Federal Employees Retiring in 2026: What to Do Before Year-End

Federal employees retiring in 2026 need to complete five actions before year-end. Each decision affects monthly income, health coverage, or 2026 tax liability.

First, confirm your continuous Federal Employees Health Benefits (FEHB) enrollment under OPM's actual eligibility rules. Second, make your 2027 health plan elections during Open Season. Third, maximize final Thrift Savings Plan (TSP) contributions up to the IRS 2026 limit of $24,500.

Fourth, pick a separation date that fits your retirement system and tax situation. Fifth, submit a complete retirement application to your agency human resources office.

The year-end window spans two distinct deadlines. Open Season and final-paycheck TSP contributions follow a calendar-year schedule, while the 2026 leave year for most federal employees does not end until January 9, 2027.

The 2026 Federal Benefits Open Season runs November 9 through December 14, 2026. The leave-year end sets the date past which you lose annual leave hours above the 240-hour carryover ceiling.

The checklist below walks through the year-end sequence in the order most agencies publish in their retirement guides. Federal Pension Advisors, a retirement planning firm specializing in federal employee benefits, publishes year-end planning resources covering this timeline each fall. Federal employees can also use the TSP calculator to estimate potential Thrift Savings Plan growth and evaluate how contributions may affect their retirement savings goals.

What Federal Employees Retiring in 2026 Need to Do Before December 31

Federal employees retiring in 2026 face another significant FEHB premium increase. The average enrollee share rises 10.9% in 2027, the third consecutive year of double-digit increases. These rising costs are part of several important benefit updates for the coming year. Review the 2027 FEHB changes for federal employees to understand how premium increases, coverage options, and other program changes may affect your benefits.

That follows 13.5% in 2025 and 12.3% in 2026. The rate of increase is declining, but the cumulative effect still makes the 2027 FEHB election one of the more financially consequential decisions on your year-end list.

The core year-end sequence: verify retirement eligibility, lock in 2027 health coverage, finish TSP contributions, confirm a retirement date, submit paperwork, and update beneficiaries.

Start the process at least 60 days before your chosen separation date. That gives your agency human resources office time to process the application and resolve common errors before they affect your first annuity payment.

Confirm Your Retirement Eligibility and the FEHB Five-Year Rule

Before anything else, confirm you meet two eligibility tests: the retirement system's age-and-service requirement and the FEHB five-year rule.

Under the Federal Employees Retirement System (FERS), the newer of the two civil service systems, you qualify for an immediate unreduced annuity in three ways. You can retire at the Minimum Retirement Age (MRA), the earliest age a FERS employee can retire with an immediate annuity, with 30 years of service. You can also retire at age 60 with 20 years, or at age 62 with 5 years. However, retirement eligibility is only one part of the decision. You should also consider how healthcare expenses may affect your retirement income. Review the latest Blue Cross FEHB premiums for 2027 to understand potential health insurance costs before choosing your retirement date.

The Civil Service Retirement System (CSRS) generally covers employees hired before 1984. It uses age 55 with 30 years, age 60 with 20 years, or age 62 with 5 years.

CSRS employees must also generally have been in a CSRS-covered position for at least one of the two years immediately preceding retirement. This requirement can affect employees who transferred to a non-CSRS position late in their careers.

The FEHB five-year rule is the most important health benefit test for 2026 retirees. According to OPM, you must have been continuously enrolled in FEHB (or covered as a family member under another person's FEHB enrollment) to carry FEHB coverage into retirement.

The required enrollment period is either the five years of service immediately preceding retirement, or the entire period of service since your first opportunity to enroll if that period is shorter. Certain qualifying coverage through TRICARE or CHAMPUS can also count toward the requirement.

The rule measures coverage, not a specific plan. You keep eligibility even if you change plans, switch carriers, or adjust your enrollment type during those five years.

A break in coverage while continuously employed and eligible can disqualify you from carrying FEHB into retirement. OPM has authority to waive the rule in narrow circumstances such as a Reduction in Force, buyout, or discontinued service retirement. Previous enrollment can also count across certain breaks in federal service.

As federal benefits writer Reg Jones has noted, OPM will not generally grant a waiver if it was within the employee's control to meet the eligibility requirement. Confirm your enrollment history with your HR office before setting a separation date.

Use the 2026 Open Season to Lock In 2027 Health Coverage

The 2026 Federal Benefits Open Season runs from Monday, November 9 through Monday, December 14, 2026. This is your last routine chance to change FEHB until November 2027.

Existing FEHB and FEDVIP enrollments generally continue automatically into the new plan year unless you change them. If OPM terminates or substantially restructures your current plan, your agency or OPM will provide instructions.

For employees retiring in 2026, Open Season decisions matter more than for active employees. Once you separate, you cannot switch plans mid-year without a qualifying life event. At the same time, federal pay changes can affect other retirement calculations, including your High-3 average salary. Understanding how a federal pay freeze could affect your High-3 calculation can help you evaluate another important factor before choosing your retirement date.

Three programs apply during this window: FEHB, the Federal Employees Dental and Vision Insurance Program (FEDVIP), and the Flexible Spending Accounts program (FSAFEDS). FEDVIP continues smoothly into retirement, and you can enroll each Open Season even after retirement.

FSAFEDS has important limitations for retirees. Federal annuitants generally cannot enroll in or continue FSAFEDS participation after retirement, apart from certain reemployed-annuitant situations. The two FSAFEDS account types behave differently at separation:

• Health Care Flexible Spending Account (HCFSA): Generally reimburses only eligible expenses incurred before your separation date. Submit pre-separation claims within the applicable claims period.
• Dependent Care Flexible Spending Account (DCFSA): You can use the remaining balance for eligible dependent-care expenses within the applicable period. Account rules and plan-year cutoffs apply.

Compare 2027 premiums carefully. According to OPM, the average enrollee share of FEHB premiums rises 10.9% in 2027, and premium changes within specific plans vary widely. Use OPM's plan comparison tool at opm.gov to run side-by-side totals before committing.

Maximize Your Final 2026 TSP Contributions

The TSP (Thrift Savings Plan) is the federal government's tax-advantaged retirement savings program. It has its own year-end deadline, separate from your retirement date.

According to IRS Notice 2025-67, the 2026 elective deferral limit for the TSP is $24,500. That is the maximum you can contribute from your pay during the year. Catch-up contributions add significant room for older employees:

• Age 50 and older: additional $8,000 catch-up
• Ages 60 to 63: higher super catch-up of $11,250 under the SECURE 2.0 Act of 2022
• FERS employees contributing at least 5% of basic pay: 1% automatic agency contribution plus up to 4% matching

One SECURE 2.0 provision became binding in 2026 for higher-paid employees. Participants whose prior-year FICA wages exceeded $150,000 must make any catch-up contributions on a Roth basis.

If you fall in that group, confirm your TSP election routes to Roth. That way your final-year catch-up contributions actually post to the account.

To hit the full limit before separating, divide the remaining contribution room by the number of pay periods left in 2026. Submit the adjusted election through your agency payroll system or myPay well in advance of the next cutoff. As you prepare for retirement, it is also important to understand how annual cost-of-living adjustments may affect your future annuity. Review the latest 2027 FERS COLA updates to understand what changes may mean for your retirement income.

Final-pay-period deductions typically post to your TSP account within a few business days of payroll processing. But what matters for the IRS limit is the calendar year in which the contribution is credited, not the pay period it covers.

A contribution deducted from a late-December pay period that is processed and credited in January generally counts toward the following year's limit. Confirm with your agency payroll office before relying on a late-year contribution to hit the maximum.

If you plan to roll over the TSP balance or begin withdrawals in retirement, review the options now. According to the Federal Retirement Thrift Investment Board (the agency that administers the TSP), separated participants have several options.

You can take multiple partial withdrawals, establish installment payments, purchase a life annuity, or combine withdrawal options. You can generally change installment amounts and frequencies, and stop or restart payments through the My Account portal.

A TSP life annuity purchase is generally irrevocable once completed.

Choose the Right Retirement Date: December 31, 2026, or January 9, 2027?

Your retirement date is one of the most consequential year-end decisions. It sets when your annuity begins accruing, how much of your annual leave converts to a lump sum, and the tax year in which that lump sum is paid.

According to the Interior Business Center, which processes retirements for several federal agencies, nearly 40% of all federal employee retirements happen at the end of the year. Employees pick those dates to maximize their annual leave lump sum payout. However, retirement planning also involves reviewing your Thrift Savings Plan (TSP) investments and understanding how market performance may affect your retirement savings. See the TSP fund performance for September 2026 for a closer look at how the different TSP funds performed.

Two dates dominate the end-of-year conversation for 2026: December 31, 2026, and January 9, 2027.

These are dates worth comparing, not universal recommendations. The best date for any individual depends on retirement system, actual leave balance, use-or-lose status, agency payroll calendar, and tax situation. Confirm your effective separation date and lump-sum calculation with your HR office before committing.

2026 year-end retirement date comparison

Source: OPM Pay and Leave Administration guidance, OPM retirement annuity payment schedule, and the 2026 NFC and GSA payroll calendars.

A key payment-timing point: OPM pays annuities on the first business day of the month for the preceding month. A December 31, 2026, retirement produces a January 1, 2027, annuity commencement date. Your first regular payment lands on or about February 1, 2027.

A January 9, 2027, retirement produces a February 1, 2027, commencement date. Your first regular payment lands on or about March 1, 2027. OPM typically pays interim amounts for several months while finalizing the full case.

Your actual lump-sum annual leave payout depends on the unused leave credited to your account at separation. It also depends on whether you have already forfeited any use-or-lose leave.

Retiring on the final day of the leave year does not automatically guarantee the maximum possible payout. It preserves hours above the 240-hour carryover ceiling only if those hours remain on your record at separation. Because your retirement date can affect annual leave payouts and other retirement benefits, review these federal retirement date considerations for 2027 before choosing your separation date.

The IRS taxes the lump sum as ordinary income. That is one reason some retirees deliberately push the payout into a year with no salary.

Submit Your Retirement Application and Verify Your Records

Retirement paperwork takes longer than most employees expect. OPM has publicly described multi-month processing timelines for new retirement cases. Interim payments cover the gap at a reduced percentage of the estimated full benefit.

Submit the complete package to your agency HR office, which forwards it to OPM.

Core documents to prepare include:

• SF-3107 (FERS) or SF-2801 (CSRS) retirement application
• SF-2818 for FEGLI continuation decisions
• Verified Service Computation Date (SCD) for retirement
• Beneficiary designations: TSP (TSP-3), FEGLI (SF-2823), unpaid compensation (SF-1152), and FERS/CSRS (SF-3102 or SF-2808)
• Marriage certificate and any court orders affecting survivor benefits

Pull your Official Personnel Folder (OPF) and treat two record checks as separate tasks.

First, verify your High-3 average salary (the average of the highest three consecutive years of basic pay). Review your actual pay history and SF-50s covering that period.

Second, verify your SCD for retirement. It determines creditable service used in your eligibility test and in the years-of-service multiplier of your annuity formula.

An inaccurate SCD can shrink your annuity through lost service credit. An inaccurate pay record can shrink your High-3. The two problems have different fixes.

Federal Employees Group Life Insurance (FEGLI) decisions need resolution now. Decide whether to continue Basic and Optional coverage into retirement. These decisions should be part of your broader retirement preparation, especially as you coordinate your insurance elections with your retirement application and processing timeline. For the latest update, read what the OPM retirement backlog falling below 10,000 means for federal retirement applications.

Under the 75% Reduction option, Basic coverage decreases by 2% of its pre-reduction amount each month. The reductions begin the second month after you reach age 65 or retire, whichever is later, until 25% of the original coverage remains.

You pay no Basic premiums once the reductions begin. The No Reduction option keeps the full Basic benefit for life but requires continued premium payments throughout retirement.

Plan for the 2027 COLA and FERS Supplement

Federal retirees receive a cost-of-living adjustment (COLA) each December 1, first appearing in the January annuity payment.

According to the Congressional Research Service, the CPI-W increased 3.6% from the third quarter of 2025 to the third quarter of 2026. Beginning in January 2027, the CSRS COLA is 3.6% and the FERS COLA is 2.6%.

The gap exists because of how FERS adjustments work. If the CPI increase is more than 3%, the FERS adjustment is 1% less than the CPI increase.

The 2027 COLA does not apply uniformly to everyone retiring in 2026. According to OPM, retirees whose annuities began on or before December 31, 2025, generally receive the full 2027 adjustment.

Retirees whose annuities begin during 2026 generally receive a prorated COLA. The proration is one-twelfth of the applicable adjustment for each full month the annuity has been in payment status before the COLA effective date. For example:

• A CSRS retiree whose annuity begins in September 2026 would receive 3/12 of the 3.6% CSRS COLA, or 0.9%, in January 2027.
• A CSRS retiree whose annuity begins in November 2026 would receive 1/12 of the 3.6% CSRS COLA, or 0.3%.
• A FERS retiree whose annuity begins in November 2026, if age 62 or older, would receive 1/12 of the 2.6% FERS COLA, roughly 0.2%.

More importantly for most 2026 FERS retirees, FERS and FERS Special COLAs do not apply until age 62, except for disability, survivor benefits, and other special provision retirements. A 58-year-old FERS retiree will not see a COLA on the regular annuity until the January after turning 62.

FERS employees who retire before age 62 with eligibility for an immediate unreduced annuity may qualify for the FERS Special Retirement Supplement (SRS). The SRS approximates the Social Security benefit earned during federal service. It continues until the month before the retiree turns 62. Changes in the federal workforce can also influence when employees consider retirement and how they evaluate their benefits. Learn more about these considerations in our guide to federal workforce changes and retirement strategy.

The SRS is subject to an annual earnings test on earned income (wages and net self-employment earnings). The thresholds resemble the Social Security pre-full-retirement-age earnings test.

Investment income, annuity payments, and TSP withdrawals generally do not count toward the earnings test. Confirm SRS eligibility, estimated amount, and earnings-test exposure with your HR office before separating.

Make Final Tax and Beneficiary Decisions Before Year-End

Several tax and beneficiary items are easier to fix before separation than after. Update TSP beneficiary designations through tsp.gov using Form TSP-3. A marriage, divorce, or birth during 2026 should trigger a review.

Review FEGLI beneficiaries on SF-2823 and unpaid compensation beneficiaries on SF-1152. These do not transfer automatically from one program to another.

On the tax side, 2026 is likely your last year of W-2 federal wages. TSP Required Minimum Distribution (RMD) ages depend on year of birth under the SECURE 2.0 Act of 2022:

• Participants born between 1951 and 1959: RMDs begin at age 73
• Participants born in 1960 or later: RMDs begin at age 75

If you are a separated TSP participant, you can generally delay the first RMD until April 1 of the year following the year the age requirement is reached. Subsequent RMDs are due by December 31 each year.

Participants who have already begun taking RMDs in prior years should confirm the 2026 distribution is scheduled before year-end. That timing matters to avoid the IRS excise tax on missed distributions. Rules differ for inherited accounts.

Social Security claiming is a separate decision from the SRS. The FERS Special Retirement Supplement generally ends at age 62 regardless of when you actually claim Social Security. Electing to delay Social Security past 62 does not extend the SRS. To better understand how much you may receive before age 62, use our FERS Supplement Calculator to estimate your potential monthly benefit.

Evaluate your Social Security claiming strategy on its own merits rather than assume that claiming at 62 is automatically the best option. According to the Social Security Administration, delaying benefits past Full Retirement Age increases the monthly benefit by roughly 8% per year of delay up to age 70.

Final Year-End Takeaway

Federal employees retiring in 2026 have a short window to lock in decisions that drive lifetime retirement income. Four pieces matter.

Lock in 2027 health coverage during Open Season through December 14. Finish final TSP contributions through year-end payroll and use the Federal Paycheck Calculator to estimate how your federal pay and deductions affect your take-home pay. Set a retirement date that fits your retirement system and leave situation. Submit a complete application package that reaches OPM without gaps.

The order matters because each step feeds the next.

If you're inside the final 60 days before your target retirement date, work through the checklist in sequence rather than tackling items in parallel. A missed FEHB enrollment or an inaccurate SF-50 can take months to correct. You cannot move the retirement date once the application is in OPM's queue.

For complex situations involving CSRS Offset, deferred annuities, the FERS Supplement earnings test, or divorce decrees affecting survivor benefits, Federal Pension Advisors offers a free consultation. The firm specializes in federal employee benefits and can review the full timeline before you submit. Schedule a free federal retirement consultation to discuss your situation and understand the factors to consider before filing.

FAQ: Federal Employees Retiring in 2026

When is the deadline to retire from federal service in 2026?

There is no single federal deadline. Your retirement is effective on the date you choose and submit on your SF-3107 or SF-2801 application. Many 2026 retirees target December 31, 2026, or January 9, 2027, to align with the end of the pay period, end of the leave year, or calendar-year tax planning.

Confirm your effective date with HR before committing.

Can I keep my FEHB in retirement if I retire in 2026?

Yes, if you have been continuously enrolled in FEHB (or covered as a family member) for the five years of service immediately preceding retirement. The entire period since your first opportunity to enroll also qualifies if that period is shorter.

Qualifying TRICARE or CHAMPUS coverage can count. The rule tracks coverage, not a specific plan.

How much can I contribute to the TSP before retiring in 2026?

The 2026 elective deferral limit is $24,500 per IRS Notice 2025-67. Employees age 50 and older can add an $8,000 catch-up. Ages 60 to 63 qualify for a higher $11,250 super catch-up under the SECURE 2.0 Act.

Catch-ups must be Roth if prior-year FICA wages exceeded $150,000.

Is it better to retire on December 31 or January 9?

It depends on retirement system, leave balance, use-or-lose status, and tax goals. January 9, 2027, is the end of the 2026 leave year, which can preserve leave above the 240-hour carryover ceiling.

December 31, 2026, delivers a calendar-year break and an earlier annuity commencement date. Neither is universally best.

When will I receive my first FERS annuity payment after retiring in 2026?

OPM pays annuities on the first business day of the month for the preceding month. A December 31, 2026, retirement produces a January 1, 2027, commencement and a first regular payment on or about February 1, 2027. A January 9, 2027, retirement produces a February 1 commencement and a first regular payment on or about March 1, 2027.

Do federal retirees get the full 2027 COLA if they retire in 2026?

Not automatically. OPM generally pays the full 2027 COLA to retirees whose annuities began on or before December 31, 2025.

Retirees whose annuities begin during 2026 receive a prorated COLA. The proration is one-twelfth of the applicable adjustment for each full month the annuity has been in payment status before December 1, 2026.

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Disclaimer: 

This article is for educational and informational purposes only and should not be considered financial, investment, tax, or legal advice. Federal retirement benefits, including FERS, CSRS, FEHB, FEGLI, and TSP, depend on individual circumstances and applicable federal regulations, which may change. Retirement eligibility, annuity calculations, contribution limits, COLA adjustments, health coverage, and tax implications may vary based on your service history and personal situation. Always verify current information with the Office of Personnel Management (OPM), the Internal Revenue Service (IRS), the Social Security Administration (SSA), and your agency's human resources or benefits office before making retirement decisions. Federal Pension Advisors is not affiliated with or endorsed by OPM or any U.S. government agency. This content does not establish an advisor-client relationship.