Fork in the Road: A Comprehensive Guide to Deferred Resignation for Federal Employees

These are important considerations for federal employees wondering if they should take the deferred resignation offer from OPM.

Bottom Line Up Front: President Trump has issued executive orders requiring federal employees who have been working remotely since the COVID outbreak in 2020 to return to their physical offices five days a week.

There were quite a few orders, which we will address in this article, that went out in addition to this “Fork in the Road,” but right now, let’s tackle the most pressing and deadline-sensitive issues: returning to the office or submitting a voluntary, deferred letter of resignation.

The fork, if you will: choose to return to the office and embrace the four pillars of “reshaping the government” as outlined by the Trump Administration or submit your resignation by February 06, 2025, for a severance package – discussed here.

What if I Do Not Want to Return to My Physical Office as a Federal Employee?

For those federal employees who do not want to return to their physical office, they have been provided with a “Deferred Resignation Letter” that the administration will accept with a deadline to decide by February 06, 2025.

At this time, under the order if you choose to submit your resignation letter, drafted and prepared for you on January 28, 2025, as a “Deferred Resignation Letter,” you accept a voluntary resignation with some severance.

Federal employees must understand their options before emotionally reacting. As federal employee benefits experts, we want to discuss these options and their pros and cons.

How Many Federal Employees Are Impacted by the “Fork in the Road” Trump Order?

An estimated 2 million civilian federal employees work for the government. The administration estimates that anywhere from 5% to 10% would accept the offer to resign rather than return to work and new policies.

Total FERS Employees: 2 million

Estimated Resignations caused by the “Fork in the Road” email:

  • Low Estimate (5%): 100,000 employees
  • High Estimate (10%): 200,000 employees

Will I Lose My Benefits if I Accept the Deferred Resignation Letter – Fork in the Road?

To quote, every lawyer asked a question ever, “it depends.”

Federal Employees have a unique, complicated, and enviable benefits package. We work with Federal Employees nationwide to help them get to and through retirement, and our goal is to ensure that Federal employees understand their options.

This Fork in the Road email that went to two million federal employees, giving them the option to return to work or resign, is no different. We want federal employees to make financial decisions that are carefully thought out and assess whether or not they make sense.

If you are a federal employee, ask yourself, “What are you giving up by resigning?” before you make the decision.

Federal employees may lose their health insurance benefits—the best benefits they have—if they are not careful about what decisions they make when facing a fork in the road.

Let’s explore some of the biggest questions federal employees ask our financial advisors after receiving the email about Deferred Resignations.

Can I Opt for Retirement During the Deferred Resignation Period as a Federal Employee?

Yes, you can.

Suppose you become eligible for early or normal retirement at any time before your scheduled resignation date of September 30, 2025. In that case, you can retire instead of continuing with the deferred resignation. During this period, you will still accumulate retirement benefits. If you decide to retire, this choice will take precedence over the deferred resignation, effectively replacing it.

Can I Opt for Deferred Resignation Close to My Retirement Eligibility Date? (normal or early retirement)

If you become eligible for normal or early retirement shortly after the September 30, 2025, deadline for deferred resignation, your agency will consider your situation individually.

They may offer a waiver to accommodate your request without negatively impacting your retirement benefits. This approach ensures that requests close to retirement eligibility are handled flexibly and reasonably.

Who Is Eligible for Deferred Resignation?

Deferred resignation is open to all full-time federal employees, with a few exceptions.

It does not apply to military personnel, employees of the U.S. Postal Service, individuals working in immigration enforcement and national security roles, and any other positions that your employing agency may specifically exclude from the program.

What If I Don’t Respond to the Deferred Resignation Email?

There are no consequences if you choose not to respond to the email regarding deferred resignation. Responding to this offer is entirely voluntary, and you are not obligated to accept or reply to the email. The decision to accept deferred resignation rests solely with you.

Can I Accept the Deferred Resignation Offer After February 6, 2025?

Generally, the deferred resignation offer will not be available to those who decide to accept it after February 6, 2025.

However, exceptions may be made for employees who were on approved absence from January 28, 2025, to February 6, 2025.

If you were absent with approval during this time, you might still be eligible to accept the deferred resignation offer beyond the deadline – your agency will have more answers for these exceptions in the coming weeks.

Should I Take a Deferred Resignation?

Deciding whether to take a deferred resignation depends on your individual/family circumstances.

When we sit down with our federal employee clients, here is a list of questions we often run through before deciding on retirement.

Financial Considerations before accepting a deferred resignation:

  • Financial Stability: Deferred resignation allows you to maintain your income and benefits until the set resignation date, which can be a great cushion, but it doesn’t last forever.
  • Are you eligible for an early or immediate retirement already?
  • Qualifying for early and immediate retirement under the Federal Employees Retirement System (FERS) involves specific criteria. Here’s a breakdown of the qualifications for each retirement type:
    • Immediate Retirement
      • Immediate retirement is available to FERS employees who meet any of the following sets of age and service requirements:
        • Age 62 with at least five years of service
        • Age 60 with at least 20 years of service
        • Minimum Retirement Age (MRA) with 30 years of service
      • The MRA varies depending on your year of birth, ranging from 55 to 57.
    • Early Retirement
      • Early retirement, also known as a voluntary early retirement authority (VERA), is offered during specific agency workforce restructuring and allows employees to retire early under the following conditions:
        • At least 50 years old with 20 years of service
        • Any age with 25 years of service
    • Special Provisions
      • Certain categories of federal employees, such as law enforcement officers, firefighters, and air traffic controllers, have different eligibility requirements due to the nature of their jobs:
        • Age 50 with at least 20 years of service
        • Any age with 25 years of service
      • These employees can retire earlier because of their work’s physically demanding and stressful nature.

Considerations for Early and Immediate Retirement

Reduction in Benefits: Early retirees, particularly those who retire before reaching the age of 62, may experience a permanent reduction in their retirement annuity unless they meet specific age and service combinations that exempt them from reductions.

Health Benefits and Life Insurance: To continue federal health benefits and life insurance into retirement, you generally need to have been enrolled in these programs for the last five years of your federal service or from your first opportunity to enroll.

Social Security and Thrift Savings Plan (TSP): Retirees are eligible to receive Social Security benefits at age 62, but there are often penalties for early withdrawal before reaching full retirement age. TSP funds can be accessed without penalty starting at age 59½, though there are options for earlier access under certain conditions.

Cash Flow: if you are accepting early or immediate retirement, have you estimated what your monthly pension will be – remembering two important considerations: taxes and health insurance premiums.

Health Insurance: The best benefit – from our deeply green, envious eyes – that federal employees have is their health insurance. Before deciding if taking a deferred resignation is right for you, ensure you understand if you will keep or lose your health insurance.

To be eligible to keep the Federal Employee Health Benefits (FEHB) program for you and your spouse into retirement, you must meet the following conditions:

  • You must be enrolled in FEHB for 5 years before your retirement date
  • You must have enrolled with the eligibility to receive an immediate pension

Retirement Savings and Social Security

When we talk with federal employees about how to plan their retirement strategically, we often describe their benefits as a three-legged stool. Feds who retire under FERS have their pension, Social Security, and personal retirement savings, such as The Thrift Savings Plan.

If you are a federal employee considering retiring, what is your strategy for optimizing each? Think of each of these like levers; you need to evaluate how and when to pull each so you don’t potentially outlive your retirement savings.

In addition to these core financial areas that you need to consider, there are also other – BIG – questions that you need to answer on a personal level that are just as important.

  • Are you ready to retire emotionally? How will you account for days when the novelty of retiring wears off in 7, 14, 30, or 90 days?
  • Is your spouse ready for you to retire? Will you need to continue to work while the other is retired? Have you had conversations with one another about what that will look like for your household?
  • Are you considering a second career? If you love what you do but don’t want to do it for your agency anymore, what opportunities are there for you in the private sector? 

As a Federal Employee Benefits expert, my primary advice—though not intended to be self-serving—is to consult with your financial advisor. Do not face these decisions alone; ensure you have a financial sounding board to thoroughly explore your options and discuss what is best for you and your family in the long term.

Micah Shilanski, CFP®, helps federal employees confidently navigate their benefits and retirement planning. As the founder of Plan-Your-Federal-Retirement.com and a key advisor at Shilanski & Associates, he simplifies complex federal systems, empowering employees to maximize benefits, avoid mistakes, and retire on their terms.

Content provided by Shilanski & Associates, Inc., an investment advisory firm. Shilanski & Associates, Inc., is not employed by the federal government and does not represent the federal government. All strategies and ideas presented should be discussed with an advisor prior to implementation.