Understanding Discontinued Service Retirement for Federal Employees

Recent Changes Impacting Federal Employees

In recent weeks, many federal employees received notifications about involuntary separations from federal service. Those with 20+ years of federal service might qualify for a discontinued service retirement (DSR), allowing them to collect their CSRS or FERS annuity immediately.

Defining Involuntary Separation

An involuntary separation, not due to misconduct or delinquency, qualifies employees for a DSR. These are recorded as “terminations” on the Form SF 50. Examples include:

• Reduction-in-force (RIF)
• Position abolishment
• Lack of funds
• Function transfer outside commuting area
• Reassignment without an ability agreement
• Separation during probation due to performance issues

Eligibility for DSR

To receive a DSR annuity, employees must meet certain conditions, including age and service requirements, and have at least five years of civilian creditable service. Public Law 104-208 allows using unused leave for retirement eligibility but not accrued sick leave. Federal Employees Health Benefits (FEHB) and FEGLI life insurance can be retained under specified conditions.

Meeting Service Requirements

Creditable service includes deduction and non-deduction service, even if deductions were refunded and not redeposited. This includes:

• CSRS deductions for CSRS or CSRS Offset employees
• FERS deductions for FERS employees
• Non-deduction service for CSRS, CSRS Offset, and pre-1989 FERS employees with full deposits

Employees eligible for voluntary retirement can also qualify for benefits, but accrued sick leave cannot be used to meet service requirements.