Editor’s note: Ilene Slatko is a longtime columnist with Rethinking65. Read more of her articles here.

The Trump Administration’s “Fork in the Road” memo pertaining to deferred resignations has the federal workforce up in arms because of the choices presented to them and the very short timeline they’ve been given to think through major life decisions. If any of your clients are federal employees, this is something you need to address with them right away.
On January 28, the Office of Personal Management (OPM) distributed the Fork in the Road memo (that is the actual title), presenting federal employees with the option of “deferred resignation.” Employees have only until February 6 to commit to resigning. If a federal employee resigns under the program, they will retain their full pay and benefits through Sept. 30 2025, and will be exempt from any recent “return to office” requirements. [A U.S. judge on Thursday, Feb. 6, temporarily blocked the Trump administration’s proposed buyout for federal workers until at least Monday.]
The memo notes the federal workforce is being reformed following “four pillars” that include:
- Return to work. Most employees must come into the office five days a week.
- Performance culture. Performance standards will be updated and those who exceed expectations will be rewarded.
- More streamlined and flexible workforce. Most agencies and branches of government will be downsized.
- Enhanced standards of conduct. Employees who engage in misconduct will be prioritized for appropriate investigation and discipline, including firing.
Fear, Anger and Confusion
The memo takes a shape-up or ship out tone, noting, “If you choose to remain in your current position, we thank you for your renewed focus on serving the American people to the best of your abilities and look forward to working together as part of an improved federal workforce … If you choose not to continue in your current role in the federal workforce, we thank you for your service to your country …” Yet no matter what federal employees think of the political climate, the choice presented to them has real financial implications for their retirement.
Could your employees be better off if they take the pay and benefits? Or will bailing out now, before they have thought about all the moving parts, be something they might regret? What do they need to know to make an informed (albeit speedier-than-recommended) decision?
I’ve been thinking about this a lot and have spent the last several days responding to questions from various agency contacts and federal employees who have gone through my retirement programs. I’ve been asked to prepare training programs to be quickly deployed for large numbers of employees all sharing the same concerns about decision points and their future.
Additionally, I’ve been besieged by former clients asking me to help them think through these issues. In my 25 years as a financial advisor, my client list included many federal employees and I’m a subject-matter expert on the Federal Employees Retirement System (FERS).
The Real Story
First and foremost, the majority of civilian employees (federal workers) are dedicated. The pejorative tone of the memo, coupled with the short response time, have contributed to a sense of fear and anger within the civilian workforce. These are the people who process your benefits, oversee important functions, and help keep our government running smoothly. They are not there for fame or fortune. As one person wrote to me, “As a federal civilian feeling very under fire, thank you for your support. I can’t tell you how much it means.”
Think Twice About the Offer
Employment attorneys and union leadership have called for caution in accepting this resignation. The CR (continuing resolution) passed late last year that allows funding for the federal government is good only until March 14, 2025. As Congress works on a new budget, it’s important to remember that when agency budgets are slashed, it impacts payroll and other expenses. Congress passes laws authorizing agencies to spend federal dollars for certain purposes, including mandatory and discretionary budget authority.
The President’s stated goal is to slash government costs. He has said he wants to reduce agencies’ expenses and personnel costs and eliminate some agencies outright. Depending on what is passed by Congress prior to the CR ending, agencies may need to reduce the federal workforce. This could negate the ability of continued payment to the resigned employees.
Here’s what I’d like you, as an advisor, to know and be able to communicate with your clients.
Vacation Time is Questionable
According to the FAQS accompanying the memo, employees who resign can take extended vacation time while placed on administrative leave: “You are most welcome to stay at home and relax or to travel to your dream destination. Whatever you would like.” However, this presumes supervisors don’t need them to do any work. The deferred resignation letter, included at the bottom of the memo says, “I am committed to ensuring a smooth transition during my remaining time at my employing agency. Accordingly, I will assist my employing agency with completing reasonable and customary tasks and processes to facilitate my departure.”
If you have called a federal agency recently or read news reports, you already know many agencies are woefully understaffed. Because of this, I believe there is a small likelihood their supervisors won’t need them to work during the eight months. Working from home will continue for many that take the offer.
More importantly, should an employee change their mind and wish to rescind their decision to resign, the deferred resignation letter clearly states that most agencies will “likely make adjustments in response to my resignation including moving, eliminating, consolidating, reassigning my position and tasks, reducing my official duties, and/or placing me on paid administrative leave until my resignation date.” The net result is that a successful rescission of this decision is unlikely. Make the correct choice now because you may not be able to change it.
Future Employment Prospects Aren’t Clear
Although OPM’s website states that resigning federal employees would be allowed future federal opportunities, it seems more likely that this decision will stay on record, making them appear less than serious about committing to the federal workforce. For some, this may mean abandoning their ideals of helping to make a difference in the government. And will the corporate community welcome their skills?
According to the government, more than 2 million employees make up the federal civilian workforce. They’re employed by federal agencies in all 50 states and multiple U.S. territories, yet the preponderance of these employees live in the Washington, D.C, metro area (449,503). How many will be able to integrate into their home communities, and how many will need to move to find meaningful work? Outside of the D.C. area, Florida (94,014) and California (147,487) account for the largest concentration of federal employees.
The Trump administration hopes 5% to 10% of the federal workforce will resign as a result of this memo, and many of those people will need to find new jobs.
Insurance Considerations
Along with new jobs, any employee accepting this offer will lose their health benefits and other insurance (life, dental/vision) after Sept. 30. Although these resigning employees can carry their FEHB (federal health benefits) for 18 months, they will pay the entire cost plus a 2% administrative fee.
After Sept. 30, many employees who have resigned might need to turn to the Affordable Care Act exchange marketplace for health insurance, especially if they haven’t found work or are working without benefits. In ACA plans, out-of-pocket expenses (normally capped in most of the FEHB plans) could be as high as $6,000 to $9,000 annually.
There are other types of off-exchange plans available as well, such as indemnity plans, critical illness plans, and short-term plans. While these are not qualified health plans (meaning they do not meet ACA coverage requirements), they do have lower premiums and may be a good fit for some healthy people.
Retirement Benefits Could Suffer
If federal employees accept the resignation offer and are eligible for early or normal retirement during the deferred resignation period (before Sept. 30, 2025), they will continue to accrue retirement benefits (employee and agency contributions) during this period, according to the Fork Memo FAQS. In addition, the resigning employee continues to accrue creditable service during this period.
But if resigning employees become eligible for retirement shortly after Sept. 30, it may harm their retirement benefits. In this case, “your agency will review any such requests on a case-by-case basis and may extend a waiver to accommodate reasonable requests,” note the FAQs.
How the Federal System Operates
Civilian federal employees receive an automatic 1% salary contribution into their TSP (Thrift Savings Plan) account each year, but the vesting period is a three-year cliff.
Employees who have contributed to their TSP can roll the money into other qualified plans. Because the IRS stipulates that Roth withdrawals are not tax-free until the first contribution has aged five years and the “retiree” is at least 59 ½ years old — it could be expensive for some federal employees to access their TSP Roth funds should they need to supplement income before they find new jobs.
Many who choose to accept the resignation offer will likely be either new hires or those who qualify for retirement.
Retirees in the federal system must meet both age and service requirements. Most are eligible for immediate “voluntary” retirement at 57 with 30 years of creditable service. In some cases, such as VERA (Voluntary Early Retirement) or DSR (Discontinued Retirement) employees are eligible for retirement at 50 with 20 years or any age with 25 years, but this “opportunity to resign” does not offer these special shortened age and service requirements.
Federal employees old enough to retire may get additional benefits before 62 through the Supplemental Annuity. This benefit ends as Social Security eligibility starts, although those monthly benefits would be forever diminished should they be claimed then. In addition, anyone with earned income prior to attaining their FRA (Full Retirement Age under Social Security) is subject to an earnings test; those who accept this resignation and who must continue to work or those who retire earlier than planned and will go back to work need to determine if they will lose all or part of their Social Security benefits.
The Full Picture Must Be Reviewed
Many employees find themselves between a rock and a hard place. One employee wrote and mentioned how their agency office space has been shrunk during the post-COVID period, making it physically impossible for all employees to return to the office, as dictated in the “four pillars.” Others have received permission to move out of the commuting area of their base office and now face uprooting themselves and family, despite having an agreement in place.
Emotional readiness, not only financial readiness is important. The “Fork in the Road” resignation offer requires that emotional readiness be cast aside.
The “Fork in the Road” memo could spook any federal employee into potentially abandoning their carefully laid retirement plans. Even for employees who choose to adhere to the four pillars of continued employment remain in their current position, the memo paints an ominous future. “At this time, we cannot give you full assurance regarding the certainty of your position or agency but should your position be eliminated you will be treated with dignity and will be afforded the protections in place for such positions,” the memo says.
The FERS retirement puzzle has many interconnected pieces. Retirement timing, selection of allowable survivor annuity options, insurance requirements, and timing of retirement relative to tax implications are a substantial part of the retirement training I provide to employees. Classes detail the sequence of time (age and years of service) they need to fully benefit from their retirement investments and Social Security benefits in retirement. Each employee leaves with a personalized breakdown of their benefits and timetable.
Implications for Other Clients, Too
The memo’s overly simplistic approach to life-changing decisions puts employees and their advisors at a disadvantage. I believe that financial decision-making deserves adequate time to ensure the right outcome, as I’m sure that you do, too.
The Feb. 6 resignation deadline may be hastening some of your clients to make decisions they will later regret. As an advisor, please make any client who is a civilian federal employee aware of the potential risks. Planning now for taxation, retirement and health coverage is the best way to assure and reassure all your clients to be prepared for the future should they find themselves pressured to to decide on taking voluntary early retirement, for any reason.
llene Slatko, CEO and founder of DSS Consulting and the e-learning platform Metamorphosis, coaches clients on building strong financial decision-making skills. She spent over 25 years as a financial advisor and built her business through her seminar series, “Women and Their Money.” Ilene is also a subject-matter expert on the Federal Employees Retirement System (FERS) and speaks to civil-services.