Key Takeaways:
- Leaving federal service early does not automatically result in the loss of earned retirement benefits; understanding eligibility and options is crucial.
- Deferred retirement, frozen benefits, and the fate of TSP and FEHB coverage depend on your years of service, system (FERS or CSRS), and timing of separation.
How to Navigate Leaving Federal Service Before Retirement Age: Rules and Options
It’s a widespread belief that leaving federal service before retirement age means losing your pension and federal benefits. In reality, the process is far more nuanced, shaped by service years, retirement system, and the choices you make during separation. This guide will separate fact from fiction, clarify common concerns, and provide a detailed, government-sourced overview on what to expect if you exit federal employment before reaching minimum retirement age.
What Happens If You Leave Before Retirement?
Impact on federal retirement eligibility
Federal retirement eligibility depends on specific age and service combinations set by the Office of Personnel Management (OPM). If you resign before meeting the minimum required age or service years, you are not eligible for an immediate annuity. However, this does not automatically forfeit your earned service credit. The Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS) have provisions for those who separate early, allowing for the possibility of deferred or postponed benefits, provided you meet minimum service requirements.
How unused service credit is treated
If you leave federal service before retirement age, your earned federal service credit is preserved, as long as you do not withdraw your retirement contributions. This credit can later be used toward a deferred annuity or reinstated if you return to federal service. However, unused sick leave and certain types of temporary service are generally not credited if you separate before eligibility for an immediate annuity.
Who qualifies for deferred retirement
Deferred retirement is an option for those with at least five years of creditable civilian service under FERS (or five years under CSRS) who leave before reaching the minimum retirement age. When you reach the qualifying age, you can apply for a deferred annuity based on your previous federal service, provided you kept your retirement contributions in the system and did not take a refund.
What Are the Rules for Early Separation?
FERS separation requirements
Under FERS, the minimum requirement for vested benefits is five years of creditable civilian service. If you separate before reaching the minimum retirement age (generally 57 for most employees as of 2026) and before the service requirement for an immediate annuity (commonly 10 years for MRA+10 or 30 years for full benefits), you may still be entitled to a deferred benefit if you leave your contributions in the system.
CSRS early resignation guidelines
For employees under CSRS, the minimum vesting period is also five years of creditable civilian service. If you separate before becoming eligible for an immediate annuity (commonly age 55 with 30 years of service), you can qualify for deferred retirement at age 62, again provided you leave your contributions with the retirement fund.
Minimum service requirements
Both FERS and CSRS require you to accrue at least five years of creditable civilian service to qualify for any future federal retirement benefit. Service periods of less than five years do not trigger eligibility for deferred retirement, and in those cases, withdrawing your contributions is often the only practical option.
Can You Defer or Freeze Federal Benefits?
Overview of frozen FERS benefits
If you leave federal service before reaching retirement age, you may freeze your future pension rights—known as a deferred benefit. The pension you eventually receive will be calculated using the service length and high-three salary average you had at the time of separation, with no credit for salary increases or further service after that date.
Timing for deferred annuity eligibility
Deferred benefits under FERS are typically available once you reach your minimum retirement age (MRA) and have at least 10 years of creditable service. However, with only five years of service, eligibility begins at age 62. The rules differ slightly for CSRS, where deferred annuities generally begin at age 62, regardless of service length beyond the five-year minimum.
How CSRS deferral works
CSRS deferral allows you to apply for a deferred annuity if you have worked at least five years and have kept your retirement contributions on deposit. The pension amount will reflect your service and pay as of separation. Unlike FERS, cost-of-living adjustments do not begin immediately for most deferred CSRS annuitants.
What Happens to Your TSP and FEHB?
Options for the Thrift Savings Plan
After leaving federal service, you keep the money in your Thrift Savings Plan (TSP) account and retain the right to manage or withdraw your TSP funds according to plan rules. You may leave the funds in the TSP, roll them over to another eligible account, or begin withdrawals, subject to applicable rules and restrictions in effect as of your year of separation. While you cannot make new TSP contributions after separating, the account can continue to grow based on investment performance.
FEHB continuation rules after separation
Federal Employees Health Benefits (FEHB) coverage generally ends at midnight on the last day of the pay period in which you separate. You are usually offered an option to continue FEHB coverage for up to 18 months under temporary continuation provisions, though this coverage is fully self-paid. Continued FEHB into retirement is only available to those eligible for an immediate annuity who have been enrolled in FEHB for at least five years prior to retirement.
Effect on other federal benefits
Other benefits, such as life insurance (FEGLI), flexible spending accounts, and long-term care insurance, are typically discontinued upon separation. Some may be converted or ported to personal policies, but federal contributions and preferred terms often end with federal employment.
Can You Withdraw FERS Contributions Early?
Withdrawal procedures and limits
After leaving federal service, you may request a refund of your FERS or CSRS retirement contributions. Procedures are outlined by the OPM and require completion of specific forms and documentation. The refund process often takes several weeks to months and is subject to tax withholding and potential penalties if you are under a certain age.
Pros and cons of withdrawing funds
Withdrawing your retirement contributions provides a lump-sum payment, but it erases your earned service credit for federal annuity purposes. This decision is generally irrevocable—if you return to government work later and want those years to count, you must repay the withdrawn amount with interest to restore your service credit.
Potential impact on future eligibility
Taking a refund of your contributions means forfeiting any right to a deferred or future federal pension based on those years. If you are not certain whether you might return to government service or want the option of a deferred benefit, it is important to fully understand these consequences before making a decision to withdraw.
Do You Lose Your Federal Service Credit?
Conditions for service credit retention
You retain federal service credit for retirement purposes as long as you do not take a refund of your retirement contributions. This service can count toward a future deferred annuity or be added to new service if you return to federal employment.
Returning to federal service after resigning
If you later return to federal employment, your prior service typically counts toward retirement eligibility and annuity calculation, provided you did not withdraw your contributions. In some cases, you may need to redeposit any contributions you withdrew, plus interest, to fully restore service credit.
How prior service affects future retirement
Previous federal service contributes to meeting retirement eligibility thresholds, increasing your pension, and may affect qualification for certain benefits. However, gaps in service or refunded contributions can complicate annuity calculations, so keeping records and understanding the impact of your choices is vital.
Questions to Consider Before Leaving Early
Personal and financial impacts
Leaving before retirement age can affect your expected pension, benefits coverage, and long-term plans. Carefully consider how separation impacts your income in retirement and your access to federal programs like FEHB.
Timelines for benefit eligibility
Understand when you become eligible for a deferred annuity and whether you meet the conditions for any continued insurance benefits or other entitlements.
Long-term considerations
Think about the possibility of returning to federal service, how withdrawing contributions may limit future options, and your broader retirement goals. Document your service history and maintain contact information for OPM or your agency to facilitate future claims.
Frequently Asked Questions About Early Departure
When are deferred benefits payable?
Deferred FERS or CSRS retirement benefits generally become payable when you reach the eligible age—typically your minimum retirement age for FERS with at least 10 years of service, or age 62 with at least 5 years. For CSRS, deferred annuities normally begin at age 62 after meeting service minimums.
Is health coverage always lost?
FEHB coverage is not always lost immediately. While regular coverage usually ends upon separation, you may be able to continue it temporarily at full cost or qualify for coverage as a deferred retiree if you meet strict requirements for immediate annuity payment and prior enrollment.
How long can you wait to claim benefits?
You may delay claiming deferred retirement benefits for years after you become eligible. However, there are procedural steps for applying, and waiting longer does not typically increase the size of your deferred pension under the federal rules as of 2026.
