When a player retires from the NFL, that player's contract is able to be terminated with no termination penalty.
A player is considered elibible for retirement status if:
He is on an NFL team and placed on the reserve/retired list.
He is a free agent, declared his retirement, is not seeking a new team, his retirement is acknowledged on his wikipedia page, and there is a (6 of 11) majority vote from league owners to allow the retirement status to proceed.
If the player returns after being retirement status eligible, contracts terminated while they are retired preserve the protection from termination penalty.
When a player retires from the NFL, that player's contract is able to be terminated with no termination penalty.
A player is considered elibible for retirement status if:
If the player returns after being retirement status eligible, contracts terminated while they are retired preserve the protection from termination penalty.
Addresses #2