Lager primary fermentation/diacetyl rest question

I'm fermenting a Märzen with an OG of 1.060 and primary fermentation is about over. The gravity is around 1.020. So I've moved it onto the house to perform the diacetyl rest at 65. Should I let it rest at that temperature until I reach terminal gravity and then begin lagering? Or allow the diacetyl rest to go on for the recommended period of time and then bring it back to primary fermentation temperature until it reaches terminal gravity and them begin lagering?

I'd leave it until you've hit the FG. The point of raising the temperature during the D-rest is to make sure the yeast stays active. Even if you chill down to lagering temps very slowly, there's still the chance your yeast will go to sleep on you.

Sorry, but wrong. You should move to diacetyl rest temps once your beer is around 75% of the way to your predicted FG. Yeast that is done working on fermenting isn't going to do much for reabsorbing diacetyl. So if your predicted FG is around 1.010, you'd want to go around 1.022. You're pretty close and that should work just fine. Leave it at those temps for a day or two- fermentation should be pretty much done by the end. Then you can lager as close to freezing as you can manage.

I appreciate the advice! The reason I asked was because I brewed a Vienna lager in July and it came out with an off flavor. Kind of sweet tasting. Not crisp or clean at all. It was my first lager and I mistakenly chilled my yeast starter down to 50 right out of the gate, so it never developed and primary fermentation never began. 2 weeks later a bought some more lager yeast made a starter and let it ferment at room temperature. Then it fermented. But the wort was hanging out without being inoculated with yeast for three whole weeks, which undoubtedly contributed to the off flavor. This time around I pitched an enormous amount of yeast and primary fermentation took off immediately and the krausen subsided after just over a week. So I'm trying to make sure I get it right this time around!

Awesome! Pitching the correct number of healthy yeast cells is the best thing you can do for a lager. Are you using one of the calculators (mrmalty.com or yeastcalc)? Those include the viability of your yeast based on the date of manufacture to give you professional pitching rates. You'll be reaping the benefits right away. If you're oxygenating with pure O2 (that's the next step for good lagers) then after working with your favorite yeasts for a while, you may find that some strains don't even need a diacetyl rest if you're treating them nice!