Laid Off in 2026? 6 Critical Offboarding Steps You Can't Forget
In 2026, over 185,000 employees have been laid off from companies, such as Microsoft, Starbucks, F5, Meta, Oracle and many more. While employees are grappling with intense emotions during this time, there are many administrative tasks to consider. HR teams are also overwhelmed during this time, so they may not have the capacity to provide the offboarding experience that employees need to understand what they need to do.
Here are a few important administrative tasks that employees and HR teams often forget:
Health Benefits
You have 18 Months of COBRA coverage if you lost benefits due to job loss (voluntary or involuntary) or reductions in work hours. Before you sign up for COBRA coverage, shop around in your Health Insurance Exchange and compare private health insurance plans. You may find a health insurance plan that meets your needs at a lower cost, especially if you only use your insurance for preventive care.
If you can negotiate to move your termination date to the first of the following month rather than the end of the current month, that will give you one more month of health insurance coverage paid by your employer. Check with your HR.
401k Balance
According to Vanguard's How America Saves 2025 report, 33% of those who have Vanguard-administered 401(k) plans withdrew their 401(k) balance in a lump sum when they left a job rather than roll it over to a new employer’s 401k plan or their own rollover IRA. When you cash out your 401(k) balance before age 59 ½, you incur a 10% early withdrawal penalty and you must pay income taxes on the withdrawal. That is a significant financial hit to your retirement savings!
For some employees with low 401(k) balances, they don’t consider the amount worth the time to rollover into another employer plan or IRA. But consider this:
If you withdraw $1,000, you will receive $702 after 10% early withdrawal penalty and 22% federal tax. The tax rate will vary based on your personal financial situation.
In contrast, if you rollover the balance in an investment with a 7% annual rate of return over 40 years - assuming that you are currently 30 years old - you will have $15K when you retire at 70 years old.
Here are some considerations:
Current employer 401(k) plan - The plan may allow you to leave your balance in the current plan if you meet balance thresholds. If not, you will be forced to withdraw or rollover your balance. You will continue to be subject to plan administration fees if you leave your balance in the employer plan.
New employer 401(k) plan - Check with your HR to understand eligibility requirements and rollover options. Your new plan may not allow rollovers. Again, you will be subject to plan administration fees.
Rollover IRA - You can open your own rollover IRA. Once you have an account open, you can rollover any future 401(k) balances to this same account so you minimize the risk of forgetting about balances in past employers’ plans. Also, you will not be subject to employer plan administration fees. Note that you will need to open two separate rollover IRAs if you have traditional and Roth 401(k) accounts.
In both employer 401(k) plans and IRAs, you will pay fund expenses. In researching your mutual funds, you can look up the ‘expense ratio.’ Index funds have lower expense ratios - as an example, Vanguard 500 Index Fund Admiral Shares (VFIAX) has an expense ratio of 0.04%. Actively managed funds will have higher expense ratios. Also, large companies can negotiate institutional share classes with lower expense ratios.
As you decide your next steps, you need to understand if the participant pays for plan administration fees and how much, expense ratios for mutual funds available in your employer plans vs. individual IRAs, convenience of maintaining your company account, and risk of losing track of multiple accounts at prior employers.
Health Savings Account (HSA)
Similar to your 401(k) balance, your HSA balance can be rolled over to your own individual account or you can reimburse yourself for eligible expenses, such as COBRA premiums, deductibles, copayments, doctor visits, hospital services, prescriptions, and other eligible medical expenses. Check the IRS website for a list of eligible expenses.
If you keep your HSA balance in your employer account, you will be subject to plan administrator fees that can quickly deplete your balance. Move it or spend it.
Flexible Spending Account (FSA)
Submit reimbursements for your healthcare FSA. Your full annual election is available on day one of the plan year, so you can spend or get reimbursed for the total amount upfront. You must have incurred the medical service after your FSA plan year began, but before your employment ends.
In contrast, dependent care FSAs do not allow upfront spending. Reimbursements are only issued up to the amount you have actually contributed to the account at that time. Some platforms will allow you to submit the reimbursement request and you will receive the reimbursement after each payroll.
Payroll
Login to your payroll system as soon as you can so you don’t forget. Update your contact information - email, address and phone number - and download your most recent pay stub. It is important for the payroll department to know where to mail your tax form and required notices, as well as contact you for any questions or notifications after you leave employment. The pay stub is useful so you can compare it to your W2 form at the end of the year.
You should continue to have access to your payroll system after you leave employment, but I have had a company remove my access prematurely.
Other Benefits
If your employer offers reimbursements for wellness, learning or other benefits, remember to submit your reimbursement requests before you leave the company or your access is removed.
Whether you left your employment voluntarily or not, the transition is full of emotions - exhilaration, sadness, grief, fear, anger and many more. Hopefully, this list will make the transition just a bit smoother.