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The costliest mistakes after a tech layoff are timing mistakes. Do not sign a release in the meeting, wait to file unemployment, default to full-price COBRA, cash out a 401(k), or let a 90-day option window pass. First preserve documents and access, identify the legal and equity termination dates, open your unemployment claim, and price health coverage. Then negotiate severance, protect retirement and equity value, and build a targeted portfolio and search plan. The rules below are for U.S. workers; state unemployment, mini-WARN, mini-COBRA, immigration, tax, and equity-plan terms can change the result.
What should I do first after being laid off from a tech job?
Use the first 48 hours to preserve evidence, identify every deadline, and avoid irreversible decisions. Shock is not a good planning window; wait 24–48 hours before moving retirement money, exercising options, or accepting a rushed settlement.
- Do not sign in the meeting. Take the separation packet home. If you are 40 or older, an age-discrimination waiver generally must give you at least 21 days to consider an individual offer, or 45 days in a group reduction-in-force or exit-incentive program. A signed waiver must also provide seven days to revoke, and that period cannot be waived.
- Save records before access ends. Download your offer letter, pay stubs, benefits summary, severance agreement, equity grants and plan document, vesting schedule, and contact details for former colleagues. Do not copy confidential source code, customer data, or trade secrets.
- Confirm three dates in writing: your last day worked, the last day health coverage remains active, and the termination date used by the equity plan. They can differ.
- Tell your household before posting publicly. Put the severance deadline, revocation period, COBRA and Marketplace windows, spouse-plan window, option deadline, next vest date, 401(k) loan or force-out notice, tax payment date, and any immigration grace period on one calendar.
- File unemployment during the first week. Apply even if severance is coming; the agency, not your former employer, decides whether and when benefits are payable.
This is general information, not legal, tax, or immigration advice. An employment attorney, tax professional, or immigration lawyer can apply the rules to your contract and state.
Should I sign my severance agreement right away?
No. A severance agreement trades extra consideration—usually money or benefits—for a release of claims. Read it away from the termination meeting and compare the value of the release with what you are giving up.
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What age-40 and group-layoff rules require
The U.S. Equal Employment Opportunity Commission (EEOC) says an ADEA waiver must be understandable, specifically refer to ADEA rights, advise you in writing to consult an attorney, and provide the statutory review and revocation periods. In a group program, the employer must provide decisional-unit information, including job titles and ages of selected and non-selected employees; broad age bands do not substitute for the required disclosure. The agreement cannot waive claims that arise after signing. You may still file an EEOC charge, and a clause that bars filing or participating in an EEOC proceeding is unenforceable.
Workers under 40 do not receive OWBPA’s federal minimum review period, although an employer may offer one. Pressure to sign within a few days is a reason to request time and advice, not a reason to sign.
What to check and negotiate
- Exact severance amount, payment date, and whether it is a lump sum or salary continuation.
- Last day of employment, benefits end date, PTO payout, bonus treatment, and any repayment or clawback language.
- Equity termination date, vesting through that date, acceleration, and the post-termination option exercise period.
- Employer-paid COBRA months, outplacement, reference language, rehire eligibility, and a neutral-reference commitment.
- Whether non-compete, non-solicit, confidentiality, and non-disparagement clauses are narrowly written. There is no federal non-compete ban in effect in 2026; state law controls. The FTC’s 2024 rule was blocked in 2024 and its appeal was dismissed in 2025. Overly broad clauses can also implicate employees’ rights under McLaren Macomb.
Cash formulas at large technology companies are often rigid, so the highest-value edits may be a vesting-date change, an option-window extension, paid COBRA, or a narrower restriction. Ask for a named RSU tranche, vest date, and share count rather than “some acceleration.” Outplacement is commonly three months, while six months is reported in some large-company programs; get the duration in the agreement.
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How severance is taxed
Severance is generally supplemental wages. Employers commonly withhold federal tax at 22% (and 37% on supplemental wages above $1 million from one employer), but that withholding can be too low for a high-income technology worker. In 2026, Social Security withholding is 6.2% up to the $184,500 wage base; Medicare is 1.45%, plus 0.9% additional Medicare above $200,000. Set aside cash for federal and state tax instead of treating the net check as spendable income. If your 2025 adjusted gross income exceeded $150,000, compare withholding with the 110% prior-year safe-harbor target and address any estimated-tax gap by January 15.
Section 409A has an involuntary-separation safe harbor only within limits: Morkel Financial’s 2026 summary cites twice the lesser of prior-year annualized pay or the $360,000 section 401(a)(17) compensation limit, with payment by the end of the second taxable year after separation. Your agreement should be reviewed for timing and tax language.
Do I get unemployment if I got a severance package?
Apply immediately in the state where you physically performed the work, even if a severance payment is scheduled. State rules differ: a lump sum may have little effect, while salary continuation can delay benefits for the weeks it covers.
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Which state do I file unemployment in if I worked remotely?
File in the state where you actually performed the work, not where the company’s headquarters sits. A remote employee living and working in Texas generally files in Texas; a worker physically working in Washington files in Washington. If you worked in multiple states, the agency can explain a combined-wage claim.
How severance and equity can affect a claim
California’s EDD guidance treats severance as not wages for unemployment, and Washington generally does not treat a lump-sum severance as disqualifying. New York may delay benefits during weeks severance “covers,” while Texas may delay for salary continuation. Apply and report the payment; let the state make the determination. RSUs that vest after termination without services are usually not weekly wages in California guidance, while selling stock is a capital transaction. Report uncertain items rather than guessing.
Certify weekly or biweekly while the claim is pending. Keep a contemporaneous log of applications, interviews, networking, training, and other required activities—often three to five per week—because states audit. “Suitable work” can eventually include lower pay than your former technology salary. Unemployment is federally taxable; elect the portal’s 10% federal withholding option if offered. California, Washington, Texas, and Nevada do not impose state income tax on unemployment, but verify your own state’s treatment. California’s 2026 maximum is reported as $450 per week for up to 26 weeks; conflicting secondary tables exist for other states, so use your state agency’s current figure. A voluntary buyout can still be company-initiated; do not describe it as quitting unless that is legally accurate.
COBRA vs. Marketplace: which health coverage is cheaper after a layoff?
Compare all three routes before the Marketplace special-enrollment window closes: COBRA preserves the employer plan, Marketplace coverage may be subsidized, and a spouse or partner’s plan can be cheaper if you act quickly.
| Option | What you keep or gain | Key cost and deadline issues |
|---|---|---|
| COBRA | Same doctors, network, deductible progress, and plan design | Usually 18 months after job loss; up to 102% of the full plan cost. Elect by the later of 60 days after coverage ends or 60 days after the election notice; first payment is due within 45 days after election and coverage is retroactive. |
| ACA Marketplace | New plan, with Medicaid or CHIP screening on the same application | Special enrollment generally runs from 60 days before through 60 days after job-based coverage ends. Network and deductible can reset. Subsidies depend on estimated household income for the coverage year. |
| Spouse or partner plan | Employer-sponsored coverage under the household member’s plan | Loss of coverage is a qualifying event; the window is often about 30 days. Confirm the employer’s exact deadline. |
What COBRA actually costs
COBRA applies to private employers with at least 20 employees in the prior year, unless the job ended for gross misconduct. The Department of Labor says qualified individuals may pay the entire premium plus up to 2% administration. KFF’s 2025 Employer Health Benefits Survey put average annual employer-sponsored premiums at $9,325 for single coverage and $26,993 for family coverage. At 102% of the family figure, the illustrative cost is about $27,533 per year, or $2,294 per month. KFF also reported average worker contributions of $1,440 for single coverage and $6,850 for family coverage, with workers paying 16% and 26% of premiums respectively; the average single deductible among covered workers in a deductible plan was $1,886.
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When the Marketplace wins—and when it does not
HealthCare.gov bases savings on household size and estimated income for the coverage year, not employment status or assets. A low-income layoff year can qualify a high-net-worth household for help, but severance, RSU vesting, and Roth conversions increase modified adjusted gross income. Enhanced pandemic-era credits expired at the end of 2025; in 2026 the 400% federal-poverty-level cliff returns. MoneyGeek’s 2026 example says a single person earning $30,000 pays no more than $155 per month for a benchmark Silver plan, compared with $767 for average single COBRA coverage under its assumptions. The Marketplace population fell from 21.8 million in 2025 to 19.2 million in 2026, and KFF reported a 114% net-premium increase for enrollees who stayed in the same plan after enhanced credits expired. Compare doctors, prescriptions, deductible exposure, and total annual cost—not just the premium.
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COBRA can still be worth more when you are mid-treatment, need specialists outside Marketplace networks, receive an employer subsidy, or expect a new job soon. Read whether a “COBRA payment” is a subsidy paid to the plan or taxable cash; a 2026 severance example described five months of COBRA as a taxable lump sum.
What happens to my RSUs and stock options after a layoff?
Read the award agreement and equity plan, not just the offer letter. The plan’s termination date controls, and an ordinary layoff usually does not trigger a change-in-control double trigger.
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|---|---|---|
| Unvested RSUs | Cancel on termination in most plans; no income or capital-loss deduction for forfeited units | Ask to move termination past the next vest or accelerate a named tranche or receive cash in lieu. |
| Vested RSUs | Settled shares remain yours; basis is generally the fair-market value at vest | Review concentration, tax lots, trading windows, and diversification. |
| Unvested options | Usually disappear at termination | Confirm the plan’s rule in the equity portal. |
| Vested options | Survive only through the post-termination exercise period, often about 90 days but sometimes years | Get the exact expiration date in writing and model strike price, tax, liquidity, and downside. |
RSUs: the termination-date edit
Offer XRay’s October 2026 summary states that unvested RSUs are generally forfeited and vested RSUs stay yours. The financially important variable is often an eight-day or similar shift in the plan termination date: compare that date with the next vest and request a specific tranche, vest date, and share count. Some plans accelerate on involuntary layoff, but that is plan-specific. A one-quarter vest can be worth more than extra weeks of salary.
Options and the 90-day trap
Confirm the post-termination exercise period in Carta, Shareworks, E*TRADE, or your plan administrator. If the stock is below the strike price, allowing the option to expire may be rational. For an incentive stock option, exercising more than three months after employment ends generally loses ISO tax treatment and produces NSO treatment on the spread; exercising inside the window can still create alternative-minimum-tax exposure. NSOs generally create ordinary income on fair-market value minus strike at exercise, even when shares are illiquid. Partial exercise can reduce cash risk. Do not drain an emergency fund to exercise a speculative pre-IPO grant.
Should I cash out my 401(k) after a layoff?
Usually no. A cash distribution is generally ordinary income and may add a 10% tax before age 59½. First decide whether to leave the account in the old plan, make a direct rollover to an IRA or new employer plan, or take a distribution.
- Leave it: preserves the old plan’s investment and creditor features if the plan permits, and can preserve the rule of 55.
- Direct rollover: moves the money trustee-to-trustee without current withholding. An indirect rollover usually withholds 20%; you have 60 days to deposit the entire original amount, including the withheld cash, or that portion can become taxable.
- Cash out: creates income and possible penalty precisely when your income is uncertain.
The IRS rule of 55 can exempt distributions from the 10% additional tax when you separate from that employer during or after the calendar year you reach 55. It applies to that employer’s qualified plan, not an IRA; rolling the account to an IRA destroys this exception. It is based on the calendar year, not your birthday. Check Net Unrealized Appreciation before rolling employer stock: a full rollover can eliminate that potential tax treatment. An unpaid 401(k) loan can become a distribution at separation; the plan’s repayment and rollover deadlines matter. Balances under $7,000 may be forced out or auto-rolled after notice. A large reduction in force may also trigger partial-termination vesting of employer contributions; ask the plan administrator.
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Use any remaining health FSA balance during the plan’s run-out or spend-down period. Do not assume a severance check is enough to replace tax-advantaged retirement savings.
Does the WARN Act owe me 60 days of pay?
Not automatically. Federal WARN generally covers employers with 100 or more qualifying employees and certain plant closings or mass layoffs. A covered event typically involves 500 or more full-time employees, or at least 50 employees representing one-third of a single site, and requires 60 days’ written notice to workers or representatives, the state rapid-response unit, and the local chief elected official.
Exceptions include a faltering company, unforeseeable business circumstances, and natural disaster; the employer must give as much notice as practicable and explain the basis. The remedy can be back pay and benefits for the violation period, up to 60 days and no more than half the days worked for that employer. The Department of Labor does not collect individual damages; workers generally pursue a claim themselves or through counsel. State mini-WARN laws can be stricter—for example, California’s 75-employee threshold and New York’s 90-day rule. California SB 951 is scheduled to add AI and technology-displacement disclosure to Cal/WARN notices on January 1, 2027. Compare your site’s headcount, event size, notice, severance, and state law with an attorney.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should I rebuild my professional portfolio and job search?
Use the first week for positioning and evidence, not indiscriminate applications. A specific referral request and credible work examples usually create more signal than a mass-application burst.
- Tell family, then publish a precise LinkedIn note. State what you built and the measurable outcome, identify the role, level, company type, and stage you want, and make a direct request for introductions. Avoid a generic “open to opportunities” post.
- Rewrite your headline for search. Use the job title, technical specialties, industry, and outcome keywords recruiters actually use.
- Build a non-confidential accomplishment inventory. Record shipped metrics, architecture or design case studies, public GitHub work, and writing samples while details are fresh. Keep confidential IP on the employer’s systems.
- Contact former managers and colleagues early. Ask for a defined introduction, reference, or candid view of hiring at a named company rather than “let me know if you hear anything.”
- Run a focused application mix. Five to 15 customized applications per week, referrals, recruiter conversations, and networking can be tracked in the same spreadsheet as unemployment activities.
- Claim outplacement and public training. Check the packet for resume, interview, LinkedIn, and job-portal support. State workforce programs, WIOA training, SCORE mentoring, SCSEP, and over-50 services can add free help.
Calculate runway as net severance plus unemployment, savings, and partner income divided by essential monthly spending. A lower-income year may be a useful Roth-conversion window, but conversion income can reduce Marketplace subsidies, so model both together. If daily functioning remains impaired for two weeks, seek support; in the United States, call or text 988, text HOME to 741741, contact NAMI at 1-800-950-6264, or look for sliding-scale care through Open Path.
I am on H-1B—how many days do I have?
Commonly reported guidance gives H-1B workers up to 60 days from the last paid day, or until the I-94 expiration if earlier, to find a qualifying solution. Unemployment does not extend immigration status. Contact an immigration attorney in the first week and confirm the rule with USCIS; your I-94, payroll end date, transfer filing, and family status can change the analysis.
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Which deadlines should I put on one calendar?
These clocks start from different events. Record the source date beside each one and set reminders several days early.
- Severance review: at least 21 days for an individual age-40-plus OWBPA waiver, 45 days for a qualifying group program; seven-day revocation after signing.
- COBRA: at least 60 days from the later of coverage end or election notice; first premium within 45 days after election.
- Marketplace: generally 60 days before through 60 days after job-based coverage ends.
- Spouse plan: often about 30 days after loss of coverage.
- Unemployment: file the same week and certify on the state’s schedule.
- Stock options: often about 90 days after the plan termination date; verify the grant.
- ISO treatment: three months after employment ends.
- Indirect 401(k) rollover: 60 days after receiving the distribution.
- Rule of 55: separation during or after the calendar year you turn 55.
- Estimated tax: fourth-quarter payment is generally due January 15.
- H-1B: commonly reported 60-day grace period or I-94 end, whichever comes first; confirm with counsel.
Frequently Asked Questions
Can my former employer change a severance offer after I ask questions?
A material change to an age-40-plus OWBPA offer generally restarts the applicable consideration period. Ask the company to identify the new version in writing and preserve every draft so an attorney can compare what changed.
How can I show portfolio work without violating confidentiality?
Recreate the method with invented data, public datasets, or a generalized architecture diagram. Remove customer names, proprietary metrics, source code, screenshots, credentials, and internal documents; when in doubt, obtain written permission or leave the example out.
Can I qualify for Medicaid after a tech layoff even if I have savings?
Eligibility is primarily tied to household income and state rules, not simply whether you have investments. Apply through the Marketplace, which screens for Medicaid and CHIP, and report later income changes to avoid a tax or eligibility mismatch.
What if my COBRA election notice arrives late?
The federal election period generally runs from the later of the coverage-end date or the notice date. Keep the envelope and delivery record, request the plan’s written timeline, and contact the Department of Labor or a benefits attorney if the notice appears defective.
