Reviewing three commonly misunderstood rules regarding retiring from the federal government. Which of these did you think was true?

Myth #1: You Need an Application for the FERS Special Retirement Supplement (SRS).

False! Federal employees do not need to apply for the SRS, which supplements social security income until age 62. If eligible, retiring feds receive the benefit automatically at no cost. Eligibility mostly depends on the type of retirement. If the FERS pension is unreduced and immediate, any FERS retiree younger than 62 will get the extra income. It is also important remember, as the current White House continues to reduce personnel at federal agencies, that those retiring under VERA (Voluntary Early Retirement Authority) or with a DSR (discontinued service retirement) will not receive the SRS until they reach their MRA (minimum retirement age, between 55 and 57).

What is the difference between VERA and DSR?

The main difference between the two is that with a VERA, retirement is voluntary and with a DSR, the federal employee left their federal job involuntarily. Another difference is that “early out” retirements under VERA are offered through the employing agency while a DSR has to applied for with OPM. There are also no VSIPs (Voluntary Separation Incentive Payments) with a DSR.

Why do some federal employees believe the SRS has to be applied for?

Some federal retirees expecting an SRS benefit still do not receive it. This is not because they “didn’t apply for it,” and most likely not an error, but because the federal retiree is working another job. Like with social security, the SRS is subject to the earnings test. If earned income is more than $23,480 (in 2026), then the SRS is reduced $1 for every $2 received. If they have a job that pays well above this limit, it could completely cancel out their SRS.

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Myth #2: There are NO exceptions to FEHB 5-Year Rule to Keep healthcare plan after retiring.

This is also FALSE! A waiver can be requested to override the FEHB 5-year rule, even if the employee’s agency doesn’t already have pre-approval for a waiver. If the agency is pre-approved to waive the requirement themselves, an HR specialist should provide the retiring employee with a memorandum explaining the authority that the agency has regarding its ability to waive the 5-year requirement. If not pre-approved, the federal worker must contact OPM directly at  (202) 606-1535 to request a waiver.

Approval of the waiver is dependent on the following conditions:

• The federal employee was unable to satisfy the 5-year rule due to circumstances out of their control, and they took reasonable to steps to attain FEHB coverage in the given timeframe.

They must provide evidence that:

• The individual had a compelling reason to believe they were covered under FEHB during the timespan in question, OR
• Their employing agency didn’t allow them to enroll despite being eligible,
• The amount of control the employee had over their FEHB coverage enrollment,
• If they acted to regain coverage at the “earliest opportunity” after learning about loss of FEHB benefits, AND
• If they had “substantial” FEHB coverage during their last 5 years of federal service.

What is the FEHB 5 Year Rule?

For a federal employee to retain their FEHB health care plan after retiring, they must maintain coverage for at least the last 5 years that they were employed by the federal government. Note that this rule is based on 5 continuous years of coverage, not consecutive. What this means is that if there was a break in service, the employee could still be eligible for FEHB in retirement even if they did not have FEHB during that break. So if a federal employee had an FEHB plan for 3 years, took a one year leave without pay in which he didn’t not have FEHB, and then came back to the federal government to work 2 more years and reenrolled in FEHB, those 5 continuous years would count despite not being consecutive. And remember, even if the rule is satisfied, a surviving spouse can only maintain FEHB coverage if they receive a survivorship pension after the federal retiree passes away.

Myth #3: Employees retiring under Special Provisions can’t avoid age-based penalty when making TSP withdraws unless they retire the year that they turn 55.

FALSE – another myth DEBUNKED! This rule is often confused with the TSP early withdrawals rules for regular FERS employees. Typically, when retiring with an unreduced immediate FERS pension at age 55 or older, the age-based penalty is not applicable. If retiring early before age 55, however, they must wait until the usual age of 59.5 to take money out of the traditional TSP and not worry about the steep 10% IRS penalty. For workers retiring under special provisions (firefighters, law enforcement officers, and air-traffic controllers), the rules work different.

Retirement Eligibility for Special Provisions

Similar to the eligibility requirements for both DSR and “early-out” retirements under VERA, employees must be at least age 50 with 20 years of service, or any age with at least 25 years. Unlike regular FERS, though, retiring under special provisions means as long as you go out with an unreduced, immediate pension, you can start taking penalty-free TSP withdrawals at ANY age. This means, so long as they had 25 years of creditable service, these employees could start withdrawing from their traditional TSP assets in their 40s and not be impacted by an age-based IRS penalty. (This rule was added in the SECURE Act 2.0)

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