The layoff already happened. What you do in the next month protects your health coverage, your equity, your retirement account, and thousands of dollars in tax you don't have to lose. Here's the order of operations.
The short answer: In your first 30 days after a tech layoff, do these five things in order: (1) read your severance agreement before signing anything, (2) lock in health coverage — you have 60 days to elect COBRA and it's retroactive, so you don't have to decide day one, (3) file for unemployment immediately, (4) don't touch your 401(k) yet, but know the rules before your old employer forces a small balance out, and (5) map your equity deadlines — vested stock options often expire just 90 days after your last day. Getting the sequence right is worth far more than getting any single step perfect.
If you're reading this the day the news landed, take a breath. A layoff is a gut-punch, but it's also a set of deadlines — and deadlines respond to a plan. The single most expensive mistake we see isn't picking the wrong option. It's making rushed, out-of-order decisions in week one that quietly cost money for years. So let's slow the clock down and go in the right order.
1. Read the severance agreement before you sign anything
Severance is often presented as a take-it-or-leave-it document with a signing deadline. It rarely is. Before you sign, understand what you're agreeing to: how many weeks of pay, whether health premiums are covered for any period, what happens to unvested equity, and — critically — any clauses you're waiving (non-disparagement, non-compete enforceability, release of claims).
Two money items people miss: how severance is taxed (it's wages — often withheld at a flat supplemental rate that may be too low or too high for your situation), and how a lump sum versus salary continuation interacts with when you can file for unemployment. You usually have more time to review than the deadline implies, and for larger packages it's reasonable to ask for a few days.
Do this now: Save a copy of the agreement, your final pay stub, your equity grant documents, and your benefits summary in one folder. You'll need all four in the next two weeks.
2. Lock in health coverage — but don't overpay for it
Losing your job-based plan triggers a Special Enrollment Period, and you have three real options: COBRA (continuing your employer plan), a Health Insurance Marketplace plan, or joining a spouse's or partner's plan. Each has a clock.
You have 60 days to elect COBRA, and if you elect it, coverage is retroactive to the day your old plan ended. In plain terms, you don't have to pay COBRA's (often steep) premium on day one. You can wait, stay uninsured on paper, and if a medical need comes up during that window, elect COBRA then and have it apply retroactively. If nothing happens and you find a cheaper Marketplace plan, you skip the COBRA bill entirely. Meanwhile, a Marketplace plan must be selected within 60 days of losing coverage, and a spouse's plan generally requires acting within 30 days.
Do this now: Note the 60-day COBRA deadline on your calendar, then price a Marketplace plan at HealthCare.gov (you may qualify for premium tax credits now that your income dropped) and check your spouse's plan's 30-day window before it closes.
3. File for unemployment immediately
Being laid off (as opposed to quitting or being fired for cause) generally makes you eligible for unemployment benefits. File as soon as you're able, even if you have severance — in California, you apply through the EDD, and it's better to be in the system early than to leave weeks of benefits on the table. Severance can affect timing in some cases, so file and let the agency sort the interaction rather than self-disqualifying.
One nuance for high earners: unemployment is taxable income, and it usually isn't withheld at a rate that matches a former tech salary. Set that expectation now so April isn't a surprise.
4. Leave your 401(k) alone — but understand the rules
The instinct to cash out a 401(k) for a cash cushion is understandable and usually a mistake — an early withdrawal typically means income tax plus a 10% penalty if you're under 59½, and you lose decades of compounding. In your first 30 days, the right default is to do nothing with the account while you weigh a proper rollover later.
But know one rule so it doesn't happen to you: if your vested balance is under $7,000, your former employer's plan can "force out" that balance without your consent — cashing it out or auto-rolling it into a default IRA (often parked in a near-zero-return money market). They must give you notice (typically 30 or more days) and a chance to direct it. If you have small orphaned 401(k)s from past jobs, this is the moment to consolidate them intentionally rather than letting a plan decide for you.
Watch for: If you hold appreciated company stock in your 401(k), a strategy called Net Unrealized Appreciation (NUA) can dramatically cut the tax — but only if you handle the distribution correctly before rolling everything into an IRA. Don't move it until you've checked this.
5. Map your equity deadlines before they expire
For tech employees, this is where the real money — and the tightest clock — usually lives. When you leave, unvested RSUs and options generally stop vesting on your last day. Worse, vested stock options often come with a post-termination exercise window of just 90 days. Miss it and the options you earned simply vanish.
Pull your equity grant documents and write down, for each grant:
- What's vested and what isn't
- The exercise deadline for any options
- Whether options are ISOs or NSOs (the tax treatment differs sharply)
- The strike price versus the current value
Exercising can require real cash and can trigger Alternative Minimum Tax on ISOs — so this is a decision to make deliberately, not on day 89 in a panic. We'll go deep on this in a dedicated post, but for your first 30 days, the job is simply: find every deadline and put it on the calendar.
Why the order matters more than the answers
Notice how these steps interact. Your severance timing affects when you file for unemployment. A lower-income year created by the layoff can be the best time in a decade for a Roth conversion or tax-loss harvesting. Exercising options has tax consequences that ripple into your estimated taxes and your Marketplace subsidy eligibility. None of these decisions live in isolation — and that's exactly why a checklist beats a to-do list. The sequence is the strategy.
This is also the moment where a fiduciary advisor earns their keep. Not to sell you a product — to help you see the whole board at once, catch the 90-day option window before it closes, and turn a low-income transition year into a genuine planning opportunity instead of just a scramble.
Talk it through before a deadline decides for you. RYSE Financial is a family-run fiduciary firm. If you were just laid off, we'll help you map your severance, equity, and coverage decisions in the right order — no pressure, no products, just clarity. Schedule a free consultation.
Frequently asked questions
What should I do first after being laid off from a tech job?
Read your severance agreement before signing, then secure health coverage (you have 60 days to elect COBRA), file for unemployment, leave your 401(k) untouched for now, and map your equity deadlines — especially any 90-day window to exercise vested stock options.
How long do I have to sign up for COBRA after a layoff?
You have 60 days from the later of your coverage-end date or the date you receive your COBRA election notice. Coverage is retroactive to when your plan ended, so you can wait to decide and still be covered for that gap if you elect and pay within the window.
Should I cash out my 401(k) after a layoff?
Usually no. Cashing out before age 59½ typically triggers income tax plus a 10% penalty and sacrifices future growth. Leave it in place in your first 30 days and consider a rollover later. Note: if your vested balance is under $7,000, your former plan may force it out, so act intentionally.
What happens to my stock options if I'm laid off?
Unvested equity generally stops vesting on your last day. Vested stock options often must be exercised within about 90 days of leaving, or you forfeit them. Check each grant's exercise deadline, whether they're ISOs or NSOs, and the tax impact before deciding.
This material is for general information only and is not intended as tax, legal, or investment advice. Rules and dollar thresholds cited are current as of 2026 and subject to change; please consult a qualified tax or legal professional regarding your individual situation.