By Cameron Hendricks via Iris.xyz
While being laid off at any age or stage in your career can come as a shock, getting laid off while in your 50s with retirement plans in sight, can completely overhaul your financial plan.
Considerations if this happens to you:
- Severance/Pro-Rated Bonus/Vacation or sick leave pay out – Many of these will be paid to you right away, but you may have the option to spread out the severance payment over separate tax years. This way you can max out the 12% tax bracket for example instead of moving to the 22% and higher brackets with a onetime lump sum severance.
- Stock Options – Under this involuntary termination, your stock options may become 100% exercisable or vest on your termination date. This will of course help with income, but will also increase your taxable income.
- 401k Loan – 401k loans typically are required to be paid in full upon termination. If not repaid, then the loan is treated as a distribution which is taxable
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