Are You Prepared for Layoffs at Your Company?
- Craig VanHulzen Money Channel Editor
- 2001 6 Jun
If you have suddenly found yourself without work, or still have a job but are worried your company might have layoffs, there are things you can do to manage this situation. Being laid off is the stress equivalent of divorce or death of a loved one.
You need to protect yourself, compose your thoughts and devise a plan of action. You have legal rights so dont be timid. It will be a natural reaction for many people experiencing a layoff. If you know what you are legally entitled to and what you can do to protect yourself and your family, you will not be as timid.
Packages offered to ex-employees vary widely. These packages may require certain actions by you in order to receive payment, but you will have a period of time where you can be looking for new employment and still get paid by your old employer.
Use the time given to begin a job search and to finish any required tasks. Remember, that most companies offering severance packages offer an amount of time to think it over. They will ask you to sign a release form. You should have enough time to consult someone about the terms of the release.
For most people, the company pays some or all of the insurance costs. After a layoff, insurance will be your personal responsibility. After all, your family depends on coverage and you cant afford to be without insurance while job hunting. This is the reason for COBRA (consolidated omnibus budget reconciliation act). You have 60 days to elect coverage und COBRA. It offers you the chance to remain on your employers plan for up to 18 months as long as you pay the premiums.
If you have participated in a defined contribution plan, such as a 401(k) plan, you are entitled to take all of your contributions plus any vested portion of the company contributions. You do this through and IRA rollover or your next employers plan. Either of these options will avoid any tax issues.
If you have a loan out on your 401(k) plan, beware and consult professional advice. You may be required to pay the full amount upon termination or suffer early withdrawal tax penalties.
You dont get to hold onto stock options and the company will outline specific details regarding your options at the time of layoffs. Act quickly on stock options, they have a limited time window in most cases 90 days to exercise.
Dont forget that you can file for unemployment insurance once your severance runs out. Walk into your local Employment Service Office. This will only be a portion of your former salary, but it is better than nothing when job searching and raising a family.