When Microsoft announced its first-ever voluntary retirement program in late April, we wrote about what to think through before deciding. Now, eligible employees have received the actual package documents and there’s a lot more to dig into.
If you’re sitting with a stack of VRP paperwork right now, here’s what matters.
The Deadlines Are Real and They’re Close
Here are the dates you need to know:
► June 8, 2026 (11:59 PM PDT): Deadline to elect to participate
► June 22, 2026 (11:59 PM PDT): Deadline to sign your Voluntary Retirement Separation Agreement and Release
► June 29, 2026 (11:59 PM PDT): Deadline to rescind your signed agreement if you change your mind
► July 1, 2026: Last day of active employment
► July 2, 2026: Official separation date which is fixed and cannot be extended
In short, you have roughly 30 days to make one of the more consequential financial decisions of your life.
What’s Actually in the Package
Cash Severance. For Level 65–67 employees, you’ll receive 2 weeks of base pay for every 6 months of service, with a minimum of 8 weeks and a maximum of 39 weeks (about nine months). Levels 64 and below get 1 week per 6 months of service, with the same floor and ceiling. This comes as a lump sum, paid within 30 days of your separation date. Additionally, those eligible will receive their annual bonus in the last paycheck.
Stock Vesting. Unvested RSUs will continue to vest for six months after your last day. If you have 25 or more years of continuous service (or are within one year of it), that window extends to 12 months. VERY importantly, if you qualify for Microsoft’s 55 and 15 retirement vesting or are within one year of meeting the age and service thresholds, your eligible unvested awards continue to vest on their original schedule. This is a huge deal for folks who are 64 years old, or within one-year of satisfying the Microsoft rule of 55 and 15. The Microsoft 55 and15 rule applies to employees who are at least 55 years old with at least 15 years of continuous service at the company (or are age 65).When you meet these criteria, all eligible stock grants that were granted more than one year before your termination date will continue to vest after separation.
Healthcare. This is where the VRP stands out and where people need to pay close attention.
The Healthcare Picture: Better Than a Layoff, But Still Complex. This is one of the most meaningful differences between the VRP and a standard Microsoft layoff package. In a typical Reduction in Force (RIF), Microsoft has historically paid COBRA premiums for up to six months. Under the VRP, eligible employees can receive up to five years of continued healthcare coverage.
Here’s how it breaks down:
- Year 1: Microsoft fully subsidizes your COBRA premiums for medical, dental, vision, and Wellbeing at Microsoft coverage. You pay nothing.
- Month 13 through Month 18: Standard COBRA rates kick in, so you’re paying out of pocket.
- Month 19 onward (after COBRA exhausts at 18 months): You may transition into VRP Extended Healthcare coverage for up to an additional 42 months, maintaining the same coverage under self-pay COBRA rates.
- Maximum coverage end date: July 1, 2031, five years from your separation date.
The important caveat: coverage can end earlier. If you become enrolled in or merely become eligible for Medicare Part A or B after January 1, 2027, your VRP Extended Healthcare coverage ends. In short, turning 65 and becoming Medicare-eligible can trigger the end of your coverage under this program.
If you’re in your early-to-mid 60s, this timeline deserves a close look.
How This Compares to a Standard Microsoft Layoff
For context, a standard Microsoft RIF package for a Level 65–67 employee uses a similar severance pay formula, but with some notable differences:
- COBRA subsidy: Six months in a layoff vs. twelve months fully paid in the VRP.
- Extended healthcare: Not offered in a standard layoff. The VRP’s five-year coverage window is unique.
- Stock vesting: Standard layoffs offer continued vesting for a defined post-termination period. The VRP’s Retirement vesting provisions, especially for those who qualify or are within one year of qualifying for the 55 and 15 retirement vesting, can be significantly more generous.
- Continuation period: In a layoff, there’s often a period where you stay on payroll but don’t work, which reduces your net severance. The VRP doesn’t work that way, your last day is fixed at July 1, and severance is paid as a clean lump sum.
On balance, the VRP is a more generous package, particularly as it relates to healthcare, but this sort of decision needs to be made in the context of your family’s situation and your financial plan.
A Few Things Worth Doing Before June 8th
- Understand exactly where you stand with your RSU vests. Identify what shares vest in the next 6–12 months, and what Retirement vesting (55/15 rule) eligibility means for shares vesting beyond that.
- Model out your healthcare costs from July 2026 through your Medicare eligibility date, month by month.
- Know your 401(k) balance and whether you hold appreciated Microsoft stock inside it. There is potentially a NUA strategy available to you, and it’s easy to accidentally give it up by rolling over funds to a Traditional IRA without careful consideration.
- Run a long-term retirement analysis: what does your spending look like, and does your portfolio support it without a paycheck?
Microsoft suggested consulting with an expert in this area before making a final decision in the VRP FAQ document. At Avier, we work with Microsoft employees through exactly these kinds of decisions and are happy to be a sounding board to you as you evaluate your options.