Severance Pay | Federal RIF Resource Hub
Federal RIF Resource Hub
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Severance Pay

Understanding eligibility, calculations, and payment details for RIF-related severance.

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What is Severance Pay?

Severance pay is a form of compensation provided to certain eligible federal employees who are involuntarily separated from service (e.g., through a RIF) through no fault of their own. It's intended to provide temporary financial support during the transition to new employment.

Key characteristics include:

  • Paid bi-weekly, like regular salary (not a lump sum).
  • Maximum benefit is equivalent to 52 weeks of basic pay.
  • Subject to federal, state, Social Security, and Medicare taxes.
  • Not payable if you are eligible for an immediate retirement annuity (including DSR).

Severance Pay Eligibility

To be eligible for severance pay due to a RIF, you generally must:

  • Be serving in a permanent appointment (career or career-conditional).
  • Have completed at least 12 months of continuous service.
  • Be involuntarily separated (RIF qualifies).
  • Not be separating for misconduct or delinquency.
  • Not be eligible for an immediate retirement annuity (including DSR).
  • Not have declined a "reasonable offer" for another federal position.

Calculating Severance Pay

Your total severance pay entitlement is based on your years of creditable service and your age at separation.

Basic Severance Calculation:

  • First 10 Years of Service: 1 week of basic pay for each year.
  • Years of Service Over 10: 2 weeks of basic pay for each year.

Age Adjustment Factor:

If you are over 40 years old at separation, your basic severance pay amount is increased:

  • Add 10% to the basic amount for each full year you are over age 40.

Maximum Limit:

The total severance pay amount cannot exceed 52 weeks (one year) of your basic pay at the time of separation.

What is "Basic Pay"?

Includes your regular salary rate plus locality pay or special rate supplements. Excludes overtime, bonuses, allowances, and premium pay.

Calculation Examples:

  • Basic Severance: 8 years * 1 week/year = 8 weeks pay
  • Basic Amount: 8 weeks * $1000/week = $8,000
  • Age Adjustment: None (Age <= 40)
  • Total Severance: $8,000 (Paid over 8 weeks)

  • Basic Severance Weeks: (10 yrs * 1 wk) + (5 yrs * 2 wks) = 10 + 10 = 20 weeks pay
  • Basic Amount: 20 weeks * $1200/week = $24,000
  • Age Adjustment: 5 years over 40 => 5 * 10% = 50% increase
  • Age Adjustment Amount: $24,000 * 0.50 = $12,000
  • Total Severance: $24,000 + $12,000 = $36,000 (Paid over 20 weeks)

  • Basic Severance Weeks: (10 yrs * 1 wk) + (15 yrs * 2 wks) = 10 + 30 = 40 weeks pay
  • Basic Amount: 40 weeks * $1500/week = $60,000
  • Age Adjustment: 15 years over 40 => 15 * 10% = 150% increase
  • Age Adjustment Amount: $60,000 * 1.50 = $90,000
  • Calculated Total: $60,000 + $90,000 = $150,000
  • Annual Salary Equivalent: $1500/week * 52 weeks = $78,000
  • Total Severance (Capped at 52 weeks pay): $78,000 (Paid over 52 weeks)

Severance Pay Calculator (Estimate)

Estimate your potential severance pay based on the standard formula. Your agency provides the official calculation.

Annual basic pay divided by 52.

Payment Schedule & Termination

How Payments are Made:

  • Severance pay is issued in regular, bi-weekly installments.
  • Each payment is equal to your basic pay for a pay period.
  • Payments continue until the total calculated severance amount is paid out or until 52 weeks of payments have been made, whichever comes first.

When Payments Stop:

Your severance payments will cease immediately if:

  • You are reemployed by the federal government (any agency, any appointment type).
  • You begin receiving an immediate retirement annuity (including DSR or disability retirement).

If payments stop due to reemployment, you may be required to repay any amount received that covers the period after your reemployment date.

Accepting non-federal employment (private sector, state/local government) does **not** stop your federal severance payments.

Tax Implications

Severance pay is considered taxable income.

  • Subject to Federal Income Tax withholding.
  • Subject to Social Security (6.2%) and Medicare (1.45%) taxes.
  • Subject to State and Local income taxes (if applicable).
  • Reported on Form W-2 by your agency.
  • Cannot be rolled over into retirement accounts like TSP or an IRA.

Consider adjusting your W-4 tax withholding form to account for this income, especially if you anticipate other income during the year.

Frequently Asked Questions

No. Unlike the lump-sum payment for unused annual leave, severance pay is distributed in regular bi-weekly installments, similar to your paycheck schedule, until the total entitlement is paid out or payments are terminated due to reemployment/retirement.

It depends on your state's unemployment laws. Many states consider severance pay as income, which may reduce or delay your eligibility for unemployment benefits during the period covered by severance. Contact your state's unemployment office for specific rules. Learn more about Unemployment.

First, discuss the calculation with your agency's HR department. If you still believe it's incorrect, you can file a claim with the Office of Personnel Management (OPM) providing your calculation and supporting documents.