What’s meant by a buyout, or voluntary separation incentive payment?
A buyout, also called a voluntary separation incentive payment (VSIP), generally is offered to encourage eligible employees to separate voluntarily through resignation, early retirement, or regular retirement, during an agency downsizing or restructuring. As a practical matter, buyout offers commonly are coupled with early retirement offers.

A buyout is a lump-sum payment equivalent to an employee’s severance pay entitlement, generally up to a maximum of $25,000. However, payments are taxable for purposes of federal withholding, Medicare, applicable state and local taxes, and Social Security for those covered by that system.

2021 Digital Almanac

Stay Connected

Latest Forum Posts

Ask the Expert

Have a question regarding your federal employee benefits or retirement?

Submit a question