Retirement Services 

Quality Benefits for the Federal Family

United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number 14 - 110 Date: 10/23/2014

Subject: Instructions for Personnel and Payroll Offices 

Background: OPM published final regulations on August 8, 2014, to implement phased 

retirement. Phased retirement was signed into law on July 6, 2012, and it allows certain 

employees who already meet specific age and service requirements to elect to transition 

into retirement. Employees in a phased retirement status continue to work on a part-time 

basis and draw partial retirement benefits during their continued employment. 

An employee in phased retirement status is still an employee for all purposes unless 

otherwise specified in law or regulation. The employing agency continues to maintain 

the employee’s Federal insurance coverage. The employee may continue to contribute to 

the Federal Thrift Savings Plan. If the employee dies while in phased retirement status, 

death benefits are based on CSRS and FERS provisions for deceased employees. While 

most employees in phased retirement status will transition into full retirement status, 

some employees in phased retirement status may elect to opt out of phased retirement 

status and return to the status of a regular employee. Phased retirement is not an 

employee right. Elections to enter into, or opt out of phased retirement status require the 

mutual consent of both the employee and the employing agency. 

This BAL is part of a series of several BALs covering Phased Retirement. OPM will 

release a series of BALs announcing the availability of the phased retirement election 

form and instruction pamphlets and checklists to accompany the CSRS and FERS 

applications as soon as they are available. 

The phased retirement statutory provisions can be found at 5 U.S.C. 8336a and 5 U.S.C. 

8412a and the regulations can be found at 5 CFR part 831, subpart Q, and 5 CFR part 

848. 

This BAL provides instructions for personnel and payroll offices on phased retirement 

elections. Use The Guide to Processing Personnel Actions to obtain information on 

processing personnel actions. Also, see BAL 14-307, Phased Retirement Instructions for 

Payroll Offices for more information on the codes for processing actions. 

Kenneth J. Zawodny, Jr. 

Associate Director 

Retirement Services
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Section 1: Electing Phased Retirement and the Effective Date of the Election

1.A. Completing Election Form to enter Phased Retirement status

To elect phased retirement, the employee and approving agency official must complete 

Part 1A of Standard Form (SF) 3116, Phased Employment/Phased Retirement Status 

Elections. One copy of this completed form will be included in the retirement package 

and a second copy will be placed on the left hand side of the Official Personnel Folder 

(OPF).

1.B Completing the Retirement Application

The employee will complete only certain areas of the appropriate CSRS or FERS 

retirement application (SF 2801 or SF 3107). Instruction pamphlets, SF 2825 and SF 

3117, will be available to provide guidance for completing the CSRS and FERS 

applications respectively. The agency will prepare a retirement package, to include the 

original copy of the Phased Employment/Phased Retirement Status Elections form (SF 

3116) and all necessary documentation needed to process the retirement. New checklists 

will also be made available in a future BAL for further guidance to agency personnel on 

what to include in the retirement package.

. The payroll provider will close out the Individual Retirement Record (IRR), posting the

effective date of phased employment/phased retirement status (NOAC 615) as the final 

action; and together with the retirement package, the IRR will be sent to OPM via the 

regular retirement process (register, DEG file... ). Detailed guidance for completing the 

IRR is provided in a chart at the end of this Section

1.C. Effective Date of the Election

A phased retirement annuity begins (commences) on the first day of the pay period

following an authorized agency official’s approval of an employee’s phased retirement 

election. Alternatively, the effective date of the election may be on the first day of a later 

pay period as specified on the employee’s election form as long as it has the concurrence 

of the authorized agency official. 

The term “effective date” designates when a personnel action goes into effect. The term 

“commencing date” designates when a CSRS and FERS annuity begins.

The effective date and the commencing date for phased retirement are the same date for 

the purposes of the phased retirement annuity. The effective date is located on Part 1A of 
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the Election Letter and it will be posted on the Individual Retirement Record (IRR) as the 

last action: “Employee in Phased Retirement Status”. 

1.D. Processing the Personnel Action 

 Entry into Phased Retirement NOA 615 

 Phased Retirement Work Schedule Code R (SF 50 Box 32) 

 Part-time hours per week reflects working percentage (SF 50 Box 33) 

 Provide required remarks on the SF 50: 

 M11 – A change to the work schedule or the part-time hours worked during 

phased employment/phased retirement status will result in the termination of 

phased employment/phased retirement status and the phased retirement 

annuity. 

 M12 – Employee may elect to enter full retirement status at any time by 

submitting application SF 2801 for CSRS or SF 3107 for FERS. 

 M13 – If employee’s Phased Retirement terminates for any reason, the 

individual may not re-elect Phased Retirement. 

 M14 – Employee is required to spend 20% of their time mentoring. 

 M15 – FEHB/FEGLI benefits are not affected by phased employment/phased 

retirement. 

See The Guide to Processing Personnel Actions for information on how to process the 

personnel action. 

1.E. Submitting Personnel and Payroll Records to OPM 

 NOAC 615 prompts closeout of IRR 

effective retirement date

 Associate SF 3116, appropriate immediate 

retirement application and IRR and send on 

a register to OPM 

 New DEG value for “Annuity Case Type”: 0

(for initial phased retirement) 
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Nature of 

Action Code

Payroll Agency HR/SSC

615 - Phased 

Employment/

Phased 

Retirement

Phased Retiree FEHB and FEGLI Premium Withholding

 Work Schedule R code prompts withholding of FEHB and FEGLI premiums as if phased retiree 

were working full time.

Individual Retirement Record (SF 2806/SF 3100)

Prompts closeout of IRR effective the begin date of phased retirement. 

 The NOA description and effective date should be on this IRR but no contributions for this 

day should be posted on this IRR. 

 All service history prior to the effective date of phased retirement should be on the closeout 

IRR.

 All agency CY contributions and cumulative totals to (but not including) the effective date of 

phased retirement should be on the closeout IRR. 

 All Leave Without Pay (LWOP), including LWOP for OWCP, should be posted on the 

closeout IRR if applicable for any period of service represented by the IRR.

 All intermittent hours/days worked should be posted on the closeout IRR if applicable for 

any period of service represented by the IRR.

 All part time hours worked and tour of duty information should be posted on the closeout 

IRR if applicable for any period of service represented by the IRR

 Notation on whether military deposit was completed at the agency should be posted.

 Closeout IRR should not have FEGLI, FEHB, Unused Sick Leave or Last Day of Pay

notations.

 Closeout IRR should be associated with retirement application package and sent on register 

to OPM.

NOA 615 prompts beginning date on a new IRR that agency will continue to maintain through the 

phased employment/phased retirement status. 

 The same NOAC (615) and the same effective date as was posted on the close-out IRR 

should be posted on the new IRR as the first Service Action. Deductions will begin on this 

date.

Data Exchange Gateway File (DEG): New DEG Value for “Annuity Case Type” 0 (zero) for “initial 

phased retirement”. OPM requests the agency annuity estimate amount be entered on the DEG when 

available.

Affected HR Code: 

Work Schedule 

Changes to code: R

Retirement 

Actions: Submit a 

Retirement 

application 

(completed per 

Instructions for 

Phased Retirement, 

SF 2825 - CSRS, SF 

3117 - FERS) and 

Phased Retiree 

Election Form, SF 

3116. Retirement 

package should be 

sent to payroll 

provider to associate 

with the closeout 

IRR.
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1.F. Withdrawing an Election for Phased Retirement

An employee in phased retirement status may cancel his or her approved election to enter 

phased retirement status and withdraw the application for phased retirement by 

submitting a signed written request with the agency and obtaining the approval of the 

authorized agency official before the effective date of the employee’s phased retirement 

status. However, the election cannot be withdrawn if OPM has received a court order 

affecting the annuity benefits.

Section 2: Electing Full Retirement Status

2.A. Completing the Retirement Application

An employee in phased retirement status may elect to enter full retirement status at any 

time by submitting an application, SF 2801 for CSRS and SF 3107 or FERS, to their 

Human Resource Office. New instruction pamphlets (SF2826 for CSRS and SF 3118 

for FERS) will be available to provide guidance for completing the applications. The 

agency will prepare a retirement package to include all necessary documentation needed 

from the phased employment period (e.g. FEHB and FEGLI forms) to process the 

retirement. The payroll provider will close out the Individual Retirement Record (IRR), 

posting the appropriate retirement Nature of Action Code 307 (Full Retirement StatusVoluntary) or 308 (Full Retirement Status – Involuntary). Together with the retirement 

package, the IRR will be sent to OPM via the regular retirement process (register, DEG 

file... ). Detailed guidance for completing the IRR is provided at the end of this Section.

2.B. Processing the Personnel Action

See The Guide to Processing Personnel Actions for information on how to process the 

personnel action.

2.C. Submitting Personnel and Payroll Records to OPM 

 NOAC 307 prompts closeout of IRR effective retirement date

 Associate appropriate immediate retirement application and IRR and send on a 

register to OPM

 New DEG value for “Annuity Case Type”: 9 (for final phased retirement)
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Nature of Action Code Payroll Agency HR/SSC

307- Full Retirement 

Status-Voluntary

Individual Retirement Record (SF 2806/SF 3100)

Notate the IRR with description of Nature of Action Code 307: Full Retirement StatusVoluntary. 

Close out this IRR per regular process for a retirement. 

Post the mandatory data on the IRR including - Last Day of Pay, Unused Sick Leave, FEHB 

plan, FEGLI coverage, military deposit status.

 Note that the military deposit status should reflect the status of a deposit during the 

phased retirement period only. (There will be very few situations where there would 

be an allowable military deposit payment).

Retirement 

Actions: Submit a 

Retirement 

application 

(completed per 

Instruction

pamphlet, SF 2526 -

CSRS, SF 3118 -

FERS). Associate all 

the FEHB and 

FEGLI documents 

and any other 

documentation 

needed to support 

the phased 

employment service 

or benefit elections. 

Retirement package 

should be sent to 

payroll provider to 

associate with the 

closeout IRR.
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NOAC 308 - Full 

Retirement StatusILIS

Individual Retirement Record (SF 2806/SF 3100)

Notate the IRR with description of Nature of Action Code 308: Full Retirement Status-ILIS 

Close out this IRR per regular process for a retirement. 

Post the mandatory data on the IRR including - Last Day of Pay, Unused Sick Leave, FEHB 

plan, FEGLI coverage, military deposit status.

 Note that the military deposit status should reflect the status of a deposit during the 

phased employment/phased retirement period only. (There will be very few 

situations where there would be an allowable military deposit payment).

Submit a retirement 

application (SF 

2801, SF 3107) 

completed per 

Instruction 

Pamphlets SF 2826

for CSRS, 3118 for 

FERS and associate 

all the FEHB and 

FEGLI documents 

and any other 

documentation 

needed to support 

the phased 

employment service, 

type of separation or 

benefit elections 

(e.g., OPM Form 

1510, notice to 

phased retiree of 

involuntary 

separation, spousal 

consent form, 

marriage 

certificate....)
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Data Exchange Gateway File (DEG): New value for “Annuity Case Type” Line 210: 

 9 for “ phased full”

OPM requests the Agency Annuity Estimate Amount be entered on the DEG when 

available. 
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Section 3: Employees in Phased Retirement Status who Elect to Opt Out of Phased 

Retirement Status and Return to Regular Employee Status

3.A. Completing Election Form to Opt Out of Phased Retirement status

To opt out of phased retirement, the employee and approving agency official must 

complete Part 2A of the SF 3116 and send a copy to OPM’s point of contact email 

address: phasedret@opm.gov. 

3.B. Processing the Personnel Action

 Opt Out Phased/Employment/Nature of Action Code (NOAC) 616

 Change Annuitant indicator to W, X,Y for CSRS retiree or M, N, P for FERS 

retiree 

 Provide required remarks on the SF 50:

 M16 – The time spent in phased employment/retirement status will be 

credited as part-time service for annuity calculation purposes.

 M17 – Employee’s phased retirement annuity is terminated.

See The Guide to Processing Personnel Actions for information on how to process the 

personnel action.

3.C. Submitting Personnel and Payroll Records to OPM 

No IRR is submitted when an employee opts out of phased retirement.
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Nature of Action Code Payroll Agency HR/SSC

616- Opt out Phased 

Employment/Retirement

Individual Retirement Record (SF 2806/SF 3100)

 None

Affected HR Code: 

Work Schedule 

Changes to code: F

Annuitant Indicator 

changed to W, X,Y

– CSRS, M, N, P -

FERS 

Retirement 

Actions: Fax 

completed SF 3116 

Part 2a to: 

phasedret@opm.gov
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Section 4: How an employee in phased retirement status can temporarily work more 

hours than their scheduled working percentage

An authorized agency official may order or approve an employee in phased retirement 

status to perform hours of work in excess of the officially established working schedule 

in rare and exceptional circumstances that meet the following conditions:

 The work is necessary to respond to an emergency posing a significant, 

immediate and direct threat to life or property and there is no other qualified 

employee available to perform the required work. But, if an agency can anticipate 

an emergency they should make advanced plans to minimize any necessary 

excess work by phased employees/phased retirees.

 The employing agency must inform the employee in phased retirement status and 

his or her supervisor that there are limitations on hours worked in excess of the 

officially established part time working percentage and that records must be 

maintained to document the exception to the working schedule. These records 

must be retained for at least 6 years and be readily available to auditors.

 The agency must also inform the employee in phased retirement status that any 

basic pay received for hours worked outside the officially established part time 

work schedule or working percentage, are subject to retirement deductions and 

agency retirement contributions but will not be included in computing retirement 

benefits.

There is more information on granting an exception to the established work schedule of 

an employee in phased retirement status in the regulations in 5 CFR 831.1715 and 5 CFR 

848.205.

Section 5: Move to Another Agency

5.A. Election to Continue as an Employee in Phased Retirement Status upon a 

Move to another Agency

An employee in phased retirement status may move, without a break in service of more 

than three calendar days, to another agency and retain his or her phased retirement status 

only if the change would not result in a change in the working percentage. 

To move to another agency during phased retirement, the employee in phased retirement 

status and the approving official from the receiving agency must complete Part 3A of the 

SF 3116 and send a copy to OPM’s point of contact email address: phasedret@opm.gov. 

The phased retiree must also submit the SF 3116 to the current (losing) agency and it 

should be stored on the right hand side of the OPF or eOPF. 
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5.B. Election to Discontinue Phased Retirement Status upon a Move to Another 

Agency

If an employee in phased retirement status moves to another agency without a break in 

service of more than three calendar days and the new agency does not approve the 

employee’s continued participation in phased retirement status or the employee wishes to 

discontinue phased retirement status with the new agency, the employee’s phased 

retirement status will end. Phased retirement status ends effective at the end of the day 

on the last day of employment with the current agency.

To end phased retirement status upon a move to another agency, the employee in phased 

retirement status should complete Part 3B of SF 3116 and provide it to [which HR? old or 

new?]. A copy of this form is sent to the phasedret@opm.gov email address to alert 

OPM to the effective date of termination of the phased retirement annuity. See section 

5.B Employees in Phased Retirement Status who Elect to Opt Out of Phased Retirement 

Status and Return to Regular Employee Status in BAL 14-109. Also see The Guide to 

Processing Personnel Actions for information on documenting the personnel action.