A Financial Checklist for Bay Area Tech Professionals Facing a Layoff

A job transition in Silicon Valley can involve a number of deadlines related to equity, benefits, and taxes. Knowing what to look for ahead of time can help you approach the transition in a more organized way.

Layoffs remain part of the technology industry's rhythm. In 2026, CalMatters reported reductions at Meta, Oracle, LinkedIn, and Cisco affecting thousands of Bay Area workers. An economist quoted in that report noted that the pace was slower than in 2022 and that laid-off tech workers often find other work in fairly quick succession. Even so, a layoff can bring a number of financial decisions and deadlines. The checklist below outlines what to be aware of and what to look for in your separation documents.

Start with the separation agreement

A severance package may include a lump-sum or continued salary payment, a period of benefits continuation, accelerated vesting, or an extended option exercise window. Look for whether the agreement asks you to sign a release of claims in exchange, and note the deadline to sign. If you are age 40 or older, federal law requires that you be given at least 21 days to consider a waiver of age discrimination claims (45 days if the waiver is offered as part of a group layoff) and seven days to revoke it after signing, as the U.S. Equal Employment Opportunity Commission explains. Before signing, understand what you are receiving and what you are giving up, and consider having an employment attorney review the document.

Equity: terms and deadlines to review

Equity compensation can involve several time-sensitive decisions. Items to look for in your equity plan, award agreements, and separation terms include:

• Unvested restricted stock units (RSUs) and stock options may be forfeited at termination, depending on the applicable equity plan, award agreement, and separation terms.

• Vested but unexercised stock options may expire if they are not exercised within the post-termination exercise window stated in your grant agreement. Check the length of that window, since it can vary by company and by grant. Exercising requires cash for the strike price and, for incentive stock options (ISOs), may create an alternative minimum tax (AMT) liability, as IRS Topic 427 describes. If the shares are private and illiquid, this can be a difficult decision.

• ISOs exercised more than three months after employment ends do not meet the employment requirement of Internal Revenue Code Section 422 and are taxed as nonqualified stock options, subject to limited exceptions such as disability. A company may allow a longer exercise window, but that does not extend ISO tax treatment.

• Employee stock purchase plan (ESPP) contributions not yet used to purchase shares are handled according to your plan's terms; review whether they will be refunded. Shares already purchased and held in your account remain your property.

• 10b5-1 plans may continue or terminate depending on their terms; review with counsel.

Benefits: health coverage and retirement accounts

Under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), as described by the U.S. Department of Labor, you may be able to continue employer group health coverage for up to 18 months at your own expense, and you have at least 60 days to elect coverage. Compare COBRA with plans available through Covered California, which may be less expensive depending on your projected income for the year.

Depending on the plan terms and your account balance, you may be able to leave assets in the former employer's 401(k) plan, roll them to an eligible new employer plan, or roll them to an individual retirement account (IRA). The IRS explains the rollover rules. Before rolling pre-tax assets to an IRA, consider whether you use a backdoor Roth strategy, since pre-tax IRA balances are included in the pro-rata calculation on IRS Form 8606. If you leave employment with an outstanding 401(k) loan, review the plan's repayment and offset provisions. If a qualifying loan offset occurs because of severance from employment, you may have until your federal income tax return due date, including extensions, for the year of the offset to complete an eligible rollover of the offset amount, according to the IRS. If you have a health savings account (HSA), the account stays with you after you leave your employer, as described in IRS Publication 969.

Cash flow and taxes

• Emergency reserves. Maintaining an accessible cash reserve can provide flexibility during a period of uncertain employment. The appropriate reserve will vary based on expenses, other income sources, expected job-search duration, benefits, and individual circumstances. If you do not have a reserve, consider whether part of the severance payment may be used to build one.

• Withholding on severance. Severance pay may be treated as supplemental wages for federal income tax withholding purposes; see IRS Publication 15 for the rules that apply to supplemental wages. Combined with a partial year of RSU vesting, your total withholding may be higher or lower than your actual tax liability. Consider consulting a tax professional regarding the withholding on your severance.

• Unemployment insurance. Individuals who lose employment may be eligible for California unemployment benefits and can review eligibility and filing requirements through the California Employment Development Department.

• A lower-income year. A lower-income year may create tax-planning opportunities, such as evaluating a Roth conversion, ISO exercise, or capital-gain realization. Each can also create current or future tax consequences, including potential AMT exposure, so the analysis should be based on your complete tax situation and reviewed with a qualified tax professional.

Longer term: reassess the plan

A layoff can also be a natural point to revisit the bigger picture. How concentrated is your net worth in your former employer's stock, and does the change in your income affect how much of it is appropriate for you to hold? Are your fixed expenses, especially housing, sustainable through a longer search? Have your goals changed?

A transition can also be an opportunity to revisit priorities and your overall financial structure. The aim is to address time-sensitive items deliberately and avoid hasty decisions on everything else. This article is for general educational purposes and does not constitute legal, tax, or investment advice; consult qualified professionals about your specific situation.

Important Disclosures

Important Disclosures: Propulsion Capital Management is an investment adviser registered with the State of California Department of Financial Protection and Innovation. Registration does not imply a certain level of skill or training. This article is provided for general informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice, nor an offer or solicitation to buy or sell any security or to adopt any particular investment strategy. The information is believed to be accurate as of the date of publication but is subject to change without notice; tax laws and regulations change frequently and their application depends on individual facts and circumstances. Nothing herein should be relied upon as a substitute for personalized advice from a qualified professional. Investing involves risk, including the possible loss of principal, and past performance is no guarantee of future results. Diversification does not ensure a profit or protect against loss. Any examples are hypothetical, are for illustrative purposes only, and do not reflect the experience of any client. Links to third-party websites are provided for convenience; Propulsion Capital Management does not endorse, and is not responsible for, the content of third-party sites. Propulsion Capital Management does not provide tax or legal advice; please consult your tax adviser or attorney regarding your specific situation.