management, FERS types of retirement, retrieved 2026-10-11
- U.S. Office of Personnel Management, Fact Sheet: Severance Pay, retrieved 2026-10-11
- FEDweek, Agencies instructed on canceling shutdown RIFs, reinstating affected employees with back pay, retrieved 2026-10-11
- FedSmith, Federal employees may see bigger payouts for voluntary separation under new proposal (February 20, 2026), retrieved 2026-10-11
- NPR, Trump's 'Fork in the Road' resignation offer for federal workers is in judge's hands (February 10, 2025), retrieved 2026-10-11
Every government figure on this page carries its source and retrieval date. Worked examples are educational estimates on the assumptions shown, not a projection of any person's benefit. FFEBA is an education organization, not a financial advisor.
