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 for CSRS if under 55; FERS generally not reduced).
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. An age reduction may apply if retiring before age 55, depending on your retirement system.
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 (If Applicable)
The application of an age reduction for DSR depends on your retirement system:
- CSRS Employees: If retiring under DSR before age 55, your calculated basic annuity is permanently reduced by one-sixth of one percent for each full month (which is 2% for each full year) you are under age 55. This reduction does not disappear when you reach age 55.
CSRS Example: Retiring at age 51 years and 6 months. You are 3 full years and 6 months (42 months) under 55. Reduction = 42 months × (1/600) = 7%. Your CSRS annuity is reduced by 7% for life. - FERS Employees: There is no annuity reduction for FERS employees who retire on a discontinued service annuity under the age of 55 for their FERS basic annuity.
- FERS Transferees (with a CSRS component): If a FERS employee has a CSRS component in their annuity and retires under age 55, only the CSRS portion of the annuity is subject to the 2% per year (1/6th of 1% per month) reduction. The FERS portion of the annuity is not reduced.
DSR Eligibility & Annuity Calculator (Estimate)
Check potential DSR eligibility and estimate your annuity, including any applicable 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 OPM Form 1510 (Certification of Agency Offer of Position and Required Documentation) or equivalent, certifying your separation qualifies for DSR and detailing any job offers made.
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 (e.g., OPM Form 1510)
- 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)
For FERS employees, there is generally no age reduction for DSR on their FERS basic annuity if they retire under age 55.
If a FERS employee is a transferee with a CSRS component in their annuity, that CSRS component would be subject to this permanent reduction if the employee is under age 55 at retirement. The FERS portion of their annuity remains unreduced.
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.