01/23/2023
What to consider if were just laid off.......
This is what a quality 👔Financial Advisor should be working with you on, in your time of distress.
1️⃣Reassess your basic budget to calculate you total monthly essential nut. Do you have 6-12 months of cash set aside to maintain your essential expenses like mortgage, rent, healthcare, car payments, child tuition, utilities...ect.
What can you cut?
Have a family meeting explain there new austerity budget is in effect.
When you have NO income, LUMP sums dwindle fast.
2️⃣What does your severance package look like?
What will your net after tax payments be?
How long will the payments last?
Should you stop your 401k witholding to allow for increased cash flow?
Will you immediately vest for RSUs or options?
What will the tax consequences in 2023 be of your severance package?
Are you OVERwitholding?
Do you forfeit all of your UNVESTED RSUs ?
What happen if you access your ESPP before the 2 year holding period?
Do you have personal life insurance to protect your family or where you just relying in the group plan?
How much will your total COBRA cost be?
3️⃣Assess your sources of immediate liquidity.
Cash, CDs, Money Market, Bonds
Should you sell stocks if you know you'll need cash in the next 6-12 months?
What stocks should you sell based on least tax implication?
Is it a good year to sell stocks because you may be in a lower Long Term Capital gains bracket?
Should you draw down on credit line(s) and put cash in a checking account?
Without a job, your access to credit may get cut off and /or it is unlikely you a bank will loan you money being unemployed.
Do you have Roth money you could access basis on tax and penalty free?
Do you have Cash value life insurance you could borrow against?
Are you aware of the penalties associated with a pre 59 1/2 401k/IRA withdrawal?
Will you have any forced Deferred compensation drops because you separated service?
4️⃣Income taxes
Assuming your severance is your only income source for 2023, what opportunity could a lower income provide?
Lower capital gains rate?
Lower ordinary income tax brackets for possible IRA to Roth conversions?
Qualification for tax credits previously phased out of?
Impact of equity compensation ?
5️⃣ Risk
With no income, did your investment risk tolerance just change?
Example.... If you look at your IRA/401k like its an "emergency" fall back, do you really want it all in 100% equites?
6️⃣ 401k Rollovers
Beware of people after your 401k rollover, the "rollover experts" will be coming out of the woodwork, especially if you're advertising your layoff on
You don't "need" to do anything. Take your time, breathe.
-Assess weather you may need access to these funds to live
-Consider the expense of using an advisor
-Rule of 55 for 10% penalty free withdrawals If you leave your 401k at your employer.
Its going to be OK..Lots of great people will help you. 🤗
