If You Got let go from the tech sector In 2022-3: What To Do With Your Stock Options, Old 401k, and Job Search
Unfortunately, if you’re working in the tech sector in 2022-23, you have a significant risk of being laid off. With 10s of thousands already laid off and many more expected to be, the job market can feel uncertain. If you were laid off, you face a number of decisions that can seem daunting. What to do with your stock options, where you should manage your old 401k, and how to optimize your job search are likely all questions swirling around your head. Thankfully, we’re going to provide helpful tips in this article as to what you should do if you were laid off and how to answer these questions for your situation!1
What To Do With Your Stock Options If You Were Laid Off
If you’ve been laid off, you’re probably wondering what to do with your stock options. Here’s a guide to help you make the best decision for your situation.
If you have stock options, you have the right to purchase shares of your company’s stock at a set price. This is usually done through a broker. When you exercise your option, you’re essentially buying shares of your company’s stock at a discounted rate.2
The first thing you need to do is figure out the value of your options. This can be tricky, but there are online calculators that can help. Once you know the value of your options, you need to decide whether or not to exercise them.
If the current market price of your company’s stock is lower than the exercise price, it might make sense to hold onto your options and wait for the stock price to go up. However, if the market price is higher than the exercise price, it might be better to exercise your options and sell the shares right away.2
Another thing to consider is how long you have before your options expire. If they’re going to expire soon, it might not make sense to wait around for the stock price to go up. In this case, it might be better to just sell the options and take the cash. Many companies only allow you 90 days from the date of your layoff to exercise your options so it’s important to not procrastinate this decision.2
Of course, there’s no one-size-fits-all answer here. It all depends on your personal circumstances and what you think is best for the financial future you’re seeking to build.
What To Do With Your Old 401(k)
401k’s are a great retirement savings tool, but what do you do with your old 401k when you leave your job?
There are a few options for what to do with your old 401k. You can cash it out, roll it over into an IRA, or leave it with your former employer.1
Cashing out your 401k is strongly advised against. Unless you’re over the age off 59.5, you’ll incur significant taxes and penalties on the withdrawal. However, if you need the money for an emergency expense, it may be worth considering but we recommend exhausting all other options first.1
Rolling over your 401k into an IRA is a good option if you want to keep your retirement savings intact. This can be done online or through a financial advisor. When you roll your 401k into an IRA, it’s important to make sure things are done correctly to, again, avoid paying unnecessary taxes or fees.1 Our consultants at Upward Financial Planning would be happy to help you with this to make sure everything is done properly. For more information about next steps contact us here.
Leaving your 401k with your former employer is another option, although this may not be ideal if your new employer does not offer a retirement plan. If you decide to leave your 401k behind, make sure to keep track of it so you don’t forget about it! Believe it or not, there are millions in unclaimed 401k funds in the United States alone – don’t let your hard-earned money become part of that group!1
Making The Most of Your Situation: Our Tips to Maximize Your Job Search
If you were laid off, it’s likely getting a new job is a high priority for you. Here are our tips to help you optimize your job search and make the most of your job pivot:
1. Take Time Off: Surprisingly, some people find that losing their job was the best thing to ever happen to them. This type of life event can be just the “jolt” some people need to take inventory of their current life situation, where they want to go, and make any necessary changes. Whether you’re confident in your trajectory or not, we encourage people who have the means to take some time off and carefully plan the next step of their career, work on their personal life, relax, and then step back into things!3
2. Use Your Network: Your network is one of your most valuable resources when it comes to finding a new job. Talk to your friends, family, and colleagues to see if they know of any open positions that may be a good fit for you. You can also use online networking platforms like LinkedIn to connect with potential employers and recruiters. One of the best ways to open up a conversation with someone at a firm or in a position you’d like to be in is to ask for their advice! When you ask “Hey ____, I noticed you’re in a role I’d really like to be in. I just got laid off and am considering a career switch. Would you be able to chat for 15 minutes and give me some advice?”, not only does it let them know you’re looking for a job in a non-confrontational way, but it also opens the door to further conversations as opposed to a confrontational ask that may put the other person in an uncomfortable space.3
3. Polish Up Your Resume: Now is the time to make sure your resume is in tip-top shape. Make sure it’s clear, concise, and free of any typos or grammatical errors. If you don’t have much experience in the field you’re interested in pursuing, consider volunteering or taking on some freelance work to build up your skills and experience.3
4. Prepare for Interviews: When you do land an interview, be prepared to answer common questions about your qualifications and why you’re interested in the position. Practice makes perfect, so take some time to brush up on your interviewing skills before your big day.3
5. Negotiate Your Salary & Benefits Package: Once you’ve landed a job offer, it’s time to negotiate your salary and benefits package. Be sure to do your research beforehand so you know what is competitive for the position you’re accepting and what you’re worth.3
Conclusion: Carpe Diem!
In conclusion, don’t let this layoff keep you down! It’s important to give yourself time to process the potential shock of your layoff, enjoy some unstructured time, but, when you’re ready, jump back into your career feet first! Making the most of your layoff financially by wisely deciding what to do with the financial matters surrounding the layoff and optimizing your job search will yield dividends in the future! Instead of viewing your layoff as a problem, view it as an opportunity that will force you to up your game and take your career to the next level!
Sources
1: https://www.fidelity.com/viewpoints/retirement/what-to-do-with-an-old-401k
2: https://insights.wrpwealth.com/stock-options-laid-off
When Daniel is not giving financial advice or managing investments, he enjoys renovating properties, real estate investing, drinking coffee, hanging out with friends, spending weekend trips in his camper van, and exploring the outdoors on a hiking or biking trail in his hometown of Roanoke, VA and beyond.