Special Services for Federal Employees Involved in the Reduction in Force (RIF) Process

 

How do I prepare for the Reduction in Force (RIF) process?

Preparing for a RIF involves both understanding the potential impact on your current benefits and your future financial situation. Here are a few steps you can take:

  • Review your benefits: Understand how your federal benefits, i.e. your health insurance, life insurance, and retirement savings, may be impacted.
     
  • Evaluate your TSP (Thrift Savings Plan): Consider how a RIF may affect your ability to access or manage your TSP funds, depending on your age and situation.
     
  • Consult with a financial advisor: Due to the complexities of federal benefits, working with a financial planner who is knowledgeable in federal benefits can guide you to a positive financial future.

How does a RIF impact your Thrift Savings Plan TSP?

If you are separated from federal service, you’ll have several options for your TSP funds:

  • Leave the money in your TSP account: You can leave the balance in your TSP account; it will continue to grow based on your previous investment choices. This may not be the most affordable option out there thanks to the initiation of “no-load funds” at firms like Fidelity and Vanguard but the TSP is still reasonable regarding fees. The downside is the lack of investment options in the TSP with key assets classes.
     
  • Transfer to an IRA or eligible employer plan: You can rollover your TSP balance to your future employer’s retirement plan or a private IRA to gain access to an expanded list of investment options for better diversification. If rolling over to an IRA, fees associated with the new IRA can be offset through the value of broader-based diversification and/or professional management. Also be sure to research your future employer plans to ensure they accept incoming rollovers of funds outside their plan.|
     
  • Withdraw the funds: You can choose to take a partial or full withdrawal from your TSP but be aware of the tax implications and potential penalties if you withdraw before the age of 59½. Penalty-free early withdrawals from the TSP may be available, provided that you meet the requirements for the rule of 55.