Critical Deadline & Choice
If eligible for DSR, submit your retirement application before your separation date to ensure continuous benefits. Also, remember you must choose between DSR and Severance Pay – you cannot receive both. This choice is irrevocable.What is Discontinued Service Retirement?
Discontinued Service Retirement (DSR) is a special provision allowing federal employees facing involuntary separation (like a RIF) to retire immediately, even if they don't meet standard age/service requirements, provided they meet specific DSR criteria.
It provides an immediate annuity and, crucially, allows for the continuation of health (FEHB) and life (FEGLI) insurance if eligibility rules are met.
Involuntary but Earned
While triggered by an involuntary separation, DSR is an earned retirement benefit based on your service history.DSR Eligibility Requirements
To qualify for DSR due to a RIF, you must meet all of the following conditions:
Age & Service
Meet one of these:
- Age 50+ with 20+ years of creditable service
- Any Age with 25+ years of creditable service
Separation Type
- Must be involuntary
- Not for misconduct/delinquency
- RIF qualifies
- Must not have declined a "reasonable offer"*
* A "reasonable offer" is generally a position in the same agency, same commuting area, same tenure/work schedule, and not more than two grades/pay levels lower. Declining such an offer may disqualify you from DSR. Verify with HR.
Agency Variations
Some agencies (e.g., intelligence community) may have stricter interpretations of qualifying involuntary separations. Confirm with your agency HR.DSR Benefits
Opting for DSR provides significant advantages, especially compared to separating without retirement eligibility:
Immediate Annuity
Receive monthly pension payments for life, starting soon after separation. (May be reduced if under 55).
FEHB Continuation
Potentially continue health insurance at lower retiree rates for life (must meet 5-year rule).
FEGLI Continuation
Continue life insurance coverage into retirement (must meet 5-year rule).
FERS Supplement
Potential extra payment (if FERS and MRA met) until age 62.
Crucial: FEHB/FEGLI 5-Year Rule
To continue FEHB and/or FEGLI into *any* retirement (including DSR), you must have been enrolled in that specific program for the 5 years immediately preceding retirement OR since your first opportunity to enroll. This rule is not waived for DSR.DSR vs. Severance Pay: The Irrevocable Choice
If you are eligible for DSR, you are generally **not** eligible for Severance Pay. You cannot receive both. Understanding the trade-offs is critical:
| Feature | Discontinued Service Retirement (DSR) | Severance Pay |
|---|---|---|
| Income Type | Lifetime monthly annuity payments | Temporary income replacement (paid bi-weekly) |
| Duration | Lifetime (+ potential survivor benefits) | Limited duration (max 1 year's salary equivalent) |
| FEHB/FEGLI | Can continue at retiree rates (if 5-yr rule met) | Ends; TCC/Conversion options only (at higher cost) |
| Long-Term Value | Very High (lifetime income + benefits) | Low (limited cash payment) |
| Best For | Long-term security, maintaining benefits | Immediate cash needs, planning new non-federal career |
For most individuals eligible for DSR, the long-term financial security and value of the lifetime annuity plus continued health benefits far outweigh the temporary payments from severance pay.
Get Help Comparing OptionsAnnuity Calculation & Age Reduction
Your DSR annuity uses the standard FERS/CSRS formula, but includes a permanent reduction if taken before age 55.
FERS Formula (Basic):
1% (or 1.1% if 62+ w/ 20+ yrs) × High-3 Salary × Years of Service
CSRS Formula (Simplified):
(1.5% × High-3 × first 5 yrs) + (1.75% × High-3 × next 5 yrs) + (2% × High-3 × remaining yrs)
Permanent Age Reduction (Under 55)
If retiring under DSR before age 55, your calculated basic annuity is permanently reduced by 2% for each full year you are under age 55 (prorated monthly at 1/6th of 1% per month).
Example: Retiring at age 51 and 6 months. You are 3 full years and 6 months under 55. Reduction = (3 years × 2%) + (6 months × 1/6th of 1% per month) = 6% + 1% = 7%. Your annuity is reduced by 7% for life.
DSR Eligibility & Annuity Calculator (Estimate)
Check potential DSR eligibility and estimate your annuity, including the age reduction.
DSR Application Process
Applying involves standard retirement forms plus certification of your involuntary separation.
Verify Eligibility & Notify HR
Confirm age/service and RIF qualification with HR immediately. State intent to apply for DSR.
Gather Forms & Documents
Get SF-3107/SF-2801, benefit forms (SF-2818, SF-2809), tax forms (W-4P), and supporting docs (birth/marriage certs, military papers, SF-50s).
Obtain Agency Certification
Ensure HR provides/completes certification that your separation qualifies for DSR.
Complete & Submit Package
Fill out all forms accurately. Submit the complete package (including DSR certification) to HR before separation.
Follow Up
Confirm HR sent package to OPM. Keep copies. Monitor for OPM acknowledgment and interim payments.
Required Documentation Checklist
- SF-3107 (FERS) or SF-2801 (CSRS) Application
- Agency Certification of Involuntary Separation for DSR
- Proof of Birth (Birth Certificate or Passport)
- Marriage Certificate (if electing survivor benefit)
- Military Service Records (DD-214 if applicable)
- Prior Service Documentation (if applicable)
- SF-2818 (FEGLI continuation election)
- SF-2809 (FEHB continuation election)
- W-4P (Federal Tax Withholding) / State Tax Form
- Direct Deposit Information (SF-1199A or voided check)
Post-Application Timeline (Typical)
After submitting your DSR application:
- Separation Date: HR forwards completed package to OPM.
- ~2-4 Weeks Post-Sep: OPM acknowledges receipt, assigns claim number.
- ~4-8 Weeks Post-Sep: Interim annuity payments (approx. 60-80%) may begin.
- ~2-4 Months Post-Sep: OPM completes final processing (adjudication).
- Following Adjudication: First full annuity payment received, including retroactive adjustments. Final determination letter sent.
Note: Processing times can vary significantly. Submitting a complete and accurate application early is key.
Frequently Asked Questions (DSR)
Brief Note on Taxes
Your DSR annuity payments are generally subject to federal income tax (and state tax, depending on the state). A portion of your annuity representing your previously taxed contributions (if any, mainly CSRS) may be recovered tax-free. TSP withdrawals are also typically taxed as ordinary income, unless they are from a Roth TSP balance and meet qualification rules. Consult a tax professional for specific advice.