Veterans’ Preference in a Federal RIF Changed on 2 September 2026

OPM’s reduction in force final rule took effect on 2 September 2026 and rewrote how federal employees are ranked for retention. Performance now comes before tenure and length of service, and veterans’ preference changed from an ordering tier into 3 or 5 points added to a performance score.

Which RIF do you mean?

“Military RIF” is used for two different things, and the answer is different for each.

• A military reduction in force is the involuntary separation of uniformed service members, run through selection or force-shaping boards to meet authorised end strength. Retention there is a service personnel matter, not a civil service one, and separation pay rather than retention standing is usually the question.
• A federal civilian RIF is the process in 5 CFR part 351 that ranks civil service employees for retention when positions are abolished. This is where veterans’ preference operates, and it is what this page covers.

If you are a veteran working as a DoD civilian, the second one is your situation even though both get called a military RIF. The change described below is significant for you and took effect on 2 September 2026.

What changed on 2 September 2026

OPM published a final rule on 3 August 2026 revising its RIF regulations, effective 2 September 2026. In OPM’s own words the rule makes the regulations

“more streamlined, efficient, and merit-based by prioritizing performance over tenure and length of service when determining which employees will be retained in a RIF and by modifying the types of employees who are excluded from RIF competition.”

Subpart E, Retention Standing, was replaced outright. Sections 351.501 to 351.504 were revised and reorganised, a new § 351.505 covers length of service, and the old records and effective-date sections were renumbered to §§ 351.506 and 351.507.

Under the previous rule, § 351.501 ranked competing employees by tenure group, then by veterans’ preference subgroup AD, A, B, and then by years of service augmented by performance credit. Preference sat above service and performance in the hierarchy, which meant that within a tenure group, every preference eligible ranked ahead of every non-preference employee — whatever their ratings.

That is no longer how it works.

The new order of retention

The amended § 351.501 reads:

“When determining the order of retention in a reduction in force under this part, an agency must classify competing employees on the appropriate retention register on the basis of four factors (tenure of employment, performance, veterans’ preference, and length of service) as follows: (a) By tenure group, with the competitive service tenure group and the excepted service tenure group listed on separate retention registers; (b) Within each tenure group, by performance credit in descending order as determined in Sec. 351.503, as augmented by veterans’ preference as described in Sec. 351.504; (c) When two or more competing employees have the same performance credit, as augmented by veterans’ preference… the competing employees are further ranked in descending order by tenure subgroups… with tenure subgroup I listed ahead of tenure subgroup II, and then by years of service beginning with the earliest service computation date.”

5 CFR § 351.501, as amended effective 2 September 2026

Three structural changes are worth naming separately.

• Competitive and excepted service employees are now on separate registers. They no longer compete against each other.
• The three tenure groups became two subgroups. Each service has a tenure group containing subgroups I and II, defined in § 351.502.
• Length of service dropped to the last tiebreaker, behind performance and behind tenure subgroup.

How performance credit is calculated

Because performance now drives the ranking, the arithmetic in § 351.503 matters more than anything else in the rule. Each rating of record is scored:

The values are summed. Entitlement to performance consideration is based on the three most recent summary level ratings of record received during the 4-year period before the RIF notices are issued, so the maximum performance credit is 21. An agency may set a cutoff date before notices go out, after which no new rating of record is counted.

Note the cliff between Level 3 and Level 2: Fully Successful is worth 3 points, and Minimally Satisfactory is worth nothing at all. There is no partial credit below Fully Successful.

What veterans’ preference is now worth

The amended § 351.504 converts preference into points:

The subgroup labels survive — the rule still requires employees to be identified as AD, A or B on the retention register — but they now determine a point value rather than an ordering tier. That distinction is the whole change, and here is what it does in practice:

Under the previous rule the ordering of those three employees, all in the same tenure group, was fixed by subgroup: AD, then A, then B, and ratings could not disturb it. Under the amended rule the non-preference employee ranks highest.

Put in a way that is useful for planning: 3 points is roughly one and a half rating levels on a single appraisal, since the gap between Fully Successful and Exceeds is 2 points. Preference is now an advantage that a materially better performer can overcome, rather than a protection that outranks performance.

Which rule applies to your RIF

The transition provision is unambiguous, and it turns on the notice date:

“This rule is effective September 2, 2026. An agency that issued a RIF notice before the effective date of the rule must process the RIF under the regulations in effect when the RIF notice was issued. An agency that issues a RIF notice on or after the effective date must apply the RIF provisions as amended by this final rule.”

So if you are holding a notice dated before 2 September 2026, the old subgroup ordering governs your retention standing and the points system does not apply to you. If the notice is dated on or after it, the new arithmetic does.

One practical warning. Codified regulation text lags amendments, and this one has not caught up: as of 1 September 2026 the eCFR still displayed the pre-amendment § 351.501, with the old subgroup ordering and no points system. The Federal Register document is the controlling source, and it is cited above. The eCFR link in the sources is pinned to 1 September 2026 deliberately, so it keeps showing the superseded text this article compares against.

Military retirees: when you count as preference eligible

Being a veteran is not the same as being preference eligible for retention, and for military retirees the rule is restrictive. Under § 351.504(b) a retired member of a uniformed service counts as preference eligible under part 351 only if at least one of these applies:

• the military retirement is based on a disability that resulted from injury or disease received in the line of duty as a direct result of armed conflict, or was caused by an instrumentality of war incurred in the line of duty during a period of war;
• the retired pay is not based upon 20 or more years of full-time active service, not counting active duty for training; or
• the employee has been continuously employed in a covered position since 30 November 1964 without a break of more than 30 days.

Officers add a further condition: an employee who retired at the rank of major or above, or equivalent, is preference eligible under part 351 only if they are a disabled veteran as defined in 5 U.S.C. § 2108(2) and meet one of the three conditions above.

The upshot is that a conventional 20-year retiree without a qualifying disability is generally not preference eligible for RIF retention, and therefore sits in Subgroup B with zero added points. That surprises people, and it mattered less when preference was one factor among several than it does now that points decide ties.

Military service and length of service

Length of service is now the final tiebreaker rather than a primary factor, but the military credit rules still decide close cases. Under the new § 351.505 all active duty in a uniformed service is creditable, with two limits:

• A retired member covered by § 351.504(b) gets credit only for active service during a war, or in a campaign or expedition for which a badge has been authorised — unless they are preference eligible, in which case total active service counts.
• No dual credit. Active duty performed concurrently with civilian federal employment cannot be counted twice.

The campaign-or-expedition condition here uses the same authorisation concept as the protected veteran categories — see active duty wartime or campaign badge veteran for which operations qualify and why authorisation rather than receipt is the test.

The protections that survive

Two provisions matter more now that the ranking is less favourable to veterans.

Armed Forces restoration rights remain a mandatory exception. Section 351.606 continues to require agencies to provide a mandatory exception for employees with restoration rights arising from uniformed service. If you are serving, or have recently returned, that is a separate and stronger protection than retention standing, and it is not a discretionary decision by the agency.

But if the whole competitive area is abolished, none of the ranking happens. Section 351.605 lets an agency abolish an entire competitive area without following the retention-standing sections at all. In that case the agency is not required to rank competing employees, must not apply assignment rights, and the notice must state that the employee was not ranked relative to others because every position in the competitive area is being abolished. Mandatory exceptions under § 351.606 still apply.

This is the most important thing for a veteran to understand about the current framework: preference points only help you if there is a register. Where the competitive area itself goes, there is no register to be high on.

Preference in a RIF is not preference in hiring

These are separate mechanisms in separate parts of the regulations, and being covered by one does not tell you about the other. Hiring preference operates through examination points and category rating; retention preference operates through the register described above. The definitions of who qualifies differ too — the retiree restrictions in § 351.504(b) are specific to retention.

For how preference works on the way in, including the frequently misstated question of whether it reaches excepted service positions, see competitive vs excepted service. Note that the RIF rule now puts competitive and excepted employees on separate retention registers, so the competitive-excepted distinction has become more consequential on the way out as well as on the way in.

On hiring freezes: a freeze suspends recruitment actions, but it is an administrative posture rather than a regulation, it is usually time-bound, and it does not change part 351. The two interact in one place worth knowing — a freeze can leave a tentative offer unfulfilled while a RIF proceeds elsewhere in the same agency, because the authority to abolish positions and the authority to fill them are exercised separately. Any freeze current when you read this will have its own scope and exceptions, so read the agency notice rather than a summary.