VA Deferred Resignation Program: What It Is

The VA Deferred Resignation Program is a voluntary option offered to certain U.S. Department of Veterans Affairs employees that allows them to resign from their positions while remaining on the payroll for a set period, typically receiving pay and benefits without performing work duties. This program is part of a broader federal workforce reduction effort announced in early 2025, and it is designed to encourage voluntary departures to avoid involuntary layoffs.

Background and Purpose

The program emerged from the Office of Personnel Management’s (OPM) “Fork in the Road” directive, which was sent to most federal employees in late January 2025. The goal was to shrink the federal workforce by offering a deferred resignation option: employees who chose to resign by a specified deadline would continue to receive their salary and benefits until a set date (often September 30, 2025), regardless of their actual last day of work. The VA, as one of the largest federal agencies with over 480,000 employees, implemented its own version to align with this initiative while trying to manage its staffing needs.

The program was controversial from the start. Labor unions and some lawmakers argued that it might be illegal or that the government lacked the authority to pay employees who are not working. However, the administration defended it as a cost-saving measure that would reduce the need for layoffs. For the VA specifically, the program was seen as a way to reduce administrative overhead while preserving critical frontline services, though critics worried about losing experienced staff in areas like benefits processing and healthcare.

How the Program Works

Under the standard deferred resignation offer, an eligible employee who opts in agrees to resign from their position, but their resignation is not effective until a future date. During the interim period, the employee is placed on administrative leave and does not perform any work. They continue to receive their regular salary, health insurance, and other benefits until the resignation date. After that date, they are no longer employed by the VA.

Key features of the program include:

• Employees must submit a resignation notice by a specific deadline (the original deadline was February 6, 2025, though it was extended for some agencies).
• The resignation date is typically set for September 30, 2025, but may vary based on the employee’s length of service or other factors.
• Employees are expected to return any government-issued equipment (laptops, badges, phones) before the resignation date.
• Participation is voluntary, and employees who do not opt in continue working as normal.

It’s important to note that the program is not a buyout or early retirement. It does not provide a lump-sum severance payment; instead, it provides continued pay for a limited period. Employees who are eligible for retirement may also choose to retire instead, which could offer different benefits.

Eligibility and Exclusions

Not all VA employees were eligible for the deferred resignation program. Generally, the offer applied to most full-time and part-time employees who had been with the VA for at least one year. However, certain positions were excluded, including:

• Military personnel (active duty and reserves)
• U.S. Postal Service employees (though they are not part of the VA)
• Employees in positions related to national security or public safety, as determined by the agency
• Some law enforcement and healthcare workers, especially those in direct patient care roles, were initially excluded to ensure continuity of care.

For VA healthcare workers, the exclusion was particularly significant. The VA operates one of the largest healthcare systems in the country, and losing nurses, doctors, and support staff could jeopardize patient care. As a result, many clinical positions were not offered the deferred resignation option, or the offer was rescinded for those roles after initial confusion.

How to Decide: Pros and Cons

If you are a VA employee considering the deferred resignation program, it’s crucial to weigh the benefits against the drawbacks. Here are some factors to consider:

Pros:

• You receive pay and benefits for several months without working, which can provide a financial cushion while you search for a new job.
• You avoid the stress of an involuntary layoff, which could come later if the VA implements reductions in force (RIFs).
• You may be able to use the time to pursue other opportunities, start a business, or transition to retirement.

Cons:

• You lose your job, and the pay period is limited—after September 30, 2025, you are unemployed.
• You may not be eligible for unemployment benefits during the deferred period because you are still receiving pay.
• If you are close to retirement, you might lose out on future pension accrual or other benefits that come with continued service.
• There is uncertainty about whether the program will be honored as promised, especially if legal challenges arise.

Before making a decision, it’s wise to consult with a financial advisor or a human resources specialist at the VA. They can help you understand your specific situation, including how the program affects your retirement, health benefits, and taxes.

Common Problems and Misconceptions

One common misconception is that the deferred resignation program is a “buyout”—it is not. A buyout typically provides a lump-sum payment, often with the option to retire early. The deferred resignation program simply pays you your normal salary for a fixed period, after which you are separated.

Another issue that arose was confusion about the resignation deadline. The original deadline was February 6, 2025, but it was extended to February 10 for some agencies. Many employees were unsure whether they could change their minds after opting in. In most cases, once you accept the offer, it is binding, but there were reports of some employees being allowed to withdraw if they had not yet received a final agreement.

There were also problems with the exclusion of healthcare workers. Initially, the VA sent out emails to all employees, including those in clinical roles, offering the program. Later, the VA clarified that many of those employees were not eligible, causing confusion and frustration. Some employees resigned under the assumption they were eligible, only to find out their resignation was not accepted or was rescinded.

Finally, there is the question of whether the program is legal. The American Federation of Government Employees (AFGE) and other unions filed lawsuits challenging the program, arguing that Congress had not appropriated funds for this purpose. As of the time of writing, the courts have not issued a final ruling, so the program’s future remains uncertain.

Comparison with Other Federal Options

The deferred resignation program is not the only way to leave federal service. Other options include:

• Early Retirement: If you are at least 50 with 20 years of service, or any age with 25 years, you may be eligible for early retirement under certain circumstances. This provides a pension immediately, though it may be reduced.
• Voluntary Separation Incentive Payments (VSIP): Commonly known as a buyout, this is a lump-sum payment of up to $25,000 (before taxes) for employees who voluntarily resign or retire. The VA has used this in the past, but it is not part of the current deferred resignation program.
• Regular Retirement: If you meet the age and service requirements, you can retire normally and begin receiving your pension and other benefits.
• Resignation without Deferral: You can simply resign and leave immediately, but you would not receive any special payments.

Each option has different tax implications and long-term effects on your benefits. The deferred resignation program may be more attractive if you need a steady income while job hunting, but a VSIP might give you more cash upfront.

Costs and Financial Considerations

While the program provides continued pay, there are costs to consider. For example, your health insurance premiums will continue to be deducted from your paychecks, as will any other payroll deductions like retirement contributions (if you are still contributing). You will also owe taxes on the income, so you may want to adjust your withholding to avoid a large tax bill later.

Another financial aspect is the impact on your Thrift Savings Plan (TSP). If you stop contributing during the deferred period, you may miss out on employer matching contributions. You can change your TSP contributions at any time, so you might consider continuing to contribute to maximize your retirement savings.

If you are planning to retire after the deferred period, you should check whether the time on administrative leave counts toward your service credit. In most cases, it does, because you are still an employee, but it’s best to confirm with HR.

Safety and Legal Protections

If you decide to participate, ensure you understand your rights. The program is voluntary, and you cannot be forced to resign. If you feel pressured or coerced, you may have legal recourse. Also, if you are a whistleblower or have a pending complaint against the VA, resigning could affect your ability to pursue those claims. It’s advisable to speak with an employment attorney before signing any agreement.

From a safety perspective, the program does not involve any physical risks, but there is financial risk. If the program is struck down by the courts, you might not receive the promised pay, and you could be left without a job. This is a significant risk that you should weigh carefully.

Alternatives to Deferred Resignation

If you are not sure about the deferred resignation program, consider these alternatives:

• Stay in your job: If you are not ready to leave, you can decline the offer and continue working. The VA may still implement layoffs later, but you would have more time to prepare.
• Request a transfer: You might be able to move to a different position within the VA or another agency, which could give you more stability.
• Negotiate a different arrangement: In some cases, you might be able to negotiate a phased retirement or a part-time schedule instead of resigning.
• Seek external opportunities: Start looking for a new job now, but do not resign until you have a solid offer. This avoids the risk of being unemployed after the deferred period.

Each alternative has its own trade-offs, and the best choice depends on your personal circumstances, career goals, and financial situation.

Frequently Asked Questions

Can I change my mind after opting in?

Once you submit your resignation notice, it is generally binding. However, if you have not yet received a written agreement from the VA, you may be able to withdraw. Some employees were allowed to rescind their decision if they realized they were ineligible. It’s best to contact HR immediately if you have doubts.

Will I continue to accrue leave during the deferred period?

Yes, because you remain an employee until the resignation date, you will continue to accrue annual leave and sick leave. However, you will not be able to use that leave unless you are called back to work, which is unlikely. Any unused leave will be paid out in a lump sum after your resignation becomes effective.

Does the program affect my retirement benefits?

It can. If you are eligible to retire, you may choose to retire instead of taking the deferred resignation. Retiring gives you a pension for life, whereas the deferred resignation only provides temporary pay. If you take the deferred resignation and then retire later, your pension will be based on your service credit, which includes the deferred period. Consult a benefits specialist to see what is best for you.

Is the program available to part-time employees?

Yes, part-time employees are generally eligible, but the pay and benefits during the deferred period would be prorated based on your regular work schedule. You should check with HR to confirm your specific situation.

What happens if the program is ruled illegal?

If a court rules that the program is unlawful, the government may be required to stop payments and reinstate employees who resigned. However, this is not guaranteed, and you could be left without a job. This is a risk you assume when participating.

Template

In summary, the VA Deferred Resignation Program offers a way for eligible employees to leave the agency with continued pay for a limited time, but it comes with significant risks and considerations. If you are considering it, gather all the facts, seek professional advice, and make a decision that aligns with your long-term goals.

Related

• Simple Feedback Form Design: 7 Key Principles
• Word Document Form Fields: How to Use Them
• Product Issue Form: How to Write One That Works