It may seem strange, given the performance of the stock market this past year, to consider the prospects of corporate downsizing and restructuring.   On the surface it appears that record profits are being had, and companies should be embarking upon hiring binges.  Unfortunately, for many companies the success at the earnings trough has been due to management efficiencies and not an expansion of revenue.  Because of this, it’s not surprising to see more big names cutting headcount as we roll into 2014.

A few companies on the list:

  • Intel announced Jan 17th, 2014 they were cutting 5% of their workforce.
  • Bombardier 1700 jobs- 600 in the US are on the block this year as of their Jan 21st announcement
  • Macy’s is closing some stores and laying off 2500 employees
  • JC Penny 33 stores and 2000 layoffs
  • Novartis International announced 500 jobs will be cut
  • Sprint posted companywide layoffs on Jan 18th


Unfortunately, these announcements are becoming more prevalent as companies continue to pursue lean and mean strategies in an increasingly competitive world.

What happens if you’re on the receiving end of the notice?  How do you address the continuation of benefits?  What do you do with your other incentives such as retirement accounts, stock options, and espp accounts?

There are many choices facing you at this point, but the most important decision you can make is to sit down with a planner and assess the impact of your life event on your long term financial goals.

You will want to carefully review the severance packet and information provided by the company to ensure you’re paying attention and meeting deadlines for enrollment in COBRA benefits as well as expiration dates of any grants (options/restricted stock) received while employed.

Your retirement account doesn’t have to move right away, but a careful evaluation of the choices available within the plan as well alternative options should occur.  You may be better off staying within the plan if permitted.  Often times the funds selection are lower cost than those available through self-directed retirement arrangements (Rollover IRA accounts).

Additionally, you may lose certain advantages by rolling over to a self-directed account (see the pro-rata rule) vs. rolling up into your next company’s plan or keeping it within your current sponsor.

One thing to be sure, you will not have to rush into any decisions.  While the loss is certainly a major upheaval in your daily routine, it may also be the greatest gift you’ve ever received.  Take your time and consider all of the options in front of you.  While you’re at it, see if there is a greater calling or better direction for you to pursue.