ProFeds Founder, Chris Kowalik, dives into a popular question about if it is better to quit/resign before being RIF’ed.
Key takeaways:
- What happens if you quit/resign?
- What options employees have if they are already eligible to retire
- What benefits you may give up if you quit/resign
To Watch on YouTube, CLICK HERE
Additional Resources:
- Link to full RIF training series: FedImpact.com/RIF-training-series
- Local workshop locations and dates: FedImpact.com/attend
- To be introduced to a local financial professional: FedImpact.com/request-to-meet
Subscribe and listen to episodes below or on your favorite podcast apps such as iTunes, Spotify, iHeartRadio, Audible, Amazon Music and YouTube!
Please GIVE FEEDBACK on this episode (and submit ideas for future episodes).
Transcript of this episode coming soon:
Originally released on 3/72025
*******************
We have a lot of federal employees right now who are worried about what’s coming with this RIF, and they’re even asking the question, “Is it better than I just quit outright instead of going through the RIF process?” And so definitely a lot to think about with this, but federal employees are feeling overwhelmed. The mental anguish with all of this.
They’re deciding like, “Is it just time to go so I can rip the Band-Aid off and not have to deal with all of this chaos?” Valid question for sure. Some of you might even be concerned about like, “What would my next employer think if I quit versus being laid off? Does that matter?”
We did a webinar recently on a topic completely unrelated to this, but I was surprised how top-of-mind this concept is for a lot of federal employees. This idea of quitting before you’re fired raised a lot of questions for me so that I could raise them to you on this episode.
You guys know me. I’m Chris Kowalik, the founder of ProFeds. Welcome to the Fed Impact Podcast, where we offer candid insights on your federal retirement. I’m going to be really candid with you on this particular episode because this whole topic of getting out of federal service before you’re fired, before you’re asked to even leave, is one that can have some pretty important consequences that I want everyone to be aware of.
Reduction in Force – Is it Better to Quit Before I’m RIF’ed?
The actual act of quitting, let’s talk about this. Here, you’re not being asked to leave, you’re not taking a voluntary separation, anything like that. You just deciding you’ve had enough. There is no strategic advantage to quitting versus waiting until the ax drops.
There’s mental aspects of all of this, of just the stress that all this is causing, and that’s totally valid. If that’s your reasoning, then by all means, you can certainly consider this, but I want you to realize, before you do it, what you would be giving up if you quit.
There are some questions that were posed in this webinar in the Q&A area regarding, “If I leave now, do I lock it in the High-3 versus the High-5 that it might change to?” And all of that. Let me share with you that the legislation that’s on the table right now calls for a change to the High-5 from the High-3 for newly hired employees.
It’s not going to affect people who are already in government service, and it hasn’t even passed yet. The idea that this is going to be some sweeping change, pull out the rug from underneath you, that’s not quite the way this is going. But there is legislation to potentially remove the special retirement supplement or change it in some way. This is the program that looks a lot like Social Security, but is paid prior to the age of 62.
The supplement is on the chopping block, but I’ll be honest, it has been on the block for longer than I’ve been working with federal employees, which is a couple of decades. What is the likelihood this is going to change? I don’t know, beats me. There’s been a lot of things that have changed at lightning speed since the new administration took office, and so this certainly could be one of them. But as far as the pension itself, there’s no changes to that pension.
What If I am Already Eligible to Retire?
If you’re already eligible to retire and you’re like, “Should I just quit and go ahead and leave?” By all means go, right? You’re already eligible. You’re in the driver’s seat. You can decide when to take that pension. And if you have at least five years of service, you’ve already locked yourself in for a pension, assuming that you’re not doing things like treason and espionage and all that stuff, which would be a reason for your pension to be taken away.
I’m going to guess that all the people watching this video have not done those things. So we know that at least you have a pension there if you decide to walk out the door. It might not be paid right away if you’re really young, but there is a pension there.
Benefits You May Be Giving Up
But what if benefits change between now and then? Okay, so if you quit, there is no RIF reinstatement, meaning that if it comes out that they let too many people go and they need to rehire people back, you will not be on that list. You just left. This is assuming if you retire, that’s kind of a different deal.
But if you just walk out the door and resign, then you have no reinstatement privileges with respect to competing for jobs and that type of thing. You also get no unemployment because you quit. This was a voluntary action on your part, and so the state unemployment that you would naturally be able to receive if you’re fired, you will not receive that if you walk out the door.
There’s also going to be no severance pay, right? Because severance is designed for people who are fired. You were not fired. You will also not have the voluntary separation incentive payment that is a potential for you.
If, in fact, you are with one of those agencies that will offer the VSIP as part of their RIF package, you may be able to get some cash to perhaps offset some of what you’re losing by having to leave. But again, if you voluntarily walk out the door and quit, you aren’t in line for that cash buyout of the VSIP. There’s a lot of things to consider.
I would hate for you to be short-sighted about these decisions that you’re making because of the stress. I mean, I know the stress is important and it’s valid, but from a financial standpoint, you might find yourself stressed about something different if you leave and only realize that you’ve given up an awful lot of benefits to be able to do so.
Definitely a lot to think about. There’s a lot of levers in all of this that I know we’re trying to figure out which one to pull and how to make all this work. But we’re here to help you get all this stuff straight, at least get your head on straight, figuring out what you’re going to be entitled to if you leave federal service.
I highly discourage you quitting from the federal government, unless you just simply can’t take it anymore. Otherwise, stick around. Let the agency’s RIF process play out and see what’s offered to you to be able to leave.
Get Connected & Next Steps
Hopefully we’ll stay connected. If you’ve listened to plenty of these podcasts, you know that we love to stay connected with federal employees. The way to do that here from the audio version of the podcast is to pull out your phone, text the word “podcast” to the number 224-444-6144, and we’ll be nice and connected. You’ll have access to all the tools and resources that we have right on our website. Thank you for joining us. We’ll see you next time.
*********************************
For an introduction to a financial professional in our network: FedImpact.com/request-to-meet
View all podcast episodes: FedImpact.com/podcasts
Find a comprehensive retirement workshop for your area: FedImpact.com/attend
