If you’re a federal employee separating from service on September 30, 2025, it’s important to understand how the Federal Deferred Resignation Program (DRP) and related benefits affect your financial future. When your federal employment ends, your benefits and pay do not stop all at once. Instead, there are important decisions to make and deadlines to keep in mind to ensure a smooth transition. 

Below is a comprehensive checklist of steps former federal employees should take once their employment ends. 

Health and Insurance Benefits 

Health Insurance (FEHB) 

• Coverage Continuation: Most employees are eligible to continue FEHB for up to 18 months under COBRA, though you’ll pay the full premium plus an administrative fee. 
• Retiree Coverage: If you meet retirement eligibility and were continuously enrolled for five years, you may carry FEHB into retirement. 

Dental and Vision (FEDVIP) 

• Similar to FEHB, dental and vision coverage can continue into retirement if eligibility requirements are met. If not, you may need to seek private or marketplace alternatives. 

Flexible Spending Accounts (FSA) 

• FSAs end with your separation. Expenses incurred after your resignation date are not reimbursable, so submit outstanding claims as soon as possible. 

Health Savings Accounts (HSA) 

• Your HSA funds remain yours after separation. You can use them for qualified medical expenses, though contributions may stop if you’re no longer covered by a high-deductible health plan. 

Group Life Insurance (FEGLI) 

• You may be able to convert or port your FEGLI coverage to an individual policy. Retirees may keep some coverage if eligibility rules are met. 

Disability Insurance 

• Short-Term & Long-Term Disability: These benefits generally end with your federal employment. Consider private coverage if you anticipate needing protection in the future. 

Federal Long Term Care Insurance Program (FLTCIP) 

• Unlike other benefits, FLTCIP can usually be continued into retirement or after separation. Premiums will need to be paid directly to the insurance carrier. 

Retirement and Savings Plans 

Federal Employees Retirement System (FERS) 

If you’ve been contributing to FERS during your federal service, you have several important decisions to make after separation: 

Deferred Retirement Eligibility: 

• With at least five years of creditable civilian service, you may qualify for a deferred annuity beginning at age 62. 

• With at least ten years of creditable service (including five years of civilian service), you may qualify for a deferred annuity at your Minimum Retirement Age (MRA), which falls between ages 55 and 57 depending on your birth year. 

Refund of Contributions: 

• You can request a refund of the retirement contributions you personally made during your federal career. 

• Your contributions are returned tax-free, but any interest earned is taxable.  

• You may be able to roll over the refund to your TSP, a 401(k), or an IRA to defer taxes.  

• Important: If you receive a refund, you forfeit your right to a deferred annuity, unless you later return to federal service and repay the refund plus interest to restore credit for that service.  

Other Key Considerations: 

• Review your service history to confirm eligibility and update beneficiary designations. 

• For more information on FERS visit our recent blog: Understanding the Federal Employees Retirement System (FERS) or the OPM Retirement Center.   

Thrift Savings Plan (TSP) 

• Your TSP account remains intact after separation. You can leave funds invested, roll them over, or begin withdrawals (subject to age and eligibility rules). 

• Consider seeking guidance on rollover strategies to IRAs or other retirement plans. 

Other Agency-Specific Retirement Plans 

• Some agencies offer supplemental retirement or savings plans. Confirm payout rules and deadlines for distribution. 

Pay and Leave 

Last Paycheck 

• Expect your final salary payment to arrive after your separation date. Confirm with your agency’s payroll office when this will be processed. 

Accumulated Annual Leave 

• Any unused annual leave is paid out as a lump sum, typically with your final paycheck or shortly after.  

Accumulated Sick Leave 

• Sick leave is not paid out but may count toward service credit for retirement if you are eligible under FERS. 

Other Financial Considerations 

Unemployment Compensation 

• As a former federal employee, you may be eligible for unemployment benefits through your state of residence. Apply promptly, as each state has its own rules and processing timelines. 

Final Thoughts 

The end of federal service on September 30, 2025, marks the start of an important transition. The DRP and related benefits can provide stability if you take the right steps. Review your options carefully, make timely elections, and don’t hesitate to seek professional guidance to align your federal benefits with your long-term financial goals. 

If you’re a former federal employee navigating this process, we can help you evaluate your retirement, insurance, and investment options to create a personalized plan for your next chapter. 

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