Are you in the Buyout Zone?

The IRS is the latest agency to join the 2012 buyout parade. Employees in other agencies should study it because it may be the model for similar buyouts gove...

So how rare, tough and targeted are Uncle Sam’s 2012 buyouts? Example:

The Internal Revenue Service this week will send out about 1,600 buyout (VSIP) and early out (VERA) to a targeted group of enforcement personnel. The first 270 who accept by the March 16 deadline, and agree to leave by May 3, will get the buyout. Buyouts (called a basic severance allowance) will be one week’s salary for each of the first 10 full years of service and two weeks pay for each full year beyond 10 years plus an additional 25 percent of the “otherwise applicable amount for each full three-months over the final full year.” Bottom line: That’s a maximum $25,000 payment before deductions.

Workers at IRS (and other agencies that are or will be offering buyouts) who get a full buyout will take home much less after deductions.

Workers in other agencies who are hoping to get a buyout/early- out offer this year should study the IRS program carefully. It is not — like the buyouts of the 1990s — agencywide. The IRS program, for example, is limited to specific categories of compliance workers that were not offered buyouts when IRS opened them up last year.

The 2011-2012 buyouts are very different from those offered during the 1990s when the Clinton administration sought to eliminate 272,000 civil service jobs using buyouts, early retirement offers and layoffs. In some cases, the buyouts were agency-wide and agencies consolidated or contracted out many services that had been done in-house. Veterans of that era say it hurt many agency HR operations (which were targeted for buyouts) and many have never fully recovered.

A number of agencies are offering buyouts now, and others (like the General Services Administration) plan them. Agencies get the most bang for the buck by offering buyouts early in their fiscal year (Oct. 1) and many peak in February and March. Yesterday’s column listed past and current buyouts, and asked readers if $25K, after deductions, was worth it? Here’s what some said:

Mike J., said his buyout price is $67,000. “Assuming once Congress gets done with us, I will get a retirement pension, my price is $335,000. Grade 9 step 10, with five more years to max out my retirement, so $67,000 x 5 years.”

Good luck with that!

Robyn from the Treasury Department said:

“Personally, I have neither the years nor the age to receive a VERA/VSIP offer. (Later bloomer from the private sector). But many of my coworkers do.

In conversations during the late 2011 round of buyouts, one coworker told me she would go if the buyout amount (after taxes) was enough for her to purchase a new vehicle. I did not ask if that purchase would be for a Lamborghini, Lexus, Acura or Kia. Although I suppose we can rule out Kia since the $25k after taxes would probably cover that. ”

Or, think used Yugo.

Finally, this summary from an IRS enforcement officer:

I got a VERA/VSIP offer with an off-the-rolls date of May 3 … This offer seems to be going to domestic (as opposed to international specialists) revenue agents who are not working in a specialty field of any sort (review, global high wealth, subject matter experts, employee plans/exempt organizations, etc.). I do not know for sure, but I believe collection personnel also received the offer. This would be the enforcement personnel in IRS.

I crunched the numbers and decided not to go eight weeks early. It came down to about a $900 per year reduction in my pension before the age reduction for going two months before eligibility. In my group alone, five out of eight Revenue agent series personnel (which includes the manager) received the buyout offer and only one plans to take it. At step 10 his high-three has been frozen for some time.” Only one plans to take it. He is eligible and his high-three has been fixed at grade 13 step 10 for some time.”


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