I'm Michael Walstedt, a fee-only wealth advisor at Reliant Wealth Advisory, based in Hoboken, NJ. I work with tech employees on equity compensation, IPOs & concentrated stock decisions. Click here to book a free strategy session.
If you're one of the roughly 60,000 Microsoft employees who got the Voluntary Exit Offer (VEO) email this week, you've probably already read the terms twice and seen them picked apart on Blind. Weeks of pay per six months of service, some continued vesting, a fixed stretch of healthcare. That part isn't hard to understand.
What's harder is figuring out what the offer is actually worth to you. The severance number in the email is the least interesting part of the decision. The things that move the outcome are how your stock vests, which tax years the money lands in, and what it costs to cover yourself until the next job.
Here are the four I'd want any client to think through before the VEO's early December deadline:
1. This isn't a bonus, so compare it to the right thing
Microsoft has said the package matches its standard severance. That matters more than it sounds. It means you aren't being paid a premium to leave. You're being offered the same exit you'd likely get in a layoff, just with you choosing the timing.
So the honest comparison isn't "severance vs. nothing." It's one of two things, depending on your situation:
If you were already planning to leave in the next year or so: This is close to found money. You'd be walking away from the same comp either way, and now you get paid to do it on your schedule.
If you'd otherwise stay three or more years: You're trading years of salary, refreshers and vesting for a few months of base pay. That's usually a bad trade unless you have a specific reason to go.
One more thing to check: a voluntary separation can affect your eligibility for unemployment benefits, and the rules vary by state. Don't assume you'll get them. Look up your state's rules before counting on that money in your runway.
2. Know exactly which shares you keep and which you walk away from
For a lot of Microsoft employees, unvested stock is worth more than the severance itself. Before deciding, pull your vesting schedule from your brokerage account and split every grant into two buckets: shares that will vest during your continued vesting window, and shares that won't.
That second bucket is the real cost of saying yes. Put a dollar figure on it at today's price. If it's large, that's a strong reason to stay, or at least a number to bring to your next employer when you ask for a sign-on grant to make you whole.
The less obvious issue is the first bucket. Continued vesting sounds like pure upside, but it means MSFT shares keep landing in your account for months after your last paycheck (reportedly six or 12 months for level 67 and below, depending on tenure). Many people let those pile up because they're busy job hunting or just don't think about it. You end up more concentrated in one stock right when you have the least income to absorb a drop.
A few things to decide before you sign:
Selling plan: Whether you'll sell shares as they vest, hold some, or sell down existing shares now.
Withholding: RSUs are typically withheld at a flat 22% federal rate. If you start a new job quickly, that will likely be too low. If you take a long break, it might be too high. Either way, it won't match your actual tax bill on its own.
ESPP: Find out what happens to any contributions in the current purchase period once you separate.
3. The tax year after you leave could be your cheapest ever, or your most expensive
Exits are expected by year-end, which means 2026 already holds close to a full year of salary and vesting. The question is what 2027 looks like, and that depends almost entirely on what you do next.
If you take real time off: 2027 could be the lowest-income year you've had in a decade. That's an opportunity most people waste. A low-income year is a good time to do Roth conversions at a lower bracket, or to sell long-held MSFT shares and pay a lower capital gains rate than you would while working. If you've been sitting on a concentrated position because the tax bill felt too big, this may be the window.
If you land a new job quickly: 2027 could stack a new salary on top of severance and several more months of Microsoft vesting. That's how people end up in a higher bracket the year after they "lost" their job, often with a surprise bill in April because nothing was withheld correctly.
Two things to find out now:
When severance pays: Whether it arrives as a lump sum or over time, and in which calendar year. That alone can shift your bracket.
Your final 401(k) contributions: Severance often isn't eligible for 401(k) deferrals. If you haven't maxed out for 2026, see whether you can raise your contribution on your remaining paychecks before you leave.
4. Healthcare and runway cost more than the offer letter suggests
Unlike the spring Voluntary Retirement Program, the VEO doesn't include extended healthcare. Once the fixed coverage period ends, you're on COBRA, a marketplace plan or a new employer's plan. For a family, COBRA can easily run a couple thousand dollars a month.
The marketplace can be much cheaper, but here's the catch: premium subsidies are based on your income for the year, and severance and vested RSUs both count. The same continued vesting that looks like a perk can shrink or wipe out a subsidy you'd otherwise get. Run the numbers on both options with your expected 2027 income, not a guess.
If you have an HSA, it can help here. HSA money can generally be used tax-free for COBRA premiums, which is one of the few cases where it covers insurance premiums at all.
Then do the runway math honestly. Add up your monthly spending, including healthcare, and divide your cash plus after-tax severance by that number. That's how many months you can look for the right job instead of the first one. If the answer is under six, think hard before saying yes in this hiring market.
The real question
Strip away the headlines about layoffs and AI spending, and the decision comes down to this: would you have left Microsoft in the next year or two anyway? If yes, the offer probably helps you, as long as you plan the stock, taxes and healthcare around it. If no, you'd be selling future pay at a discount, and the package alone isn't a reason to go.
Either way, you have about six weeks. That's enough time to run the numbers properly, but not if you wait until the week before the deadline.
I work with tech professionals on equity comp and career transitions like this one. If you'd like a second set of eyes on your offer before you decide, click here to book a call or grab some time below:
