Federal Severance Pay Calculator

by

Reviewed by: David Chen, CFA

Financial content reviewed for accuracy and regulatory compliance.

Use this tool to estimate your potential federal severance pay entitlement based on your annual salary, years of creditable service, and eligibility for the veteran/age bonus factor.

Federal Severance Pay Calculator

Calculated Result

$0.00

Calculation Details

Enter the required variables and click Calculate to see the steps.

Federal Severance Pay Formula

1. Weekly Pay (W) = Annual Salary (A) / 52
2. Service Factor (F) = 10 + Years of Service (Y) + (Y × 0.1 × Bonus Factor (B))
3. Total Severance Pay (S) = W × F
4. Max Severance = 52 × W
5. Final Severance Pay = MIN(S, Max Severance)

Formula Sources: U.S. OPM Severance Pay, Cornell Law 5 CFR 550.707

Variables Explained

  • Annual Salary (A): The rate of basic pay received immediately before separation. This is used to calculate the Weekly Pay rate.
  • Years of Creditable Service (Y): Total years, including fractional service, creditable under your retirement system. A minimum of 2 years is required for severance pay.
  • Bonus Factor (B): A binary (0 or 1) factor that is applied if the employee is a military veteran or is over the age of 40 at the time of separation. This adds an extra 0.1 weeks of pay for each year of service.
  • Target Severance Pay (S): (Optional) The desired total severance amount. If entered, the calculator will solve for one of the other unknown variables (A or Y).

What is federal severance pay calculator?

Federal severance pay is a benefit provided to federal employees who are involuntarily separated from service and are not eligible for immediate retirement. This pay is designed to provide financial assistance during the transition period following job loss. Eligibility is strictly defined by Title 5 of the U.S. Code and OPM regulations, generally requiring at least 12 months of continuous civilian employment.

The calculated severance pay is not a one-time lump sum; rather, it is paid in the same increments as regular salary until the entitlement period ends or the employee is reemployed by the Federal Government. The maximum total payment is capped at 52 weeks of weekly basic pay, regardless of the years of service.

How to Calculate Federal Severance Pay (Example)

Let’s calculate the severance pay for an employee with an annual salary of $90,000, 10 years of service, and eligible for the bonus factor.

  1. Determine Weekly Pay (W): Divide the annual salary by 52 weeks: $$W = \$90,000 / 52 \approx \$1,730.77$$
  2. Calculate Service Factor (F): Add 10 weeks (base bonus) to the years of service, and then add the bonus component: $$F = 10 + 10 + (10 \times 0.1 \times 1) = 21 \text{ weeks}$$
  3. Calculate Total Severance Pay (S): Multiply the Weekly Pay by the Service Factor: $$S = \$1,730.77 \times 21 \approx \$36,346.17$$
  4. Check Maximum Limit: The maximum is 52 weeks of pay: $$S_{max} = 52 \times \$1,730.77 \approx \$89,999.99$$
  5. Final Result: Since $\$36,346.17$ is less than the maximum, the total severance pay is $\$36,346.17$.

Related Calculators

Frequently Asked Questions (FAQ)

What is the maximum severance pay I can receive?
The maximum severance pay entitlement is 52 weeks of basic pay. Payments stop once the total calculated entitlement is reached or if the employee becomes reemployed in the Federal Government.

Do I need to pay taxes on severance pay?
Yes, federal severance pay is subject to Federal, state, and local income taxes, as well as Social Security and Medicare taxes (FICA), just like regular salary.

What happens if I get a new federal job while receiving severance?
Severance payments cease immediately upon reemployment with the Federal Government. If the second period of federal employment also ends in involuntary separation, the previous severance period is taken into account for calculation purposes.

Is unused annual leave included in severance pay?
No, unused annual leave is paid out in a lump sum upon separation, separate from the severance pay calculation and entitlement period.

V}

Leave a Comment