What happens to your RSUs, options and vesting when you leave a tech job

Most tech workers planning an exit have a spreadsheet for their runway, a rough number for their notice period, and only the vaguest idea what happens to the equity that made up a third of their compensation. This is understandable — equity grants are explained once, at offer stage, in a conversation designed to make the total number sound large. The rules that govern what happens when you leave are in a document almost nobody reads until the week they need it.

By then some of the decisions have already been made for you. This piece covers what you keep, what disappears the moment you resign, the clock that starts running on your last day, and the tax bill that catches people who exercise options without modelling the cost first. It is written US-first, because that's where the specific mechanics — the 90-day window, the AMT exposure, ISO versus NSO treatment — bite hardest. The general shape holds elsewhere; the specifics won't.

One caveat stated plainly up front: none of this is tax or legal advice, and equity compensation is the area where generic advice does the most damage. The figures below are illustrative. Before you act on any of it, get your actual grant documents in front of an accountant who handles equity comp specifically — not a generalist, and not a colleague who left two years ago under different terms.

RSUs and options are not the same asset

The two are routinely lumped together as "my equity" and they behave almost nothing alike when you leave. The distinction is worth getting straight before anything else, because it determines whether leaving costs you money or merely costs you upside.

Restricted stock units are a promise of shares on a schedule. You pay nothing. When they vest, shares appear in your brokerage account and their full value is taxed as ordinary income that year, usually with some shares withheld automatically to cover it. There is no decision to make and no deadline to miss.

Stock options are a right to buy shares at a fixed price. Vesting doesn't give you anything — it gives you permission to spend your own money. To convert a vested option into an actual share, you exercise it: you pay the strike price. That requires cash, it usually triggers tax, and crucially, it has an expiry date that arrives shortly after you leave.

So the honest summary is this: with RSUs, leaving forfeits future grants you haven't earned yet. With options, leaving can forfeit value you have already earned, simply because you ran out of time or cash to claim it.

What happens to your RSUs

Vested RSUs are yours and leaving doesn't touch them. Once a tranche vests, those are shares you own outright — already taxed, sitting in your account, indistinguishable from stock you bought on the open market. You can hold them or sell them on whatever timeline you like, subject to trading windows and insider rules while you're still an employee. Your cost basis is the share price on the vest date, and any movement since then is a capital gain or loss when you sell.

Unvested RSUs are forfeited. In virtually every plan, the unvested portion of your grant is cancelled on your termination date and you receive nothing for it. There is no pro-rating, no partial credit for the eleven months you served toward a twelve-month tranche. This is the standard term across the industry and it is very rarely negotiable on a voluntary resignation.

Which makes the vesting cliff the single most expensive date in your equity agreement. A typical grant vests over four years with a one-year cliff: nothing at all until your first anniversary, then 25 percent all at once, then the rest quarterly or monthly. Leaving at eleven months and three weeks yields zero. Leaving a week later yields a quarter of the grant. On a $200,000 four-year grant, that week is worth $50,000.

Cliffs get the attention, but the same arithmetic applies to every subsequent vest date on a smaller scale. If your grant vests quarterly, resigning three weeks before a vest date forfeits that tranche entirely. Over a notice period you may be able to reach it; that depends on a detail covered further down.

The private company trap: double-trigger RSUs

If your employer is private, your RSUs probably carry two conditions rather than one. They vest on time served, as usual — but they don't actually settle into shares until a liquidity event, typically an IPO or acquisition. Both triggers have to fire.

This produces a situation that surprises people badly. You can serve three years, satisfy the entire time-based condition, resign, and receive nothing at all, because the second trigger never fired while you were there. Treatment on departure varies by plan: some forfeit time-vested units outright, some preserve them for a defined period after you leave, some preserve them only if a liquidity event occurs within a window measured in months. A handful are genuinely generous. You cannot guess which yours is, and the difference can be the largest single number in your exit.

Find out before you resign, not after. The answer is in your plan document, and if the language is ambiguous — it often is — it is worth paying for an hour of a lawyer's time to read it.

Options: the 90-day clock

Here is the rule that costs former employees the most money, and the one fewest people know before they need it. When you leave, your vested options don't stay vested indefinitely. You get a post-termination exercise window — conventionally 90 days — in which to exercise them and pay for the shares. Miss it and they expire. Not reduced in value: gone, with no compensation, however far in the money they were.

Ninety days is the default, and it is short. It runs from your termination date, not from when you get around to reading the paperwork, and it does not pause because you're mid-move, mid-job-search, or waiting on a tender offer that might make the shares sellable. Some companies have deliberately extended their windows — seven to ten years, in a handful of well-known cases — which transforms the decision from a scramble into something you can actually think about. Assume you have 90 days until you've confirmed otherwise in writing.

There's a second deadline hidden inside the first. If your options are incentive stock options (ISOs), the favourable ISO tax treatment only survives if you exercise within 90 days of leaving. Even at a company that generously extends your exercise window to several years, your ISOs automatically convert to non-qualified options (NSOs) at day 91, with materially worse tax treatment. The extended window keeps the options alive; it does not keep them tax-advantaged.

What exercising actually costs

"Exercise your vested options" sounds like an administrative step. It is a purchase, and at a company whose value has risen meaningfully since you joined, it can be a large one — followed immediately by a tax bill on money you haven't received.

The strike price is the first cost. Ten thousand vested options at a $2.50 strike is $25,000 in cash, due inside the window.

The tax is the second, and it works differently depending on the instrument. With NSOs, the spread between the current fair market value and your strike price is taxed as ordinary income at exercise. If those shares are now valued at $12, your spread is $95,000, and it is taxed this year as though it were salary — whether or not you can sell a single share. With ISOs, there's no ordinary income tax at exercise, but that same spread becomes an adjustment for the alternative minimum tax, which is the mechanism that has produced some genuinely ruinous outcomes for people who exercised large private-company grants and then watched the valuation fall.

At a public company this is uncomfortable but manageable: the shares are liquid, so you can sell enough of them to cover both the strike and the tax. Same-day sale or sell-to-cover exists precisely for this.

At a private company, there is no such escape. You pay real cash for shares you cannot sell, and you pay real tax on a paper gain derived from a 409A valuation you had no part in setting. If the company later fails, you have spent that money and lost it, and the capital loss will not be worth what the tax cost you. If it succeeds, this will look like the best financial decision you ever made. Both outcomes are live, and the honest position is that you are making a concentrated, illiquid bet — on a single company, using post-tax savings, at exactly the moment your income has stopped.

Timing your exit around the calendar

Once you have the vesting dates written down, the decision changes shape. You are no longer choosing when to leave; you are choosing between specific, quantified outcomes.

Sometimes the arithmetic is decisive. If a $40,000 tranche vests in five weeks and you are not in crisis, waiting five weeks is close to the highest-paid decision available to you. Sometimes it is not: if you are genuinely unwell, the tranche is small, or the next meaningful date is eleven months out, staying to reach it is a poor trade. The point of doing the arithmetic is to make that trade knowingly instead of discovering the cost afterwards — and to keep the equity from becoming the reason you never leave. There is always another vest date. At some point the answer has to be that enough is enough, and the calendar can't be allowed to make that call indefinitely.

One structural detail carries real weight: whether your termination date is your last day in the office or the end of your notice period. If you're paid through a notice period and your termination date falls at the end of it, vests landing inside that window may still be yours, and your exercise clock starts later. If your employer treats your last working day as the termination date, they don't. Two companies with identical vesting schedules can produce outcomes weeks apart on this alone, and it is worth establishing before you choose a resignation date.

And if you're being laid off rather than resigning, equity is negotiable in a way it simply isn't on a voluntary exit. Accelerated vesting, an extended exercise window, and continued vesting through a severance period are all things companies have agreed to. They are rarely offered unprompted. The severance negotiation piece covers the sequence; the thing to know here is that the exercise window in particular is a low-cost concession for an employer to grant and can be worth a great deal to you.

ESPP and the smaller items

If you participate in an employee stock purchase plan, shares you've already bought are yours to keep. Contributions deducted since the last purchase date typically don't buy anything — they're refunded to you as cash, because you need to be employed on the purchase date to participate. If a purchase date falls within a few weeks of your planned exit, that's worth factoring in, since ESPP discounts are usually the cleanest return in the whole compensation package. Selling ESPP shares within the holding periods creates a disqualifying disposition and a worse tax outcome, which is a reason not to liquidate everything reflexively on your way out.

Two other things worth checking: whether your plan has any "good leaver" or retirement provision that preserves vesting under defined circumstances (uncommon in tech, not unheard of, and occasionally triggered by age and tenure combinations people don't realise they've met), and whether any part of your grant carries a clawback tied to a non-compete or non-solicit. The latter is increasingly hard to enforce in much of the US, but the clause being unenforceable and the company declining to assert it are different things.

The part that isn't arithmetic

Equity is the mechanism by which a job you want to leave keeps you there. That is substantially what it's designed to do — the vesting schedule is a retention device, and it works. The specific feeling of watching a vest date approach while dreading every Monday is one of the most common experiences among people planning an exit, and it is worth naming as a real cost rather than treating it as a free option to wait.

What the arithmetic does is convert a vague sense of being trapped into a set of dates and numbers. Sometimes the number is large enough to justify staying another quarter, and knowing that makes the quarter bearable in a way that indefinite waiting is not. Sometimes it turns out to be smaller than the story you'd built around it, and the thing that felt like a golden handcuff was mostly an unexamined assumption. Either way you end up deciding on the actual figures.

Work out the number, write down the dates, and then make the decision as a whole person rather than as a spreadsheet. The freedom number framework is the right companion for the second half of that, and preparing while you're still employed covers the wider groundwork this sits inside. What you shouldn't do is leave the equity question until your last week, when the only remaining choices are the expensive ones.