Designate for Assignment (DFA)
When a player's contract is designated for assignment -- often abbreviated "DFA" -- that player is immediately removed from his club's 40-man roster. Within seven days of the transaction (had been 10 days under the 2012-16 Collective Bargaining Agreement), the player can either be traded or placed on outright or unconditional release waivers.
If the player is claimed off waivers by another club, he is immediately added to that team's 40-man roster, at which point he can be optioned to the Minor Leagues (if he has Minor League options remaining) or assigned to his new team's 26-man roster.
If the player clears outright waivers, he may be assigned outright to the Minor Leagues. However, players with more than five years of Major League service time can reject an assignment to the Minor Leagues, and players with more than three years of Major League service time, or who have been previously outrighted, may reject the outright assignment in favor of free agency in lieu of the assignment. If the player clears unconditional release waivers, he is unconditionally released.