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Federal and Public Sector Retirement

Voluntary Separation Incentive Payment (VSIP)

A Voluntary Separation Incentive Payment (VSIP), also commonly known as a buyout, is a lump-sum payment of up to $25,000 that is offered to eligible federal employees as an incentive to voluntarily separate by resignation, optional retirement, or early retirement.  When a federal agency is downsizing or restructuring, it may offer a VSIP to eligible employees who are no longer needed in the workforce.  Federal employees who are offered a VSIP must meet general eligibility requirements in order to take advance of these provisions.  The federal employee involved must:

  1. Be serving in an appointment without time limit;
  2. Be currently employed by the Executive Branch of the federal government for a continuous period of at least three (3) years;
  3. Be serving in a position covered by an agency VSIP plan; and
  4. Apply for and receive approval for a VSIP from the agency making the VSIP offer.

Federal employees in the following types of categories are generally not eligible for VSIP.  These include federal employees who:

  1. Are reemployed annuitants;
  2. Have a disability such that the individual is or would be eligible for disability retirement;
  3. Have received a decision notice of involuntary separation for misconduct or poor performance;
  4. Previously received any VSIP from the federal government;
  5. During the 36-month period preceding the date of separation, performed service for which a student loan repayment benefit was paid or is to be paid;
  6. During the 24-month period preceding the date of separation, performed service for which a recruitment or relocation incentive was paid or is to be paid; and
  7. During the 12-month period preceding the date of separation, performed service for which a retention incentive was paid or is to be paid.

If a federal employee receives a VSIP and later accepts employment for compensation with the federal government of the United States—other than the General Accounting Office, the U.S. Postal Service, or the Postal Rate Commission—within five (5) years of the date of the separation on which the VSIP is based, including any work under a personal service contract, the employee must repay the entire amount of the VSIP to the paying agency before his or her first day of reemployment.

It is very important for federal employees considering VSIP as an option to obtain legal advice from an attorney regarding the VSIP process prior to making final decisions concerning their federal employment or reemployment. Berry & Berry, PLLC represents and advises federal employees nationwide and abroad before their individual federal agencies, the Office of Personnel Management (OPM), and the Merit Systems Protection Board (MSPB) in regard to issues arising under the Voluntary Separation Incentive Payment (VSIP).  Please contact our firm to schedule a consultation with one of our attorneys to discuss your individual VSIP issue.

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