Receiving less than the full VSIP amount


Q. My agency has offered a Voluntary Separation Incentive Pay (incentive is $25,000). I have worked 26 years and nine months and am considering this offer. Someone told me that not everyone will receive the full incentive of $25,000. Is there a calculation used to determine the actual amount one will receive?

A. According to the Office of Personnel Management, “An agency computes a Voluntary Separation Incentive Payment 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.

“The amount that the employee actually receives is less than the amount determined using the above computations because of the deduction of taxes, including Federal, state, Social Security, and Medicare, as appropriate.”

You’ll find the coverage and computation rules at


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

Leave A Reply