OPM.GOV MARCH 2017

Guide to 

Voluntary Separation 

Incentive Payments

United States Office of Personnel Manag
Voluntary Separation Incentive Payment Guide 

 TABLE OF CONTENTS 

 TOPIC See Page 

1. The Purpose of VSIP ..................................................................................................................... 1 

2. Statutory Basis for VSIP Regulations............................................................................................ 1 

3. VSIP Regulations........................................................................................................................... 1 

4. VSIP Planning for Organizational Effectiveness........................................................................... 2 

5. Preparing for VSIP......................................................................................................................... 3 

6. Competitive Sourcing Situations ................................................................................................... 4 

7. Agency VSIP Decisions................................................................................................................. 5 

8. VSIP Request From Agency Headquarters ................................................................................... 5 

9. Information in VSIP Request to OPM........................................................................................... 6 

10. Basis for OPM Approval of VSIP Request ................................................................................. 7 

11. Maximum Time Period for VSIP Option .................................................................................... 8 

12. General Eligibility for VSIP ........................................................................................................ 8 

13. Ineligibility for VSIP ................................................................................................................... 9 

14. Employees on Active Duty in the Armed Forces ........................................................................ 9 

15. Employees on Leave without Pay, Workers’ Compensation, Details, etc. ............................... 10 

16. Employees with Service Agreements ........................................................................................ 10 

17. Implementing the VSIP Plan ..................................................................................................... 10 

18. VSIP Offers Must Be Consistent With OPM-Approved Authority ...................................... 13 

19. Computation of Payments.......................................................................................................... 13 

20. Waiver of Usual Participation Requirement to Continue Health Benefits into Retirement ...... 14 

21. Ensuring that VSIP Separations are Voluntary.......................................................................... 15 

22. Processing VSIP Separations..................................................................................................... 15 

23. Establishing Effective Dates...................................................................................................... 16 

24. Agencies with Statutory VSIP Authority................................................................................... 16 

25. Waiver of VSIP Repayment Requirement................................................................................. 16 

26. Agency Management of VSIP ................................................................................................... 17 

27. Reserved..................................................................................................................................... 18 

28. OPM Oversight of VSIP............................................................................................................ 19 

29. Checklist for VSIP Request ....................................................................................................... 19 

 

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1. The Purpose of VSIP

The Voluntary Separation Incentive Payment (VSIP or buyout) Authority allows 

agencies to offer lump-sum payments to employees who are in surplus positions 

or have skills that are no longer needed in the workforce, as an incentive to 

separate. Under VSIP, agencies may pay up to $25,000, or an amount equal to 

the amount of severance pay an employee would be entitled to receive, whichever 

is less. Employees may separate to accept VSIP by resignation, optional 

retirement, or by voluntary early retirement, if authorized. 

VSIPs are an option for increasing voluntary attrition in agencies that are 

downsizing or restructuring. Besides providing an incentive for employees to 

voluntarily retire or resign to avoid potential reduction in force actions, the agency 

may also offer VSIP to employees in safe positions that could then provide 

placement opportunities for employees holding surplus positions. 

In its request to the Office of Personnel Management (OPM) for VSIP approval, 

the agency should clearly outline how VSIP would assist the agency in reaching its 

restructuring or downsizing goals. At all stages of developing an individual VSIP 

plan or a combined VSIP/VERA (Voluntary Early Retirement Authority) plan, the 

agency must always consider whether a sudden increase in attrition will 

compromise the agency’s: 

(1) Ability to effectively carry out its mission; and/or,

(2) Available fiscal resources.

2. Statutory Basis for VSIP Regulations

Section 1313(b) of the Chief Human Capital Officers Act of 2002 (Public Law 107-

296, approved November 25, 2002) authorized the VSIP option under regulations 

issued by OPM, as codified in sections 3521 to 3525 of title 5, United States Code 

(U.S.C.). 

3. VSIP Regulations

OPM implements the statutory VSIP requirements through regulations in part 576 

of title 5, Code of Federal Regulations. 

 The National Archives and Records Administration (NARA) provides a copy

of current VSIP regulations at http://www.ecfr.gov. 

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 VSIP regulations do not apply to the Department of Defense (DoD). Public 

Law 108-136, approved November 24, 2003, gives DoD permanent 

agency-specific VERA and VSIP authority. 

4. VSIP Planning for Organizational Effectiveness 

An agency may request VSIP from OPM, and has the discretion to make certain 

decisions concerning how and when to use an approved VSIP authority. Before 

requesting VSIP, the agency should consider how VSIP would assist the agency in 

reaching a specific goal in human capital planning. For example, when an agency 

(or an agency component) is undergoing substantial restructuring or downsizing, it 

may consider offering VSIP as a more cost-effective and less disruptive plan than 

involuntary actions such as reduction in force. A comprehensive strategic 

workforce plan that addresses current and future human capital needs will help the 

agency develop the data needed to submit a formal request for VSIP authority. 

The agency’s plan to use the VSIP option should reflect management decisions 

such as whether the agency will: 

(1) Modify the structure of its components (e.g., consolidate field locations, 

merge line programs into smaller organizations, open field locations closer 

to agency customers); 

(2) Modify the span of control (e.g., eliminate existing layers of supervision, 

delegate additional program and administrative authority to lower level 

managers); 

(3) Exclude certain positions or organizations from the VSIP option to maintain 

organizational effectiveness (e.g., the agency would have difficulty 

replacing employees in certain lines of work, components, and/or 

geographic locations); 

(4) Use vacancies that become available because of VSIP retirements or 

resignations as placement opportunities for employees in surplus positions; 

(5) Offer VSIPs to all or only some of its excess employees (e.g., how many 

VSIP offers are possible under the agency’s budget); and, 

 

(6) Offer VSIPs only for certain periods of the fiscal year (e.g., the agency can 

maximize savings if employees separate for a VSIP earlier rather than later 

in the fiscal year). 

 Additional Fiscal Issues When Planning for VSIP 

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An agency may pay a VSIP only from appropriations or funds available for the 

basic pay of the employee who separates for the incentive [5 U.S.C. 3523(b)(7)]. 

The one-time VSIP financial costs are particularly critical if the agency plans to 

offer VSIPs to employees with obsolete skills, and then restaff the positions with 

employees who have skills currently needed by the agency. For example, in a 

downsizing situation, the agency can readily achieve savings from the VSIPs in 

the present or the next fiscal year if the agency has a net reduction of a position 

because of the VSIP. In contrast, a reshaping situation generally provides no 

savings when the agency replaces an employee with obsolete skills who received 

a VSIP by the appointment of another employee with different skills. Because the 

agency has no net reduction in the workforce, the agency must plan for the same 

level of continuing salary expenses in addition to the cost of the VSIP for 

employees who retired or resigned. 

When planning for VSIP, the agency should use a collaborative approach involving 

agency management, Human Resources, and Finance. The agency’s decisionmakers must be closely involved in all phases of plans to offer VSIPs, particularly 

in reshaping situations. 

5. Preparing for VSIP 

 

An agency should begin planning for VSIP as soon as it appears likely that the 

organizational changes the agency needs to make cannot be accomplished by 

lesser measures (e.g., hiring freeze, normal attrition, reassignments). Early 

planning will ensure that the VSIP authority is available in time for both the agency 

and its employees to make the most effective use of the option. At the activity or 

subagency level, the organization should recognize that some lead time is 

required to develop the data to support the VSIP request, to submit the request to 

the agency headquarters, and then for the headquarters to formally request OPM 

approval of the VSIP. At each level, the activity may be asked to clarify the VSIP 

request, or develop additional data to support the request. 

Also, to ensure that there are no agency delays in planning for VSIP offers, 

agency with bargaining unit employees should review existing labor agreement(s) 

and consider whether it has any collective bargaining obligations. The agency 

should follow any applicable procedures contained in the labor agreement. If, 

however, an agency finds it has bargaining obligations, it should plan for early 

negotiations. 

In addition, to maximize the benefit of VSIP, the agency should allow sufficient 

time for important decisions such as developing activity or subagency policy on the 

coverage and application of the authority, preparing the human resources staff, 

counseling employees, holding retirement seminars, computing annuities for those 

considering retirement, etc. VSIP often results in an additional major workload for 

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an agency’s human resources staff. For example, the agency must inform eligible 

employees of the VSIP opportunity. The agency must also advise interested 

employees on the amount of their incentive payment, their annuity and related 

issues. This process requires additional time and staff when eligible employees 

are widely dispersed and/or do not have access to a local human resources office. 

Once OPM receives an agency’s VSIP request, OPM reviews the package to 

verify that the request is consistent with the controlling statutory and regulatory 

requirements. 

While the VSIP request is pending approval at higher levels of the agency or at 

OPM, the agency should continue planning how it will use its VSIP authority. The 

agency should also monitor whether any of the assumptions that serve as the 

basis for the VSIP request have changed. 

6. Competitive Sourcing Situations 

An agency that is undergoing a competitive sourcing study and anticipates the 

need for restructuring or workforce reduction to implement the outcome of the 

study (e.g., contracting out or establishing a Most Efficient Organization), may 

initiate a request for VSIP authority before the study is completed. Because of the 

detailed requirements related to a competitive sourcing study and the need for 

strict confidentiality in the process, it is difficult for the agency to forecast either the 

outcome of the study or the effects of the study on the agency’s workforce. As a 

result, an agency may not be able to furnish the kind of specific data about the 

positions for which they wish to offer VSIP. In this situation, the agency should 

submit a request to OPM projecting possible outcomes, presenting “if-then” 

scenarios for either (1) retaining the function; or (2) contracting out. OPM may 

provide the agency with contingent approval for the VSIP option (i.e., the agency’s 

need for VSIP would be subject to the outcome of the competitive sourcing study). 

Before extending VSIP offers to employees, the agency must notify OPM of the 

outcome of the competitions. If the competitive sourcing decision will result in the 

agency contracting the function, OPM will authorize immediate use of the VSIP. If 

the competitive sourcing decision is to retain the function in the agency, the 

agency must provide OPM with updated information to support the VSIP. 

Contingent approval benefits agencies because it: 

(1) Provides for early review of the agency’s VSIP request by OPM and OMB; 

(2) Enables both the agency and OPM to respond quickly to a decision on the 

agency’s VSIP request when the competitive sourcing study is completed; 

(3) Helps the agency retain skilled workers and maintain productivity in a 

competitive sourcing situation; and 

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(4) Allows the agency to demonstrate positive efforts to assist employees who 

may be negatively affected by the results of the competitive sourcing study. 

7. Agency VSIP Decisions 

An agency may: 

(1) Request VSIP authority from OPM; 

(2) Decide whether to use an approved VSIP authority; 

(3) Decide which employees are covered by VSIP; 

(4) Establish the VSIP window; 

(5) Determine the number of employees who may separate with a VSIP; and 

(6) Determine the maximum amount to be paid for each VSIP (with a cap of 

$25,000). 

 

8. VSIP Request From Agency Headquarters 

An agency’s request to OPM for VSIP must be signed by: 

(1) The head of the agency; or 

(2) A specific designee (i.e., a senior officer or official within an agency who 

has been specifically designated to sign requests for VSIP under a 

designation from the head of the agency). 

The agency should send its VSIP request to OPM at: 

 Deputy Associate Director 

Recruitment and Hiring

 U.S. Office of Personnel Management 

 1900 E Street, NW 

 Room 6500 

 Washington, DC 20415 

 To expedite processing of the VSIP, the agency may email or fax its VSIP request 

to 202-606-4430. 

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For additional guidance on VSIP, the agency should contact OPM’s Recruitment 

and Hiring (202-606-0203). 

For more information, refer to the checklist for VSIP requests in Section 29. 

9. Information in VSIP Request to OPM 

The agency may submit either a specific VSIP implementation plan outlining the 

intended use of the incentive payments, or the agency’s human capital plan, which 

outlines the intended use of VSIPs. The request to OPM for VSIP authority must 

contain the following information: 

(1) Identification of the specific positions and functions to be reduced or 

eliminated, identified by organizational unit, geographic location, 

occupational series, grade level and any other factors related to the 

position; 

(2) A description of the categories of employees who will be offered VSIP, 

identified by organizational unit, geographic location, occupational series, 

grade level, and any other factors, such as skills, knowledge, or retirement 

eligibility; 

 Although the category listing should be general in nature, it should not 

be difficult to determine all of the categories of employees who will be 

offered VSIP, and the geographic location(s) where each category will 

be offered VSIP. For example: Do say “We plan to offer VSIP to 

auditors and accounting technicians in Des Moines, IA; accounting 

technicians in Dallas, TX; and auditors, accounting technicians and 

payroll clerks in Orlando, FL.” Do not say “We plan to offer VSIP to 

auditors, accounting technicians, and payroll clerks in Des Moines, IA, 

Dallas, TX, and Orlando, FL.” 

 When considering ‘retirement eligibility’ to determine the categories of 

employees who will be offered VSIP, agencies are advised to ensure 

they are in compliance with the Age Discrimination in Employment Act 

of 1967 (ADEA), as amended. 

(3) The time period during which incentives may be paid; 

 The request should include a narrative of the time period during which 

VSIP will be offered and the date by which employees accepting VSIP 

should be off the rolls. The agency should identify factors that might 

cause delays or complications. The agency should provide an 

explanation for the length of the time period required. 

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(4) The number and maximum amounts of VSIPs to be offered; 

(5) A description of how the agency will operate without the eliminated or 

restructured positions and functions; 

(6) A proposed organizational chart displaying the expected changes in the 

agency’s organizational structure after the agency has completed the 

VSIPs; 

 This chart should show the agency (or component within the agency, if 

the VSIP request is for a single component) minus the eliminated, 

restructured or redescribed positions (different grade, title, function(s), 

etc.). To effectively show the meaning of this information, it would be 

useful to display a current organization chart as well. 

(7) A short explanation of how Voluntary Early Retirement Authority (VERA) will 

be used in conjunction with VSIP, if the agency has requested, or will 

request VERA. 

 This discussion should explain the extent to which the agency believes 

it will reach its goals by combining VERA with VSIP as an enticement 

for voluntary separation. If the agency believes that VERA, when used 

with VSIP, may encourage employees to retire early to receive a VSIP, 

it should provide that information and explain the anticipated, positive 

effect that VERA will have on the VSIP acceptance rate. 

(8) A description of how VSIPs offered under another statutory authority 

are being used, if the agency is offering incentives under any other 

statutory authority. 

 This item is for agencies that may still have a single agency VSIP law. 

If that is the case, the agency should discuss the number of incentives 

it plans to offer under each VSIP authority, broken down as described 

in item two above. If the agency has no single agency VSIP authority, 

it should enter “not applicable.” in response to this item. 

The VSIP template in Section 29 provides more information about these 

requirements. 

10. Basis for OPM Approval of VSIP Request 

OPM will conduct a review of the agency request in the context of the agency’s 

human capital or VSIP implementation plan and goals, and ensure that all 

necessary information is included to evaluate the need. 

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OPM will consult with the Office of Management and Budget regarding the plan 

and subsequent modifications to the plan, and may consider the costs and 

benefits associated with using the authority. If there are questions concerning the 

agency’s plan, OPM may contact the agency, inform agency staff of its concerns, 

and ask the agency to submit additional information to support its request or revise 

the plan to comply with VSIP regulations. 

Before OPM will approve a new VSIP authority for an agency, the agency must 

forward any outstanding reports (generally, a copy of the most recent quarterly 

report) on the use of any previously approved VSIP authorities, as required under 

the original authority. 

OPM will notify the agency once the VSIP authority is approved and will fax a 

signed copy of the response to the contact person listed on the request 

immediately upon approval. To ensure a prompt response from OPM, it is critical 

that the VSIP request include the name, title, telephone number, and fax number 

of an agency contact person. 

11. Maximum Time Period for VSIP Option 

OPM may approve an agency’s VSIP request to be effective through either: 

(1) The entire period of the agency’s restructuring period as detailed in the 

VSIP implementation plan; or 

(2) The initial portion of the period covered in the VSIP implementation plan, 

with a requirement for subsequent information and justification if the period 

covers multiple years. 

12. General Eligibility for VSIP 

To be eligible to separate with a VSIP, an employee must: 

(1) Be serving under an appointment without time limitation; 

(2) Be currently employed by the Executive Branch of the Federal Government 

for a continuous period of at least 3 years; 

(3) Be serving in a position covered by an agency VSIP offer as described 

above; 

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(4) Apply for and receive approval for a VSIP from the agency making the VSIP 

offer; and 

(5) Not be included in any of the ineligibility categories listed in Section 13 

below. 

13. Ineligibility for VSIP 

Employees in the following categories are not eligible for VSIP:

Employees who: 

(1) Are reemployed annuitants; 

(2) Have a disability such that the individual is or would be eligible for disability 

retirement; 

(3) Are in receipt of a decision notice of involuntary separation for misconduct 

or unacceptable 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 bonus was paid, or is to be 

paid; or 

(7) During the 12-month period preceding the date of separation, performed 

service for which a retention bonus was paid, or is to be paid. (This applies 

to General Schedule employees only.) 

14. Employees on Active Duty in the Armed Forces 

Chapter 43 of title 38, United States Code, requires that agencies treat employees 

on military duty, for all practical purposes, as though they were still on the job. 

Further, employees are not to be disadvantaged because of their military service. 

An employee on active duty in the Armed Forces who would otherwise be eligible 

for a VSIP offer will have 30 days following restoration to the agency to accept or 

reject the agency’s offer of VSIP. 

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 The restored employee has the right to accept or reject the agency’s 

offer of VSIP, even if the authority approved by OPM has expired. 

15. Employees on Leave without Pay, Workers’ 

Compensation, Details, etc. 

Agencies must inform employees on leave without pay, workers’ compensation, 

details outside the agency, etc., of VSIP offers that would cover them. 

16. Employees with Service Agreements 

Common service agreements cover an employee’s obligation to perform service 

with the agency for a specific period of time following training, relocation, or similar 

situations. An agency should request an interpretation from its legal staff before 

deciding whether to release from a service agreement an employee who is 

interested in separating for a VSIP. 

17. Implementing the VSIP Plan 

 Organizational Basis for VSIP Offers 

After the agency has received authority from OPM to offer VSIP [whether 

throughout the entire agency or for specific organizational unit(s)], the agency shall 

further limit the availability of the VSIP based on: 

(1) One or more organizational unit(s); 

(2) One or more occupational series or grade(s); 

(3) One or more geographic area(s); 

(4) Skill, knowledge, or other factors related to a position; 

(5) Specific time periods during which eligible employees may elect to accept a 

VSIP offer; or 

(6) Any combination of the factors listed above. 

An agency cannot expand voluntary separation incentive offers beyond the scope 

of the authority approved by OPM. 

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 Selecting Employees for VSIP 

A VSIP is not an entitlement for an employee who is potentially eligible for a VSIP. 

For situations where the agency may need to limit the number of employees who 

are approved for VSIP, the agency should have an impartial formal procedure to 

make these decisions. 

The agency should finalize its selection procedures before accepting applications 

from employees for VSIP separations. 

For consistency, the agency may also decide to use the same procedure to 

determine which employees will separate under a Voluntary Early Retirement 

Authority (VERA) when a VSIP is not offered. 

Standard selection procedures may include (but are not limited to): 

o Total creditable Federal civilian service; 

o Total creditable Federal civilian service in the agency or in the 

organizational component offering the VSIP; or 

o First-in, first-out (i.e., accepting the first applications received, up to an 

established limit). 

The agency’s selection procedure should be clearly communicated to its 

employees in the notice announcing the VSIP plan. 

 Establishing “Windows” 

The agency has the right to establish ‘windows;’ that is, the time period(s) during 

which it will accept applications for VSIP and to set the time period(s) for 

employees to retire or resign for VSIP. The agency may open such windows at 

any time during which it has VSIP authority, provided that the agency includes the 

information in its VSIP plan to OPM, and OPM subsequently approves the plan 

after consultation with OMB. 

Neither the controlling statute nor OPM’s implementing regulations defines a 

maximum or minimum time period for a VSIP window. The only restriction is that 

an employee may not separate for a VSIP past the ending date of the OPMapproved VSIP plan. 

If the agency is also offering employees the option of retiring under a Voluntary 

Early Retirement Authority (VERA), the agency should coordinate the VSIP and 

VERA windows to maximize the effectiveness of both programs. 

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The agency has many potential options to implement effective VSIP windows for 

employees. Some examples include: 

o In a budget driven situation, only offering VSIP early in the fiscal year to 

maximize net savings after including the cost of each VSIP; 

o Establishing opening and closing dates which are announced to employees 

at the time of the initial offer; 

o Receiving a specified number of applications for a VSIP, provided that, at 

the time of the initial offer, the agency notified employees that it retained the 

right to limit voluntary VSIP on that basis; or

o Extending the VSIP offer only to employees in specific organizational 

unit(s), occupational series or grade(s), geographic area(s), or employees 

in possession of certain knowledge or skills -- as long as the authority 

issued by OPM covers them.

Generally, the agency must notify employees whenever the parameters of a VSIP 

offer have changed. 

 Additional Considerations 

The agency may subsequently establish a revised closing date, or a revised 

number of VSIP applications, if management’s downsizing and/or reshaping needs 

change. If the agency issues a revised closing date, or a revised number of VSIP 

applications to be accepted, the revised date or number of applications must be 

announced to the same group of employees included in the original 

announcement. If the agency issues a new window with a new closing date, or a 

new instance of a specific number of VSIP applications to be accepted, the new 

window or number of applications may be announced to a different group of 

employees as long as they are covered by the approved VSIP authority. 

After announcing a time period during which employees may apply for VSIP, the 

agency may terminate the offers before the closing date upon receipt of a 

previously specified number of VSIP applications — if the announcement indicated 

that a specified number of VSIP applications would be sought. If the offer did not 

discuss a specific number of applications the agency wished to receive, the 

specified window for receipt of applications should be observed unless conditions 

necessitate a reduction in or cancellation of the requirements for VSIP. The 

agency’s notice should also advise employees that, subject to changes in the 

situation on which the VSIP was based, the agency may need to further limit VSIP 

offers after such offers are announced. 

Agencies are urged to consider the impact of the length, timing, and availability of 

VSIP offers on employee decisions to separate. For example, long-term 

availability or repeated offers may create an atmosphere in which employees 

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choose not to accept VSIP because they assume that another opportunity will be 

available--should they decide to wait. Brief offers which do not afford employees 

the opportunity to consider the impact of this major career decision may also 

minimize effectiveness. VSIPs are most effective when offers are definitive, brief 

(but of sufficient duration to allow employees to make proper decisions), and not 

likely to be repeated. 

 Accepting Applications for VSIP 

An agency must accept VSIP applications from all employees eligible under the 

OPM-approved plan. 

The agency must limit the number of actual separations for a VSIP to no more 

than the number in the OPM-approved VSIP plan. 

18. VSIP Offers Must Be Consistent With OPM-Approved 

 Authority 

An agency may offer VSIP only as authorized in the agency-specific authority 

approved by OPM. 

o An agency may not offer or process VSIP actions beyond the expiration 

date stated in the VSIP plan approved by OPM. 

o An agency may not offer VSIP to employees not covered in the VSIP 

Plan approved by OPM. 

19. Computation of Payments 

An agency computes a VSIP on the basis of the lesser of: 

(1) An amount equal to the amount of severance pay the employee would be 

entitled to receive, as computed under 5 U.S.C. 5595(c), without adjustment 

for any previous payment made; or 

(2) An amount determined by the agency head, not to exceed $25,000. 

In counseling employees and providing VSIP estimates, the agency should stress 

that an employee who separates for a VSIP actually receives a net amount after 

mandatory withholding deductions, not the gross amount of the VSIP. 

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In counseling employees interested in voluntarily separating for a VSIP, the 

agency should advise employees that the agency may reduce the gross amount of 

the VSIP for certain outstanding employee debts, including any: 

o Debt the employee owes to the agency; 

o Commercial garnishment (including supplemental fees or court-ordered 

interest); 

o Alimony covered by a court order; and/or 

o Child support covered by a court order. 

20. Waiver of Usual Participation Requirement to 

Continue Health Benefits into Retirement 

Employees retiring in conjunction with a VSIP or VERA authority must have been 

covered under the FEHB Program either: (1) for the last 5 years of their Federal 

civilian service in order to continue such coverage in retirement, or (2) if less than 

5 years, for all service since the employee was eligible for FEHB program benefits 

unless these requirements are waived. 

OPM will grant pre-approved waivers to employees who meet (1), (2), or (3). 

(1) Have been covered under the FEHB Program continuously since the 

beginning date of the agency's latest statutory VSIP authority, or OPMapproved VSIP or VERA authority; 

and 

 Retire during the statutory VSIP or OPM-approved VSIP/VERA period; 

and 

 Receive a VSIP.

(2) Take early optional retirement. 

(3) Take discontinued service retirement based on an involuntary separation 

due to RIF, directed reassignment, reclassification to a lower grade, or 

abolishment of position. 

Employees who meet (1), (2), or (3) do not need to request a waiver. Instead, 

agencies must attach a statement to the employee's retirement application noting 

that the employee meets the requirements for a pre-approved waiver by OPM as 

set forth in OPM's specific instructions to the agency; refer to Benefits 

Administration Letter (BAL) 04-208, dated September 8, 2004. If the VSIP 

authority is based on a specific legal authority, the agency will need to provide an 

appropriate citation. Otherwise, the agency must provide the VSIP authority or 

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VERA approval number that OPM assigned to the agency, and include the 

beginning and ending dates of the agency's VSIP or VERA authority. 

Some employees who retire during a VSIP or VERA period may not be eligible for 

a pre-approved waiver. These include employees who retire on a regular optional 

retirement but do not qualify for a VSIP. Employees who do not qualify for a preapproved waiver may request a waiver on a case-by-case basis by writing to OPM 

and asking OPM to waive the participation requirement in their case. OPM may 

grant waivers to some of these employees; each case will be considered on its 

own merits, based on criteria that are applied to all other retiring employees as 

outlined in the FEHB Handbook in the section entitled Annuitants and 

Compensators. 

BAL 04-208 explains OPM’s policy on waivers of the usual participation 

requirements for employees who retire during a period during which their agency 

has statutory authority to offer VERA or VSIP. This is available from OPM’s 

website at www.opm.gov. 

21. Ensuring that VSIP Separations are Voluntary 

The agency is responsible for ensuring that employees are not coerced into 

separation under VSIP, and for ensuring that the employee’s decision is not based 

on erroneous or misleading information. 

When announcing an opportunity to separate with a VSIP, the agency should 

inform its employees that separation by retirement or resignation for a VSIP is a 

voluntary action by the employee. If the agency finds that an employee was 

coerced into separating, the agency has the responsibility to take appropriate 

corrective action. An employee who separates with a VSIP, but who believes that 

the separation was involuntary, may appeal the basis for the separation to the 

Merit Systems Protection Board. 

An agency’s optional canvass letter to determine potential employee interest in a 

VSIP is not coercion, but is simply an accepted tool to help the agency meet its 

present and future staffing needs. 

22. Processing VSIP Separations 

The “Guide to Processing Personnel Actions” contains processing instructions for 

VSIP separations. 

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(1) For CSRS employees retiring with a VSIP under the VERA option, the 

Guide states that Authority Code “ZLM/P.L. 107-296, VERA No. and date” 

covers employees under the Civil Service Retirement System. 

(2) For FERS employees retiring with a VSIP under the VERA option, the 

Guide states that Authority Code “USM/5USC Chapter 84 and AZM/OPM 

Office, VERA No. and date” covers employees under the Federal 

Employees Retirement System. 

(3) For regular optional retirements, follow the instructions in Chapter 30 of the 

Guide. 

(4) For resignations, see Chapter 31 of the Guide. 

The Guide states that the agency may use blocks 6A through D of the same 

Standard Form 50 to record receipt of the VSIP using Nature of Action 

“825/Separation Incentive” and Authority Code “ZAA/P.L. 107-296” to record the 

employee’s receipt of the VSIP. 

23. Establishing Effective Dates 

An agency may establish “off the rolls” dates for VSIP recipients. Separation 

dates must occur within the time period during which the agency has an OPMapproved VSIP authority, as identified in the agency’s approval letter.

24. Agencies with Statutory VSIP Authority 

Agencies exercising VSIP authority in effect on January 24, 2003, may continue to 

offer VSIP consistent with that authority until it expires. An agency that is eligible 

to offer VSIP under the authority described in this Guide and under any other 

statutory authority may choose which authority it wishes to use, or offer VSIP 

under both. 

25. Waiver of VSIP Repayment Requirement 

An executive branch employee who received a VSIP and accepts employment for 

compensation with the Government of the United States within 5 years of the date 

of the separation on which the VSIP is based, including work under a personal 

services contract or other direct contract, must repay the entire amount of the 

VSIP to the agency that paid it before the individual's first day of reemployment. 

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Voluntary Separation Incentive Payment Guide 

If the proposed employment is with an agency other than the Government 

Accountability Office, the United States Postal Service, or the Postal Rate 

Commission, the Director of the Office of Personnel Management may, at the 

request of the head of the agency, waive the repayment if the proposed 

reemployment is with an Executive agency, and 

(1) The individual involved possesses unique abilities and is the only qualified 

applicant available for the position; or 

(2) In case of emergency involving a direct threat to life or property, the 

individual: 

(a) has skills directly related to resolving the emergency; and 

(b) will serve on a temporary basis only as long as the individual’s 

services are made necessary by the emergency. 

If the proposed reemployment is with an organization in the legislative branch, the 

head of the organization or the appointing official may waive the repayment if the 

individual involved possesses unique abilities and is the only qualified applicant 

available for the position. 

If the proposed reemployment is with the judicial branch, the Director of the 

Administrative Office of the U.S. Courts may waive the repayment if the individual 

involved possesses unique abilities and is the only qualified applicant available for 

the position. 

Some agencies may still have their own buyout laws, or have had buyout laws that 

have expired only recently. Many employees received buyouts under these laws. 

The eligibility of these employees to be reemployed by the Government within 5 

years of buyout receipt or to have prospective employing agencies request buyout 

repayment waivers from OPM depends on the provisions of the buyout laws under 

which these buyouts were paid. 

*Note: The Department of Defense (DoD) has its own VSIP law, Public Law 108-136, and 

the provisions for DoD VSIP recipients who may be subject to VSIP repayment if 

reemployed by DoD differ from the requirements stated above. 

26. Agency Management of VSIP 

Once the agency receives VSIP authority, the goals defined in the agency’s 

implementation plan will assist the agency in monitoring the authority and, if 

necessary, in adjusting the plan while it is underway (for example, to close the 

VSIP window after reaching the agency’s workforce targets). 

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Voluntary Separation Incentive Payment Guide 

 Should the agency find that the basis under which it requested and received 

VSIP from OPM no longer exists, it must suspend its use of VSIP and 

immediately notify OPM. 

 OPM may modify or terminate an agency's VSIP authority if OPM determines 

that the agency is no longer undergoing the substantial reorganization, 

reduction in force, transfer of function, or other workforce restructuring or 

reshaping which formed the basis for OPM's approval of the authority or if the 

agency deviates significantly from the VSIP plan it submitted. OPM may also 

take steps to amend, limit, or terminate an authority to ensure that the agency 

makes VSIP offers in a manner that is consistent with applicable laws, 

regulations or program policies. 

27. 5HVHUYHG

 

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Voluntary Separation Incentive Payment Guide 

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28. OPM Oversight of VSIP 

OPM may modify or terminate an agency’s VSIP authority if OPM determines that 

the agency: 

(1) Is no longer undergoing a period of substantial restructuring or downsizing 

that was the basis for OPM’s approval of the VSIP; or 

(2) Did not administer the authority in a manner that is consistent with 

applicable law or regulations; or 

(3) Failed to meet reporting deadlines or requirements. 

29. Checklist for VSIP Request 

The VSIP checklist is an easy to follow document that can be used to help develop 

VSIP requests. A thorough response to each element on the checklist should 

result in properly submitted VSIP requests and may reduce the amount of time 

needed by OPM to process the request. 
Voluntary Separation Incentive Payment Guide 

Checklist for VSIP Requests

Agency: ___________________________________________ 

Component(s): ___________________________________________ 

Date of Request: ___________________________________________ 

A. The agency’s request includes a: ____ VSIP Implementation Plan ____ Human Capital Plan? 

The intended use of VSIP: 

______________________________________________________________________________ 

______________________________________________________________________________ 

The plan includes: 

1. ____ Identification of specific positions and functions to be reduced or eliminated (identified by 

 organizational unit, geographic location, occupational category, grade level and any other 

 factors related to the position). 

 

2. ____ A description of the categories of employees who will be offered incentives (identified by 

 organizational unit, geographic location, occupational category, grade level and any other 

 factors such as skills and knowledge, or retirement eligibility) 

3. ____ The time period during which incentives may be paid. 

4. ____ The number and maximum amounts of voluntary separation incentive payments to be offered 

 (i.e., approved). 

5. ____ A description of how the agency will operate without the eliminated/restructured positions. 

6. ____ A proposed organizational chart displaying the expected changes in the agency’s 

 organizational structure after the agency has completed the incentive payments. 

7. ____ If the agency has requested VERA, an explanation of how that authority will be used in 

 conjunction with VSIP. 

8. ____ If the agency is offering separation incentives under other statutory authority, a 

 description of how that authority is being used. 

9. ____ Verification that Agency VSIP/VERA reports are up to date (i.e., have been submitted to 

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 OPM in compliance with any existing authorities. 
ES/SWP-02803-03-17

U.S. Office of Personnel Management

Employee Services

1900 E Street, NW, Washington, DC 20415

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