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Frequently Asked Questions about Voluntary Separation Incentive Payments

What is a VSIP?

A Voluntary Separation Incentive Payment (VSIP) is commonly called a buyout. This authority is granted to agencies by the Office of Personnel Management after they submit a plan describing how the agency will use VSIPs as a tool to facilitate restructuring goals. You do not have to be eligible for retirement to be offered and receive a lump sum buyout.

Why would an agency offer Voluntary Separation Incentive Payments (buyouts)?

If a Federal agency needs to downsize or restructure, VSIPs provide an incentive for employees to voluntarily retire or resign to avoid potential reduction in force (RIF) actions. USGS may also offer a VSIP to employees in safe positions—the vacated positions could then provide placement opportunities for employees holding surplus positions.

What rights and benefits would I be giving up to take an incentive payment to retire or resign rather than waiting to be separated in a RIF?

  • Placement assistance
  • Selection priority under the Career Transition and Interagency Career Transition Assistance Programs (CTAP and ICTAP)
  • Full amount of severance pay (if eligible)
  • Discontinued Service Retirement (if eligible)
  • Reemployment with the Federal government within the next 5 years without paying back the incentive payment, unless the repayment is waivered under certain limited circumstances

Do I have a right to a buyout?

Agencies are not required to use or pay buyouts. Buyouts are not an employee right. These incentives are a management tool to help the agency reduce the workforce without having to run costly and disruptive RIFs.

What if I am offered a buyout but do not choose to leave?

Incentives are for voluntary separations, and coercion is prohibited.

How can I best plan for a buyout offer?

It's important to plan for a possible buyout offer so you can act quickly if you receive an offer. With the current focus on downsizing, consolidating, and eliminating entire functions now performed by the Federal government, buyouts may be a major consideration for employees as new incentives are authorized.

The following steps are recommended for anyone considering a buyout:

  1. Review your Official Personnel Folder to ensure that all periods of Federal service are documented, using the following link:   https://eopf.nbc.gov/doi/.
  2. Obtain an estimate of your annuity from a Benefits Specialist.
  3. Obtain an estimate of your buyout amount.
  4. If you served in the military, request your military pay record from the military finance center for your branch of service.
  5. Discuss your plans with your significant other and family.
  6. Consider meeting with a personal financial advisor.
  7. Plan for the future, keeping in mind that you are prohibited from returning to work for the Federal government within the next 5 years without paying back the incentive payment, unless the repayment is waivered under certain limited circumstances.

Eligibility

Who is eligible to apply for a buyout?

You are eligible to receive a buyout if you:

  • Apply for and are approved to receive a buyout offer during the period outlined in the plan approved by the Office of Personnel Management.
  • Accept the buyout offer.
  • Voluntarily retire, retire under early retirement, or voluntarily resign during the approved buyout window.
  • Are not subject to any of the exclusions below.

You are not eligible to receive a buyout if you:

  • Are serving under an appointment with a time limitation.
  • Have a break in Federal service so that you have not been employed by the Federal government for three continuous years.
  • Are a reemployed annuitant.
  • Have a disability on the basis of which you are or would be eligible for disability retirement.
  • Are in receipt of a decision notice of involuntary separation for misconduct or unacceptable performance.
  • Have received a buyout before.
  • Are covered by statutory reemployment rights from another organization.
  • Have received a recruitment or relocation bonus within the 24-month period preceding the announced VSIP separation date.
  • Have received a retention bonus within the 12-month period preceding the announced VISP separation date.
  • Are in a position that is not covered by VSIP or is excluded by the agency’s buyout plan.

What does a "time-limited appointment” mean?

An employee on an appointment with a time limit works only until a specified date and then goes off the rolls. The employing agency sets the ending date when it hires the individual and/or when it extends the appointment. For example, temporary and term employees serve with a time limit, so they are not eligible for an incentive payment or early out retirement. Career and career-conditional employees and permanent employees in the excepted service have no time limit so they may be eligible.

What does “continuous service” mean?

To be eligible for early retirement, you must have been an employee of the U.S. Department of the Interior for 30 days prior to the request for the VISP, with no breaks. Leave without pay (LWOP), permanent seasonal employment (PSE) off-tour time, and any other non-pay status during an appointment are NOT considered breaks in service.

Can a veterans’ preference be applied to enable an employee to be eligible for a VSIP?

No, there is no preference for veterans under the VSIP authority.

VSIP Payment

If I receive a buyout, how much will the incentive be? How is it calculated?

An incentive payment is the amount of severance pay you would get, or $25,000, whichever is less. Severance pay is calculated with the assumption that you will receive it; you don’t have to be eligible for severance pay. The amount of each employee’s incentive will vary depending on his/her pay rate, years of civilian service, and age. The maximum gross amount for each buyout is $25,000. The net amount you receive will be lower after taxes, Social Security, Medicare, etc. are deducted by the payroll office.

Severance pay is calculated as follows: one week’s basic pay for each of the first 10 years of your civilian service, plus two weeks’ basic pay for each year over 10 years. (No credit is given to military service unless the service interrupted otherwise creditable civilian service and you returned to civilian service through the exercise of a legal restoration right.) Total severance pay may not exceed one year’s basic pay at the rate you are paid immediately before separation.

When will I receive my buyout payment? Will it be all at once (lump sum) or monthly?

You will receive your incentive payment as a lump sum (less Federal income tax withholding, applicable State and local taxes, and FICA/Medicare taxes).



For additional information visit the USGS Pay and Benefits pages.

Visit the ASK HRO page for a listing of Benefits Specialists that are available to help you.



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URL: http://www.usgs.gov/humancapital/sw/workforceplanning/FAQsVSIP.html
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Page Last Modified: Friday, 02-May-2014 10:02:07 EDT