Got Laid Off? Here’s What Happens to Your RSUs.
Getting laid off is disorienting. Even if you saw it coming, there’s a lot to process financially, professionally, and emotionally. Before any of that settles, well-meaning people will tell you there are urgent deadlines, things you’ll lose if you don’t act fast, decisions that can’t wait.
Most of that is overstated. Take a breath.
Your RSUs are not going anywhere in the next 48 hours. The decisions that matter here are worth thinking through carefully, not making in a panic. Here’s what actually happens to your equity when you’re laid off, what genuinely needs attention, and how to approach it without making a rushed mistake.
The Basic Split: Vested vs. Unvested
Everything with RSUs comes down to one line.
Vested shares are yours. The moment shares are released to your brokerage account, ownership is transferred to you. Your employment status has no bearing on that. They’re yours whether you leave tomorrow or stay for ten more years.
Unvested shares go back to the company. If you’re laid off before shares vest, you don’t receive them. They return to the company’s equity pool. This is the standard outcome for the vast majority of employees in a reduction-in-force.
That’s the framework. Everything else is details.
What Happens to Your Vested Shares
Your vested shares are sitting in a brokerage account. Depending on your employer, that’s most likely Fidelity, Schwab, or Morgan Stanley. The layoff doesn’t touch them. You can sell them, hold them, or transfer them on your own timeline.
What does change is the context around holding them.
Before the layoff, you had a natural reason to stay invested in your employer’s stock. You believed in the company’s direction. You were contributing to it. Your career and the stock were pointed in the same direction.
That equation just changed. Your income is no longer tied to this company. Your day-to-day is no longer tied to this company. The case for keeping a large position in one employer’s stock was always a little circular, and now that circularity is gone.
None of this means you have to sell immediately. But it’s worth asking a question you may not have asked before: if you didn’t already own this stock, would you buy it today with this money? If the honest answer is no, or even “I’m not sure,” that’s worth sitting with.
There’s no rush. But there is a real conversation to have about concentration. Your employment is no longer tied to this company, and that changes the equation. More on that below.
What You’re Losing: Unvested RSUs
This is where people get stuck, and understandably so. Watching a large grant disappear because your last day falls two months before the next vest date is genuinely painful.
Here’s how to get a clear picture of what you’re leaving behind.
Pull up your grant agreements. They’re typically in your equity platform (Fidelity NetBenefits, Schwab Equity Awards, E*TRADE) or in your original offer letter and annual compensation summaries. Look at each grant separately. Each one has its own vest schedule and its own timeline.
For each unvested grant, note:
- The original grant date and the total number of shares
- Which shares have already vested
- Which shares were scheduled to vest next, and when
- The full remaining unvested balance
Once you have those numbers, you have a real sense of what the layoff costs you in equity terms. That’s more useful than a rough mental estimate.
Most of the time, unvested shares are simply forfeited. In some cases, particularly in larger reductions in force, companies will vest shares through your last official employment date rather than cutting off at the prior quarterly event. Your severance documentation and your grant agreements are the authoritative source on this. HR will tell you the general policy. The grant agreement is what actually governs.
Four Things Worth Checking in the Next Week or Two
Not urgent to the hour, but worth getting to before too much time passes.
Your final employment date. This is often not the day you were notified. Severance agreements frequently extend your official employment status by weeks or months for benefits continuation purposes. That date determines your final vesting cutoff. Confirm it in writing.
Whether any grants have performance conditions. Most tech company RSUs are time-based. You stay, they vest. But some grants, particularly at the senior level, have performance triggers layered on top. Check your grant agreements if you’re not sure which type you have.
Your ESPP status. Any shares you’ve already purchased through your ESPP are yours, just like vested RSUs. The open question is what happens to the current offering period. Most plans will cancel your participation and refund any payroll deductions that haven’t been used to purchase shares yet. Check your plan documents or contact the plan administrator for your specific situation.
Your 401(k) match vesting. Your own contributions to your 401(k) are always 100% yours. The employer match is a different story. It often vests on its own schedule. If you haven’t hit the vesting cliff on your employer’s match, you may leave some of that behind. Look at your plan’s vesting schedule. If you’re close, it may factor into how you think about your last official date.
The Tax Picture for Washington State Employees
Most layoff articles stop at the basics. Here’s what’s specific to your situation if you’re in the Seattle and Eastside corridor.
Shares that already vested while you were employed: The tax event already happened. When those shares vested, the value was treated as ordinary income and showed up on your W-2. You paid federal income tax on it at that time. Washington has no state income tax, which means you owed nothing to Olympia on that event. That’s a meaningful advantage over your peers in California, New York, or Massachusetts. The vest is in the past. There’s nothing new to deal with on those shares from a tax perspective.
When you sell vested shares: This is where current decisions matter. Any gain from the vest price to your sale price is a capital gain. Short-term, if you’ve held the shares less than 12 months since vesting, they are taxed as ordinary income. Long-term, if you’ve held more than 12 months, it is taxed at the lower long-term capital gains rates.
Washington’s capital gains tax applies to long-term gains. For 2025, the deduction is $278,000, meaning the first $278,000 of net long-term capital gains is exempt. Above that threshold, you owe 7% to Washington state. Gains above $1,278,000 are taxed at 9.9%. If you’ve been holding appreciated shares for several years, a large sale could push you above that threshold.
This is worth thinking through before selling, not after. Spreading sales across tax years can make a real difference in what you keep after taxes. Here’s a deeper look at how to approach RSU tax withholding if you’re still working through the vest-year picture.
Thinking About What to Do With Your Vested Shares
This is the question most people come to after a layoff, and it doesn’t have a universal answer. But there’s a useful framework.
Before the layoff, your employer’s stock represented three connected things: your compensation, your career, and part of your investment portfolio. All three were tied to the same company. That concentration was always a risk. It just felt more abstract when the employment piece felt stable.
Now, employment and compensation are off the table. The only remaining question is whether holding this stock makes sense purely as an investment decision, stripped of the career attachment.
A few things worth thinking through:
What percentage of your total investable assets does this stock represent? If it’s 20% or more, that’s a meaningful concentration in a single company, regardless of how you feel about the company’s prospects. Here’s how to think through what level of concentration actually makes sense for your situation.
What’s the tax cost of selling? For shares with large gains held over 12 months, a thoughtful sale plan spread across more than one tax year can make a real difference in what you keep after taxes. Here’s a practical guide to minimizing capital gains tax with proactive planning.
What does your full financial picture look like right now? Emergency fund, monthly burn, expected job-search duration, other assets. If holding concentrated stock while also carrying financial uncertainty from being between jobs creates real risk, that’s relevant information.
There’s no single right answer. But “I’ve always held and it’s worked out” is not the same as a deliberate investment thesis. A layoff is a natural moment to revisit whether what you own is actually what you’d choose to own.
Your 401(k)
Your 401(k) balance is entirely yours and stays that way. The company cannot touch your contributions or the vested portion of any match.
One common mistake after a layoff is doing nothing. Leaving an old 401(k) at a former employer indefinitely isn’t catastrophic, but it does mean the account sits unmanaged, potentially in a default investment option, and adds complexity to your financial picture over time.
The cleaner move is a direct rollover to either a traditional IRA or your new employer’s plan once you land somewhere. A direct rollover means the money moves from institution to institution. You never receive a check in your name, and there are no taxes or penalties.
There’s No Urgency to Decide Everything Today
The hardest part of a layoff, financially, isn’t the complexity. It’s making good decisions when you’re stressed, when the numbers feel large, and when everyone around you seems to have an opinion.
The vested shares in your account aren’t going anywhere. The tax picture is manageable with some planning. The 401(k) has plenty of time for a rollover. None of this requires you to have everything figured out in the first week.
What it does benefit from is a thoughtful plan. One that looks at your full picture, not just the equity piece in isolation. How much you hold, when you sell, how you think about taxes across this year and next, how your cash position connects to your job search timeline. Those pieces are connected. They’re worth working through together rather than making each decision separately under pressure.
If you’re navigating a layoff and want to think through what this means for your full financial situation, equity, taxes, 401(k), and what comes next, that’s exactly the kind of conversation we have. Schedule a free intro call.
Frequently Asked Questions
Do I lose my vested RSUs if I get laid off?
No. Vested RSUs are shares you already own outright. Your employment status doesn’t change that. They stay in your brokerage account and you can do what you want with them on your own timeline.
What happens to unvested RSUs in a layoff?
In most cases, unvested RSUs are forfeited and returned to the company’s equity pool. Occasionally, companies will vest shares through your last official employment date. Check your grant agreement and severance documentation for the specific terms.
Should I sell my RSUs immediately after being laid off?
There’s no rule that says you have to. But it’s worth asking whether you’d still choose to hold this much of one company’s stock if you were making the decision fresh today. A layoff removes the career connection to your employer’s stock, which changes the logic for holding a concentrated position.
How are my vested RSU shares taxed when I sell after a layoff?
The tax was already paid at vest. When you sell, you owe capital gains tax on any appreciation from the vest price to the sale price. Short-term rates (ordinary income) apply if you’ve held less than 12 months since vesting. Long-term rates apply after 12 months. Washington state’s capital gains tax may also apply on gains above $278,000.
Can I negotiate accelerated vesting as part of my severance?
Occasionally. In a large reduction in force, it’s uncommon. If accelerated vesting is on the table, it will typically be addressed in the severance documentation. Review what you’re offered carefully before signing.
What should I do with my 401(k) after a layoff?
Roll it over. A direct rollover to an IRA or your new employer’s plan keeps the money invested, avoids taxes and penalties, and simplifies your financial picture. Don’t cash it out.