If you’re reading this, there’s a good chance you’ve recently been impacted by a Reduction in Force (RIF) at Microsoft. First off, we’re sorry you’re going through this – it’s a tough, emotional time filled with uncertainty. But we’re here to help guide you through the financial side of things and make sure you don’t miss any critical steps as you plan your next move.
Below is a checklist of key items you should be thinking about in the days and weeks following your layoff:
1. Understand Your Severance Package
Start by reviewing the details of your severance package, including:
- How many weeks of pay you’re receiving
- Health insurance continuation options (COBRA or otherwise)
- Any requirements you need to meet to receive stock vesting under the “Retirement” provision (such as signing a Retirement Release Agreement)
- Timeline for your final paycheck and severance payout
If you’re unsure what you’re eligible for, Microsoft’s AskHR team is your best first stop: AskHR@Microsoft.com.
2. Apply for Unemployment Insurance
You are likely eligible to apply for unemployment benefits through your state’s employment security department. Don’t wait – processing times can be lengthy, and benefits aren’t retroactive.
3. Download Your Final Paystub and Gather Contribution Info
Your final paystub includes important data you’ll want to track:
- 401(k) Contributions (YTD): If you’re employed again later in the year, you’ll need to make sure your combined contributions don’t exceed the IRS limit for the year ($23,000 in 2025, or $30,500 if age 50+, or $34,750 if between age 60-63).
- HSA Contributions (YTD): Similar logic applies here. The 2025 limit is $4,150 for individual coverage and $8,300 for family coverage (+$1,000 catch-up if 55+).
4. Review Health Insurance Options
Your Microsoft medical, dental, and vision benefits end shortly after your termination, but you have options:
- COBRA Coverage: You can continue your existing coverage for up to 18 months on a self-pay basis.
- Spouse/Partner Plan: If your spouse or partner has employer coverage, compare costs. In many cases, this could be a better value than COBRA.
5. Evaluate Life and Disability Insurance
You may be eligible to convert or port your Microsoft-provided life and disability insurance:
- Portability or Conversion: Prudential and/or MetLife will send information to your home address. You typically have 31–60 days to act.
- Cost vs. Benefit: These policies can be expensive to maintain – this is a great time to assess whether you actually need them.
6. Consider a 401(k) Rollover (But Don’t Rush)
You don’t have to roll over your Microsoft 401(k) immediately. If your balance is above $7,000, you can leave it in the plan.
A rollover to an IRA may make sense if you’re looking for:
- More investment flexibility
- A consolidated retirement picture
- Lower fees (depending on where you roll it)
7. Don’t Forget About Your Stock Awards and ESPP
Your unvested stock awards typically stop vesting on your termination date – unless you qualify for Retirement Vesting:
- Age 55 + 15 years of continuous service OR Age 65
- You must meet additional requirements, including signing a Retirement Release Agreement
- Your stock may continue to vest over a set period of time as described in your package. Please read your documents carefully to understand what will happen for you.
ESPP Contributions from the current quarter will be refunded if your last day is before the end of the offering period.
8. Use the Group Legal Plan Before It Expires
If you’ve been paying into Microsoft’s MetLife Group Legal Plan, your coverage technically ends at the end of the month in which you are terminated – but any open matters can still be resolved. You may also be eligible to continue coverage on your own (paid monthly via bank draft) by enrolling within 60 days of your last day.
This can be a great time to:
- Create or update estate documents (wills, powers of attorney)
- Review severance or employment contracts
- Get legal advice on unemployment, severance disputes, or immigration
Reach out to MetLife Legal (855) 234-1844 or enroll online through your MetLife Legal account to continue coverage.
9. Don’t Overlook Net Unrealized Appreciation (NUA) in Your 401(k)
If you have Microsoft stock inside your 401(k), be careful before initiating a rollover.
There’s a complex but potentially valuable tax strategy called Net Unrealized Appreciation (NUA) that allows you to pay long-term capital gains tax – rather than ordinary income tax – on the growth of employer stock. However, it only applies if you take a lump-sum distribution and transfer the stock in-kind to a brokerage account.
This strategy works best when your cost basis in the Microsoft stock is extremely low. If your shares were mostly purchased at higher prices (e.g. during the last few years), NUA is likely not a fit – and a rollover may be cleaner and more tax-efficient. If you’re unsure, we strongly recommend talking with a financial advisor or CPA before making any moves.
10. Microsoft Alumni Network and Additional Resources
You can stay connected to former colleagues, job opportunities, and resources through the Microsoft Alumni Network. Other contacts worth keeping handy include:
- Fidelity (401k & HSA): (888) 810-6738
- COBRA (Businessolver): (833) 253-4929
- Benefits Questions: AskHR@Microsoft.com
Final Thoughts
Being laid off – especially from a place like Microsoft – can feel jarring and overwhelming. But with the right guidance and a proactive plan, this transition can also be a meaningful opportunity to reset, refocus, and rebuild. Whether you’re heading into a new job right away or taking time to reflect, don’t go it alone.
Need help figuring out what’s next? We’re here for you.