Key Takeaways
- Check ESPP timing—you may get contributions back
- Use this moment to evaluate concentration risk
- A low-income year may be good for strategic selling
Last updated: December 2025
Other Equity Issues
"I was in the middle of an ESPP purchase period" — Here's what happens.
ESPP (Employee Stock Purchase Plan)
If you were participating in an ESPP:
| Situation | What Happens |
|---|---|
| Mid-purchase period | Contributions refunded (no stock purchased) |
| Just before purchase date | Check timing—you might complete the purchase |
| Already purchased shares | You keep them (they're yours) |
The 15% discount benefit only applies if you complete the purchase period. Mid-period termination typically means you just get your contributions back.
Concentrated Stock Position
Many employees end up with significant holdings in their former employer's stock. A layoff is a good time to evaluate:
| Question | Why It Matters |
|---|---|
| What % of net worth is in this one stock? | > 10-15% is concentrated |
| Did you lose your job AND have your stock drop? | Double whammy risk |
| What's your emotional attachment? | May cloud judgment |
The Concentration Problem
| Scenario | Your Situation |
|---|---|
| Stock does well | Great—but you're no longer employed there |
| Stock drops 50% | You lost your job AND half your savings |
| Company fails | Lost job, lost savings, lost options—total wipeout |
Diversification isn't about optimizing returns—it's about preventing catastrophic loss.
Strategic Selling
A layoff year may be a good time to sell appreciated stock:
| Factor | Why It Matters |
|---|---|
| Lower income this year | Lower capital gains tax bracket |
| Tax-loss harvesting | Sell losers to offset gains |
| Rebalancing opportunity | Reduce concentration |
Example tax impact:
| Your Situation | Long-Term Capital Gains Rate |
|---|---|
| Employed, earning $200K | 15-20% |
| Unemployed, earning $50K | 0-15% |
Selling in a low-income year means paying less tax on the gains.
What NOT to Do
| Mistake | Why It's Wrong |
|---|---|
| Panic selling at market low | Locks in losses |
| Holding out of loyalty | Emotions aren't investment strategy |
| Selling everything immediately | May have tax consequences |
| Ignoring it entirely | Concentration risk remains |
Thoughtful approach:
- Assess your concentration percentage
- Decide on target allocation
- Create a selling schedule (not all at once)
- Consider tax implications of timing
Test Your Knowledge
What typically happens to ESPP contributions if you're laid off mid-purchase period?
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