Layoffs are an all too common part of life in the technology industry. As of October 2026, there have been more than 500 layoffs reported across the tech sector this year, affecting some 225,000 workers.1 On average, about 800 technology jobs have been eliminated every day in 2026.
But just because they’re common doesn’t make dealing with a layoff in tech any easier than in other industries. The process typically kicks off without much warning. One morning there is a calendar invite in your inbox, and by the afternoon you’re reading through a severance agreement, an equity statement, and a benefits summary, each with its own set of deadlines.
But compensation in tech is built differently from most other paychecks. Typically, base salary is often only part of the picture, with the rest tied to restricted stock unit (RSU) vests, stock options, employee stock purchase plans (ESPP), and bonuses, each with its own schedule. It can be a complex web of compensation structures that has a tendency to unwind during the layoff process.
Your budget may have been sized to total compensation, not your base pay. Your tax withholding may have been running short all year. And a meaningful share of your net worth may sit in one company's stock, spread across an equity plan account you rarely log into.
The first 90 days are a chance to sort all of this out. Here is a roadmap built around the decisions tech professionals tend to face following a layoff, in roughly the order they come up.
Weeks 1 and 2: Lock down your equity
Equity decisions come first because they typically have the tightest deadlines.
Review your inventory
Log into your equity plan account and list every grant you’ve received, including RSUs, incentive stock options (ISOs), nonqualified stock options (NSOs), and ESPP shares. For each, note what has vested, what will be forfeited, and when any exercise window closes.
Vested options typically come with a post-termination exercise window, often 90 days, and ISOs generally need to be exercised within three months of leaving to keep their favorable tax treatment.2
If your severance agreement is still open, it’s worth considering requesting a later separation date or accelerated vesting for shares that are close to their next vest date.
Think carefully about your options
Stock options in a private company raise a different set of questions, particularly around tax treatment and concentration risk. Exercising takes cash, the shares may not be sellable for years, and exercising ISOs can trigger the alternative minimum tax based on the gap between your strike price and the company's current fair market value, even though you cannot sell.3
Before deciding whether or not to exercise, consider how much you are willing to put at risk in an illiquid position, whether the company has offered tender offers in the past, and how the exercise would fit in with the rest of your portfolio. In some cases, exercising only part of your options can balance the opportunity against the risk.
Find out what happens with your ESPP
ESPP contributions typically stop at termination. However, depending on the specifics of your company’s plan, money withheld during the current offering period may be refunded or used for a final purchase. Find out which applies in your situation. Remember, selling ESPP shares before the required holding periods can change how the gain is taxed.4
Days 15 to 45: Clean up your income
Once your equity holdings have been addressed, turn to the loose ends that RSU-heavy compensation tends to leave behind.
Rethink your budget
If your spending was built around total compensation, the gap between that number and your severance or next base salary might be large. Rebuild your monthly budget around cash you can count on, and treat any future equity as upside rather than income.
Run a tax projection
RSUs are taxed as ordinary income when they vest, and employers often withhold federal tax on them at the flat 22% supplemental rate for amounts below $1 million and 37% for above $1 million.5 Severance is often withheld the same way. For many highly paid tech professionals, that may fall well short of their actual rate.
Combined with option exercises, all of these payouts together can leave you with a sizable balance due on your taxes. A tax projection can help you determine whether estimated payments or a withholding change on a new job could help you avoid a surprise in April. Coordinated tax planning can help line up these moving pieces.
Watch your cost basis
When you sell shares from RSUs or ESPP purchases, your broker may report a cost basis of zero, even though you already paid tax on that value when the shares vested. If the basis is not adjusted on your return, the same income can be taxed twice.6 That’s why it’s worth reviewing your supplemental statements carefully ahead of tax time to clear up any possible confusion.
Consolidate your accounts
Many tech professionals end up with shares sitting in multiple accounts, like an equity plan account, a separate brokerage account, and even old 401(k)s from previous employers. Bringing them together can make it easier to see your full financial picture and manage risk.
Healthcare
Decide if you will elect COBRA or find healthcare coverage through the Affordable Care Act marketplace for your state. There’s a 60-day deadline to elect continued employer coverage, so the decision shouldn’t be left until the last second.
Days 46 to 90: Think about what comes next
By month three, the focus can shift from cleanup to your longer-term financial direction.
Address concentration risk
Concentration risk refers to the potential for outsized losses when too much of your portfolio is concentrated in a single company’s stock or those in the same industry.7 After years of vests and ESPP purchases, it is common for a large share of a tech professional's net worth to sit in their former employer's stock, opening you up to concentration risk.
Staged selling, tax-aware diversification, and gifting appreciated shares to charity are a few approaches worth exploring as part of your broader investment management plan.
Plan your next 401(k) move
Many tech employers offer after-tax 401(k) contributions, sometimes used for what is called a mega backdoor Roth. If you made after-tax contributions, how you roll over your 401(k) can matter. In many cases, the after-tax portion can be moved to a Roth IRA and the pre-tax portion to a traditional IRA, but the details depend on your plan and should be handled carefully to avoid unnecessary tax and penalties.
Evaluate offers holistically
When new job offers start to arrive, look at more than just the base salary. Look at the type of equity they’re offering, its vesting schedule, whether it is a public or private company, the strike price for any options, the 401(k) match, and the health plan.
A higher base with less equity may offer more stability, but a startup offer with more equity may offer more upside along with more uncertainty. Considering both, and weighing them against your long-term goals, can help you see how each one might fit into your plans.
Ask the bigger question
For some, a layoff is also a moment to consider whether the next chapter belongs in tech at all. A move into another industry, consulting work, or a planned break may each be worth considering. Our financial planning and advisory work often starts with exactly those kinds of questions.
Plan the next chapter together
Tech compensation can be complex, and a layoff makes every piece of it matter all at once. Working through these decisions with an advisor at the table can help you protect the equity you have earned, avoid tax surprises, and build a plan around the work and life you want next.
If you are facing a tech layoff, talk to a Composition Wealth advisor. We would welcome the chance to sit down with you and map out what comes next together.
Composition Wealth, LLC (“Composition Wealth”) is a registered investment adviser. Advisory services are offered only to clients or prospective clients where Composition Wealth and its representatives are properly licensed or exempt from licensure. This communication is for general informational purposes only and should not be considered investment, financial, tax, or legal advice. It should not be treated as a solicitation to buy or sell securities and does not consider individual investment objectives, strategies, tax status, or horizon. Please consult your own tax, legal and accounting advisors before making any related decisions.