Understanding the Deferred Resignation Program and Its Legal Implications for Federal Employees

What Is a Deferred Resignation Program?

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In early 2025, federal employees have increasingly encountered a new workforce management tool: the Deferred Resignation Program (DRP). The program, especially highlighted within the Department of Defense (DoD), has sparked interest, confusion, and even controversy. At its core, a deferred resignation program is designed to encourage voluntary employee separations by offering a unique transition period—typically one that includes paid administrative leave before the actual resignation becomes effective.

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While some view it as an opportunity to smoothly transition to private sector roles, others, including federal unions and employee advocates, raise concerns about fairness, transparency, and potential coercion. This blog explores the nuances of the DRP, contrasts it with similar programs like DROP (Deferred Retirement Option Program), and outlines what legal options and planning strategies are available to affected federal employees.

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What Is the Deferred Resignation Program (DRP)?

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The Deferred Resignation Program is essentially a voluntary separation initiative. Here’s how it generally works:

• Employees are offered the chance to resign at a future date.
• They are placed on paid administrative leave during the interim period.
• During this leave, they retain benefits and salary but typically do not perform their standard job functions.
• At the end of the specified period, their resignation becomes effective.

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The goal of the program is to reduce the federal workforce without resorting to involuntary layoffs, offering a way for agencies to restructure while providing employees a transitional cushion. In the recent DoD iteration, the DRP even allowed employees to begin working elsewhere during the deferred period.

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Key Features:

• Continued pay and benefits
• Freedom to seek other employment
• Agreed-upon resignation date
• Employer-defined eligibility criteria

But unlike traditional early retirement or buyout programs, the DRP raises a unique legal and ethical question: Are these "voluntary" exits truly voluntary?

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Legal Challenges and Union Pushback

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Federal unions have not remained silent. A deferred resignation lawsuit has resurfaced, challenging the legality and fairness of the DRP, according to Federal News Network reports from April 2025. The primary concerns center around:

• Alleged pressure placed on employees to accept the DRP or face uncertain futures.
• Claims that certain protected employee classes were excluded without cause.
• Potential age discrimination concerns if older employees are disproportionately targeted.
• Lack of clarity and consistency in how the program is rolled out across agencies.

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As one FedWeek report indicated, more legal challenges may be forthcoming, especially if the program expands to other departments or if layoffs follow the expiration of deferred periods.

Affected employees may have recourse through MSPB appeals, EEO complaints, or legal actions under federal employment laws. Legal professionals recommend documenting all DRP-related communications and seeking legal advice before signing any agreements.

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How DRP Differs From DROP and Phased Retirement

It’s easy to confuse the Deferred Resignation Program with the similarly named Deferred Retirement Option Program (DROP), but they serve fundamentally different purposes.

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Deferred Retirement Option Program (DROP):

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• Employees must be eligible for full retirement.
• They officially "retire" for pension purposes but continue working.
• Pension payments accumulate in a separate interest-bearing account.
• They receive a lump sum payout upon final retirement.
• Designed to retain experienced workers while offering retirement incentives.

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Phased Retirement Programs:

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• Allow a gradual reduction in hours/responsibilities.
• Sometimes enable partial retirement payments.
• Focus on knowledge transfer and easing into retirement.

The DRP, by contrast, does not require retirement eligibility and typically involves no accumulation of pension benefits during the deferred period. It is structured around workforce reduction, not pension optimization or mentorship.

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How DRP Affects Retirement, TSP, and Federal Benefits

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While on paid administrative leave under DRP, employees typically retain their FERS, TSP, FEHB, and FEGLI benefits, but several key considerations apply:

1. TSP Contributions: These usually continue unless the employee opts out. However, no additional government matching occurs if salary is suspended.
2. FERS Service Credit: This may count toward service credit for retirement if the employee remains officially on the rolls, but rules can vary by agency.
3. FEHB and FEGLI Coverage: Typically maintained through the end of the leave period, with the option to continue into retirement if the five-year rule is met.
4. Final Pension Calculation: If DRP leads to a break in service before retirement eligibility is reached, employees may lose out on valuable annuity boosts.

Employees should conduct a full benefits audit before accepting DRP terms to ensure they don’t inadvertently forfeit retirement eligibility or face surprise benefit gaps.

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Survey Says: Employee Sentiment Is Mixed

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A recent Federal News Network survey asked federal workers whether they were opting into their agency's deferred resignation offers. Responses varied widely:

• Some welcomed the chance to move on while still drawing a paycheck.
• Others feared it was a tactic to sidestep RIF (Reduction in Force) procedures.
• A segment of employees reported feeling pressured into decisions without sufficient information.

This underscores the need for transparency, independent guidance, and legal support before making decisions that can dramatically affect career and retirement outcomes.

Also read - fers deferred or postponed retirement

What to Do If You’re Offered a Deferred Resignation Option

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If you're a federal employee facing a DRP offer, here's a proactive checklist:

1. Don’t rush to sign anything. Review the agreement in full.
2. Consult a federal employment attorney if you feel pressured or excluded unfairly.
3. Get a retirement benefits review from a FERS or TSP advisor.
4. Check your eligibility for continued health, life, and pension benefits.
5. Ask about rehire potential, severance, and how your final service date will be coded.
6. Consider long-term financial impacts, including potential gaps in annuity eligibility.
   
   

Conclusion: Know Your Rights, Protect Your Future

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The Deferred Resignation Program might work well for some employees looking for flexibility or career change. But for others, especially those nearing retirement or unsure of their benefits, the risks can be significant.

With lawsuits resurfacing, employee surveys highlighting confusion, and legal definitions still being shaped, it’s critical to approach any DRP offer with full awareness. Consult advisors, read the fine print, and protect your hard-earned benefits.

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FAQs

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Is the deferred resignation legal?

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Yes, the deferred resignation program is legal, with OPM providing implementation guidance. However, some labor groups challenged its legality, citing procedural and appropriations concerns. Despite these challenges, the program moved forward across federal agencies.

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What is the VA Deferred Resignation Program?

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The VA DRP allows eligible employees to set a resignation/retirement date (currently April 30, 2025). In return, they receive full pay and benefits until September 30, 2025, typically while on paid administrative leave. This is the second offering of such a program by the Department of Veterans Affairs.

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How many took the DRP?

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Precise government-wide figures are still being compiled. However, for the second round, around 21,000 volunteered at DoD, about 20,000 at the IRS requested it, and approximately 16,000 at USDA signed up across both rounds of the program.

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Which agencies are exempt from deferred resignation? 

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Exemptions typically included military personnel and U.S. Postal Service employees. Additionally, positions critical to national security, public safety, and immigration enforcement were often excluded. Agencies also had the discretion to exempt roles based on their essential operational needs.

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