Last Updated: September 23, 2026 Reading Time: 11 min
Since September 2, every federal RIF notice runs under an assignment right that can push you down as many as three grades or grade intervals, five for a preference eligible with a compensable service-connected disability of 30% or more (5 CFR 351.701(b)(2)). The next question on every one of those notices is what happens to your pay, and the usual answer is wrong twice. The two-year clock is not a cliff: pay retention picks up the day grade retention ends, subject to the 150%-of-maximum cap that can trim the rate (5 CFR 536.304(b)). And a reorganization, as opposed to a RIF or a reclassification, may give you no retention right at all. Here are the rules from 5 U.S.C. 5361 through 5366 and 5 CFR part 536, with the arithmetic for a GS-13 step 5 in Washington placed in a GS-11 job, including the year it takes the lower grade to catch your frozen rate.
Frequently Asked Questions
Does my pay drop the day I'm moved to a lower grade?
No. If the move came from a RIF and you served 52 consecutive weeks at the higher grade, or from a reclassification of a position that had been classified at the higher grade for a continuous year, 5 U.S.C. 5362 keeps your former grade for pay purposes for two years. You are paid as a GS-13 while sitting in a GS-11 job, and you get every raise and step a GS-13 gets (5 CFR 536.205(a)).
What happens at the end of the two years? Is that when the pay cut hits?
Usually not a cut at all. Pay retention takes over and freezes your rate where it is (5 CFR 536.304(b)(2)), unless the 150% cap bites. For a GS-13 step 5 in DC moved to GS-11, the day-one cut is $0. What you lose is speed: from then on you get half of each increase in the GS-11 ceiling, not a full GS-13 raise.
How long until the lower grade's pay catches up to my frozen rate?
For a GS-13 step 5 in DC moved to GS-11: at 2% annual raises, 20 years; at 3%, 14 years; at 1%, 40 years; and if raises stayed at 0% indefinitely, never; a single frozen 2027 only delays the convergence by a year. The GS-11 DC ceiling has to reach $164,961, a 48.5% rise from $111,087, because your rate keeps moving up at half speed too.
Do I have a right to grade retention if my agency reorganizes?
No. 5 CFR 536.201 makes grade retention mandatory only for a reduction in force or a reclassification. A reorganization falls under 5 CFR 536.202, which says an agency may grant it. Pay retention works the same way under 536.302. If you are being downgraded under a management-directed reassignment rather than a formal RIF, get the agency's retention decision in writing before you accept.
Does my retained grade protect me in the next RIF?
No. 5 U.S.C. 5362(c)(2) and 5 CFR 536.205(b) bar the retained grade from being used for RIF procedures. On the next retention register you compete as the GS-11 you formally are, even while being paid $138,024.
Do I still get step increases?
During the two years of grade retention, yes; you hold steps at the retained grade. Once you are on a retained rate, no: 5 CFR 531.404 gives within-grade increases only to an employee paid at less than the maximum rate of the grade, and a retained rate is by definition above that maximum. Step progression stops until the rate is caught or you are promoted.
If I get promoted back up, do I get a raise?
Often not a dollar. 5 CFR 531.214(d)(5) runs the two-step rule as if you were at the maximum of your current grade, not at your retained rate. A GS-11 on a $138,024 retained rate promoted to GS-12 gets a computed $119,485, keeps the higher $138,024, and sees a $0 raise. The promotion back to GS-13 pays $4,060 more a year (the two-step rule from the GS-12 maximum lands at GS-13 step 6, $142,084 in DC) and ends pay retention.
Does my retained pay count toward my High-3 pension?
Yes. 5 CFR 536.307(a)(1) makes a retained rate basic pay for retirement, and 5 U.S.C. 5362(c) does the same during grade retention. Your High-3 is built on the $138,024, not the $111,087. A retention incentive is the opposite: it is excluded from basic pay.
What counts as a reasonable offer, and what happens if I turn one down?
Under 5 CFR 536.104 it must be in writing with a position description, at or above your retained grade or rate, with equal or better tenure, full-time (or, for a part-time employee, no fewer hours than the current position), in the same commuting area unless a signed mobility agreement or a published agency mobility policy says otherwise, and it must tell you that declining ends your retention entitlement and how to appeal (5 CFR 536.104(c)). Decline a valid one and the entitlement ends at the end of that pay period (5 CFR 536.208(c), 536.308(c)).
Where do I appeal if my agency terminates my grade or pay retention?
To OPM, and only on one ground. 5 U.S.C. 5366(a) allows an appeal of a termination based on declining a reasonable offer, and 5366(b) bars other appeals or negotiated grievances over the underlying action, while 5366(a)(2) preserves your separate rights to appeal a reclassification or a RIF action. This has been the statute since 1978; it is not a product of the September 2, 2026 appeals rules, which changed 5 CFR part 351, not part 536.
Three Triggers, Only Two of Them Mandatory
Grade retention has two eligibility tests, and most coverage runs them together. The first is about you: 5 U.S.C. 5362(a) requires 52 consecutive weeks at the higher grade before the downgrade. The second is about the position: under 5362(b)(2) the job you held has to have been classified at the higher grade for a continuous year. Which test applies depends on the route. A RIF downgrade runs the 52-week test on you (5 CFR 536.203(a)); a reclassification downgrade runs the one-year test on the position (536.203(b)). They are not cumulative. Once the route's test is met, the entitlement turns on what caused the move.
| Cause of the downgrade | Grade retention | Pay retention |
|---|---|---|
| Reduction in force | Mandatory (5 CFR 536.201) | Mandatory when grade retention ends (536.301) |
| Reclassification of your position | Mandatory (536.201) | Mandatory (536.301) |
| Reorganization or management-directed reassignment | Agency election (536.202) | Agency election (536.302) |
Source: 5 CFR part 536, subparts B and C. Whether a reorganization downgrade that is neither a RIF action nor a reclassification action falls outside the mandatory list is our reading of the regulation's structure; the mandatory grade-retention triggers in 536.201 are RIF and reclassification; 536.301 adds other mandatory pay-retention situations (special-rate and pay-schedule actions among them, 536.301(a)(3) through (6)) that this table's ordinary same-schedule downgrade example does not cover.
That third row is the one to read first if your agency is consolidating offices or moving you under a directed reassignment instead of a formal RIF. The agency can grant retention, and many do. It does not have to. Ask for the retention determination and the applicable appeal instructions in writing before you accept the position; what you can appeal afterward depends on the action taken and your coverage, not on a general rule.
One more piece of the trigger: nothing in the September 2, 2026 RIF rules touched part 536. The Federal Register shows no amendment to the part since 2024, and the RIF final rule lists parts 316, 330, 351, 353, 359, 362 and 430. What changed on September 2 is the assignment right that decides how far down you go. The statutory framework that follows dates to 1978; its implementing regulations in part 536 have been amended since, most recently before 2024.
The Two Years: Paid as a GS-13 in a GS-11 Chair
Grade retention runs two years from the downgrade. During that time your pay is set as if you still held the retained grade: the same step, the same annual raise, the same within-grade increases (5 CFR 536.205(a)). A GS-13 step 5 in the Washington locality is paid $138,024 in 2026 whether the position description says GS-13 or GS-11.
Two things the retained grade does not do. It is barred from RIF procedures under 5 U.S.C. 5362(c)(2) and 5 CFR 536.205(b), so on the next retention register you compete as a GS-11. And a further qualifying downgrade during the period does not restart the clock: you keep the first retained grade for the rest of its two years, and only then retain the grade you held before the second downgrade for two years from that second action (536.204(b)).
Note the calendar coincidence. The GS-13 step 5 to step 6 waiting period is also 104 weeks, so an employee who was at the start of a step wait on the day of the RIF can see the step increase and the end of grade retention land in the same pay period.
Year Two: Nothing Drops, but the Clock Slows to Half Speed
When grade retention ends, pay retention begins if your rate is still above the new grade's range. The retained rate is set equal to your existing payable rate (5 CFR 536.304(b)(2)), which is why the day-one cut is zero in the ordinary case. The rate is then capped at 150% of the new grade's step 10, and never above Executive Schedule level IV (536.304(b)(3), 536.306).
| Line | Amount | Basis |
|---|---|---|
| GS-13 step 5, DC (the retained grade's rate) | $138,024 | OPM 2026 salary table DCB |
| GS-11 step 10, DC (the new grade's ceiling) | $111,087 | OPM 2026 DCB |
| Retained rate above the new ceiling | $26,937 (24.2%) | computed |
| 150% cap on a GS-11 retained rate in DC | $166,631 | 5 CFR 536.304(b)(3) |
| Does the cap bite? | No, by $28,607 | computed |
| Cut on the day grade retention ends | $0 | 5 CFR 536.304(b)(2) |
FedTools 2026 analysis from OPM's 2026 Washington-Baltimore-Arlington table (locality 33.94%). Rates read from the table and cross-checked against the 2026 pay data in the GS Pay Calculator.
From here the mechanics change. Under 536.305(a)(1), when the new grade's range maximum goes up, your retained rate goes up by half the dollar increase in that maximum. Not half your own raise; half the increase in the GS-11 ceiling. That is what makes the catch-up so slow. The gap closes only as fast as the ceiling outruns half of its own growth.
Solve it and the target is fixed: with a retained rate R of $138,024 and a starting ceiling M of $111,087, the ceiling makes you whole when it reaches 2R − M, which is $164,961, a 48.5% increase.
| Annual raise (across-the-board plus locality) | Years until the GS-11 DC ceiling reaches $164,961 | Pay retention ends in |
|---|---|---|
| 0% held every year (2027 is one frozen year) | never while it holds | never while it holds |
| 1% | 39.7 | year 40 |
| 2% | 20.0 | year 20 |
| 3% | 13.4 | year 14 |
| 3.1% (the 5 U.S.C. 5303 formula) | 13.0 | year 13 |
FedTools 2026 analysis: n = ln(164,961 ÷ 111,087) ÷ ln(1 + r), rounded up to the next full pay year. Assumes the same percentage applies to the ceiling each year and no further grade change.
The freeze row deserves a plain reading. A 0% year costs a retained-rate employee nothing against the GS-13 path, because both paths stand still. It costs a full year on a clock that only advances when raises happen. For the employee in this example the 2027 freeze is neutral on the paycheck and pure cost on the timeline, and every freeze year after it pushes "made whole" further out.
What year two costs is growth. Path A below is what the GS-13 rate would have paid; Path B is the retained rate under the half-speed rule, both at 2% raises and neither with within-grade increases.
| Year after grade retention ends | Path A: GS-13 step 5 rate | Path B: retained rate | Annual gap | Cumulative forgone |
|---|---|---|---|---|
| 1 | $140,784 | $139,135 | $1,650 | $1,650 |
| 2 | $143,600 | $140,268 | $3,332 | $4,982 |
| 3 | $146,472 | $141,424 | $5,048 | $10,030 |
| 4 | $149,402 | $142,603 | $6,799 | $16,829 |
| 5 | $152,390 | $143,805 | $8,585 | $25,414 |
FedTools 2026 analysis. Path A = $138,024 × 1.02 to the nth power. Path B = $138,024 plus half the cumulative increase in a GS-11 step 10 DC rate growing 2% a year from $111,087, per 5 CFR 536.305(a)(1). Rounded once, at the end.
Where the 150% Cap Actually Bites
The cap almost never trims a one- or two-grade drop. It trims the full three-grade drop by a hair. The break-even for this employee is a new-grade ceiling of $138,024 ÷ 1.5, or $92,016. GS-11 ($111,087) and GS-10 ($101,097) clear it. GS-9 step 10 in DC is $91,815, which is $201 short.
| Placement | New grade's DC ceiling | 150% of it | Retained rate | Immediate cut |
|---|---|---|---|---|
| GS-13 step 5 to GS-11 | $111,087 | $166,631 | $138,024 | $0 |
| GS-13 step 5 to GS-10 | $101,097 | $151,646 | $138,024 | $0 |
| GS-13 step 5 to GS-9 (the three-grade general limit) | $91,815 | $137,723 | $137,723 | about $301 |
FedTools 2026 analysis; 1.5 × $91,815 = $137,722.50, rounded to the nearest dollar. The sibling RIF assignment-rights post carries $137,722 for the same figure under a different rounding convention; the cut is $301 or $302 accordingly.
The Promotion That Pays Nothing
Suppose the employee on the $138,024 retained rate is promoted from the GS-11 position to GS-12. The two-step rule in 5 CFR 531.214 normally guarantees a raise on promotion. Paragraph (d)(5) makes an exception for a retained rate: the rule is applied as if the employee were at the maximum of the lower grade, not at the retained rate.
| Step | Figure | Basis |
|---|---|---|
| Deemed pre-promotion rate: GS-11 step 10 base | $82,938 | 5 CFR 531.214(d)(5); OPM base table |
| Plus two GS-11 within-grade increases (2 × $2,127) | $87,192 | standard two-step method |
| Lowest GS-12 step at or above $87,192: step 6 | $89,208 base, $119,485 in DC | OPM 2026 DCB |
| Existing retained rate | $138,024 | above |
| Pay after promotion | $138,024, a $0 raise | 5 CFR 531.214(d)(5), 536.304(b)(2) |
FedTools 2026 analysis from OPM's 2026 base and DCB tables.
Promoted a second time, to GS-13, the same two-step rule runs from the GS-12 maximum: $99,404 plus two GS-12 steps of $2,549 is $104,502 in base pay, and the lowest GS-13 step at or above it is step 6, $106,080 base and $142,084 in DC (5 CFR 531.214(d)(5)). That beats the $138,024 retained rate, so the second promotion pays $4,060 and ends pay retention (536.308(a)(2)). The first promotion is worth nothing in cash; the second is worth a step and the return of step progression. The GS Promotion Calculator shows the two-step result from the grade maximum, which is the number the rule compares against your retained rate.
What the Retained Rate Feeds, and What It Doesn't
5 CFR 536.307(a) lists the purposes for which a retained rate counts as basic pay. For everything not on the list, 536.307(b) says your basic pay is deemed to be the maximum of the new grade, $111,087 in this example.
| Program | Uses the $138,024 retained rate? | Basis |
|---|---|---|
| FERS and CSRS High-3 and contributions | Yes | 5 CFR 536.307(a)(1); 5 U.S.C. 5362(c) |
| FEGLI | Yes | 536.307(a)(2) |
| Overtime and premium pay base | Yes | 536.307(a)(3) |
| Severance pay | Yes | 536.307(a)(4) |
| Annual leave lump sum at separation | Yes | 536.307(a)(7) |
| Adverse-action provisions (part 752) | Yes | 536.307(a)(10) |
| Within-grade increases | No, there is no step above the range maximum | 5 CFR 531.404, 536.103 |
| RIF retention standing | No, the retained grade is barred from RIF procedures | 5 U.S.C. 5362(c)(2); 536.205(b) |
| Anything not listed in 536.307(a) | No, pay is deemed to be $111,087 | 536.307(b) |
Source: 5 CFR 536.307, 5 U.S.C. 5362(c). Do not confuse a retained rate with a retention incentive under 5 U.S.C. 5754: the incentive is excluded from basic pay, the retained rate is included.
The severance line matters for anyone who ends up separated later. Severance is computed on basic pay, and a retained rate of $138,024 is roughly $516 a week higher than the GS-11 ceiling. Run your own case through the Severance Calculator with the retained rate as the salary rather than trusting a rule of thumb.
Reasonable Offers and the One-Ground Appeal
Both entitlements end if you decline a reasonable offer. Under 5 CFR 536.104 the offer has to be in writing, include the position description, sit at or above your retained grade (or, for pay retention, at a rate at or above your retained rate), carry tenure equal to or better than your old position, be full-time if you were full-time, and be in the same commuting area unless you have a mobility agreement. It also has to tell you that declining ends your entitlement. Decline a valid offer and grade or pay retention terminates at the end of that pay period (536.208(c), 536.308(c)).
The appeal route is narrow and old. 5 U.S.C. 5366(a) lets you appeal a termination based on a reasonable-offer determination to OPM. 5366(b) bars other appeals and negotiated grievances over the underlying downgrade or the termination, but 5366(a)(2) expressly preserves the reclassification appeal (5 U.S.C. 5112(b), 5346(c)) and the RIF appeal routes. That has been the law since 1978. It is separate from the September 2 changes to MSPB appeal rights, which amended part 351, and it did not get better or worse this year.
Two smaller rules that catch people: a move to a new locality converts the retained rate by the ratio of the old and new range maximums (536.303(b)), and a change in the geographic location of your worksite is excluded from the half-speed adjustment (536.305(a)(3)).
Calculate Your Two Anchors
Everything above runs on two numbers: your current grade-and-step rate and the new grade's step 10 in your locality. The free GS Pay Calculator gives both from the grade, step and locality dropdowns. Then the High-3 Calculator takes the retained rate as basic pay to price the pension side, and the Severance Calculator prices a later separation on the retained rate.
Related Resources
- GS Pay Calculator: Your current rate and the new grade's ceiling, by locality
- RIF Assignment Rights: Replace, Bump and Retreat: How far down the September 2 rules can move you
- Your Appeal Rights After the September 2 OPM Rules: What changed at MSPB, and what did not
- The GS Promotion Two-Step Rule: The rule that the retained-rate exception modifies
- Pay Freeze and Your High-3: Retention incentive vs. retained rate, and the freeze
- RIF Notice: Your 60-Day Action Guide: What to do the week the notice lands
- RIF Survival Guide 2026: The full resource
Sources: 5 U.S.C. 5362, 5363, 5366 · 5 CFR part 536 · 5 CFR 531.214 and 531.404 · OPM fact sheets: grade retention and pay retention · OPM 2026 salary table, Washington-Baltimore-Arlington · Federal Register, RIF final rule 2026-15665. Computed tables are FedTools 2026 analysis from those inputs; free to cite with attribution.