Federal early retirement incentives: VERA early outs and VSIP buyouts (up to $25,000)

Last updated November 1, 2026

Published November 1, 2026 · By the OnPAR Federal Retirement Education editorial team · Last reviewed Nov 2026

Short answer: Yes. The federal government has its own version of an early-retirement or buyout offer. VERA (Voluntary Early Retirement Authority, the "early out") lets you retire early with an immediate annuity. VSIP (Voluntary Separation Incentive Payment, the "buyout") is a lump-sum payment of up to $25,000 for leaving voluntarily. Neither is automatic. Your agency must be approved to offer it (by OPM, unless the agency has its own authority, like DoD), and only positions covered by the agency's plan qualify (OPM VERA, OPM VSIP).

VERA vs VSIP at a glance

Sources: OPM VERA, OPM VSIP, 5 U.S.C. 3523.

Who is eligible for VERA

OPM says you must (OPM):

1. Be at least age 50 with 20 years of creditable federal service, or any age with 25 years.

2. Have served in a covered position for the minimum time OPM sets (usually 30 days before the agency's request).

3. Be in a position covered by the agency's VERA plan.

4. Separate by the close of the early-out window.

The FERS rule is in 5 U.S.C. 8414(b)(1)(B) and 5 CFR 842.213.

How your FERS annuity works under VERA

• No age reduction. OPM says "there is no annuity reduction in FERS for employees who retire on an early voluntary retirement under age 55." (This is different from MRA+10, which cuts your annuity 5% a year under 62. See MRA+10.)
• The formula is the same. Your basic annuity uses your High-3 and your years and months of service. Unused sick leave counts 100% for retirements after December 31, 2013.
• Start date. Your FERS annuity begins the first day of the month after you retire.
• CSRS component. If you transferred to FERS and have a CSRS component, that portion is cut by 1/6 of 1% for each full month under 55 (2% a year). The FERS portion is not reduced.
• The FERS Supplement waits. OPM says the supplement is payable once you reach your Minimum Retirement Age (55 to 57, depending on birth year), not when you retire. It then runs until 62 and is subject to the earnings limit. So if you take VERA at 52, plan for several years with no supplement.

Source for all of the above: OPM VERA. Check your own MRA with our MRA calculator.

Health and life insurance under VERA or VSIP

To keep FEHB in retirement you normally need coverage for the last 5 years of service. OPM grants pre-approved waivers to people who have been covered continuously since the start of the agency's VERA or VSIP authority, retire during that window, and take VSIP or VERA. FEGLI can continue if you carried it for the 5 years before retirement (OPM).

How much VSIP pays

Your VSIP is the lesser of (1) the severance pay you would get under 5 U.S.C. 5595(c), or (2) an amount the agency head sets, not to exceed $25,000. It is paid in one lump sum after you separate and does not count toward any other government benefit (5 U.S.C. 3523, OPM).

VSIP taxes

OPM says the amount you actually receive is less than the computed amount because federal and state income tax, Social Security and Medicare are deducted, as appropriate (OPM). Ask a tax professional how it affects your own return.

Who can't get VSIP

OPM lists these exclusions: reemployed annuitants; people eligible for disability retirement; people with a decision notice of involuntary separation for misconduct or poor performance; anyone who already got a federal VSIP; and people whose service was tied to a student loan repayment (past 36 months), recruitment or relocation incentive (past 24 months), or retention incentive (past 12 months) (OPM, 5 CFR 576).

VSIP repayment rule

If you take a VSIP and then work for the federal government within 5 years, including as a personal services contractor, you must repay the entire VSIP before your first day back. OPM can waive this only in limited cases, such as an executive branch hire with unique skills or an emergency (OPM, 5 U.S.C. 3524).

Are there offers in 2025 and 2026?

• OPM told agencies that in FY 2026 they may use Deferred Resignation Program (DRP) agreements of up to six months, and that OPM is "prepared to approve agency requests for Voluntary Early Retirement Authority (VERA) to support workforce restructuring through the end of CY 2026" (OPM bulletin to CHCOs).
• OPM's March 2026 proposed RIF rule says most of the roughly 317,000 people who left federal service in 2025 left voluntarily, including through DRP, VERA and VSIP (Federal Register).
• DRP is not VERA. DRP is a resignation. You only get an immediate annuity if you also meet a retirement rule (such as VERA or regular optional retirement) on your separation date. See FERS types of retirement.

How to find out if your agency is offering VERA or VSIP

OPM does not publish one public list of every approved offer. Offers are made by each agency to specific organizations, job series, grades and locations, for a set window. To check:

1. Watch for an announcement from your agency's HR or Chief Human Capital Officer. That is where offers and deadlines come out.

2. Ask your HR or benefits office directly whether a VERA or VSIP is approved for your position, and request an annuity estimate.

3. Read OPM's workforce restructuring pages and CHCO memos for government-wide guidance.

Before you say yes

Get a written annuity estimate from HR, check when your FERS Supplement would start, and confirm your FEHB waiver. Then run the numbers with our FERS retirement calculator. Questions? Book a free call.

Questions and answers

Does the federal government offer early retirement incentives?

Yes. With OPM approval, agencies can offer Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIP) of up to $25,000.

Who is eligible for VERA?

OPM says you must be at least 50 with 20 years of creditable service, or any age with 25 years, in a position covered by your agency's VERA plan, and separate during the offer window.

Is my FERS annuity reduced if I take VERA before 55?

No. OPM says there is no FERS annuity reduction for early voluntary retirement under age 55. A CSRS component is reduced 2% a year under 55.

When does the FERS Supplement start under VERA?

OPM says the FERS annuity supplement is payable when you reach your Minimum Retirement Age (55 to 57), not at retirement, and it is subject to an earnings limit.

Is VSIP taxed?

Yes. OPM says federal and state income tax, Social Security and Medicare are deducted as appropriate.

Do I have to pay back a VSIP?

Yes, if you take federal employment, including a personal services contract, within 5 years. OPM says you must repay the full amount before your first day back, unless a waiver is granted.

Is OPM approving VERA in 2026?

OPM told agencies it is prepared to approve agency VERA requests through the end of calendar year 2026.