You have sixty days. Use them.
Federal law requires most large employers to give sixty days' written notice before a plant closing or mass layoff. That notice is not just a warning, it is a window. Most of the decisions that matter financially are easier to make while you are still employed, and a few of them close permanently the day you separate.
What to handle, and in what order.
Some of these only work before your separation date. That is the whole reason the sequence matters more than the checklist.
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Days 1–14Documents
Get everything in writing
Request your severance agreement, your most recent 401(k) statement, your vesting schedule, and confirmation of any unused PTO payout. Ask HR for the plan administrator's direct contact.
Read the severance agreement before signing anything. Most include a review period, and signing early gives it up.
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Days 15–45Decisions
Handle what expires
Retirement account choices belong here. Several depend on your age at separation and cannot be recovered once the money moves.
If any part of your severance is negotiable, this is the window. Leverage drops sharply after your last day.
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Days 45–60Coverage
Line up health insurance
Losing employer coverage triggers a special enrollment period. COBRA continues your current plan at full cost. A marketplace plan through Pennie is priced against your new, lower income. A spouse's plan is a third option, since loss of coverage is a qualifying event.
Compare all three before coverage lapses, not after.
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AfterSeparation
File, then reassess the tax year
File for unemployment compensation promptly, since benefits are generally not retroactive to the separation date.
Once income settles, revisit the tax picture. A year with partial wages plus severance often looks very different from the year before it.
Four things you can do with a 401(k).
There is no universally correct answer here. The right one depends on your age at separation, the quality of your employer's plan, and whether you hold company stock inside it. What follows is the honest version of each, including the one most people choose and later regret.
Leave It in the Plan
Usually available above a plan-specified minimum balance. Institutional funds inside large plans often cost less than retail equivalents, and the account keeps its federal creditor protections.
If the plan is strong, or you are near 55Roll It to an IRA
Opens the full investment universe and consolidates old accounts. Move it as a direct trustee-to-trustee transfer. A check made out to you triggers mandatory withholding and a sixty-day replacement deadline.
If you want control and are past 59½Roll It to a New Plan
Keeps everything in one place and preserves plan-loan eligibility. Worth doing only if the new plan's investment menu and costs are at least as good as what you are leaving behind.
If you already have a job lined upCash It Out
Immediate access at real cost. Ordinary income tax on the full amount, a 10% federal penalty if you are under the qualifying age, plus mandatory withholding. The most expensive option and the hardest to undo.
If there is genuinely no alternativePlan rules, minimum balance thresholds, and available options vary by employer. Confirm the specifics with your plan administrator before acting on any of the above.
Three rules that are easy to miss.
Each of these costs real money when it is discovered late. Two of the three cannot be undone once the decision is made.
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The Rule of 55
If you separate from service in or after the calendar year you turn 55, you may be able to take distributions from that employer's plan without the 10% early withdrawal penalty. Ordinary income tax still applies.
Here is the part that catches people. Rolling the balance into an IRA generally forfeits this treatment. If you are 54, 55, or 56 and separating, understand this rule before you move anything.
Not reversible once rolled -
Severance and the Tax Year
Severance is taxable as ordinary income in the year you receive it. A lump sum paid on top of a full year of wages can push you into a higher bracket than you have ever been in, in the very year your income is about to fall.
Whether it can be split across two tax years, or paid as salary continuation instead, is usually set by the employer's plan rather than by negotiation. It is still worth asking. Worth modeling before you sign: the combined effect of final wages, severance, PTO payout, and any equity vesting that lands in the same year. That is the work our tax planning service is built around.
Ask before you sign -
Company Stock and NUA
Employer securities held inside a qualified plan may be eligible for net unrealized appreciation treatment, where the growth is taxed at long-term capital gains rates rather than as ordinary income when distributed.
It is uncommon, the rules are specific, and it disappears entirely if the stock is rolled into an IRA along with everything else. If your statement shows company stock, have the conversation first.
Lost if rolled with everything else
Recent Pennsylvania WARN filings.
Notices filed with the Pennsylvania Department of Labor & Industry. We track these because the sixty-day window is the part that matters, and it is the part most people find out about too late.
Layoffs and retirement accounts, answered.
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What is a WARN notice?
The Worker Adjustment and Retraining Notification Act requires employers with 100 or more employees to notify workers, the state, and local government at least sixty days before a covered plant closing or mass layoff. Pennsylvania's Department of Labor and Industry publishes every notice it receives, which is where the filings above come from.
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Do I have to move my 401(k) when I am laid off?
Usually not immediately. Most plans allow you to leave a balance above a stated minimum. Moving it is a decision worth making deliberately rather than by default, particularly if you are near 55 or hold company stock inside the plan.
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Is severance taxed differently than regular pay?
It is taxable as ordinary income. Withholding is often applied at a flat supplemental rate, which is not the same as your actual tax rate, so the amount withheld may not match what you ultimately owe when you file.
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Does Pennsylvania tax retirement distributions?
Pennsylvania does not tax qualified retirement plan distributions taken after age 59½. Distributions taken earlier may be treated differently, and federal treatment is separate from state treatment. Confirm your specific situation with a qualified tax professional.
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Can we talk before my separation date?
Yes, and earlier is better. Several of the decisions on this page close the day you separate. The first conversation is a no-obligation introduction, and there is no requirement that you become a client.
Get a second read before the date arrives.
If you are inside the sixty-day window, bring your severance agreement and your most recent 401(k) statement. We will walk through what is reversible and what is not. Based in West Chester, serving families across Chester County.
Schedule a Conversation Or call the office directly: (610) 731-8066WARN notice information is compiled from public filings published by the Pennsylvania Department of Labor and Industry. James Walter Wealth Management is not affiliated with, endorsed by, or sponsored by any company named on this page. Company names appear solely to identify publicly filed notices.