Stock options and RSUs: what you lose when you quit (and when)

Nobody tells you how much equity you're leaving on the table until after you've already left. Your company sure won't volunteer it. HR will hand you an exit checklist that glosses over the most expensive decision you're about to make.

Here's the problem: stock options and RSUs are not like a paycheck. You don't get to take unvested ones with you. And even the ones you've earned can expire in as little as 90 days if you don't move fast. Miss a deadline and they're gone forever.

This is not financial advice. Equity is complex, tax rules vary, and the stakes are high enough that you should talk to a CPA or financial advisor before exercising anything significant. This article gives you the framework to understand what you have and what the clock looks like.

Two types of equity, two completely different rules

Most tech and startup employees have one or both of these: stock options or RSUs. They look similar on your compensation statement. They are not similar at all when you quit.

Stock options give you the right to buy shares at a locked-in price (called the strike price or exercise price). You don't own anything yet — you have the right to buy. If the stock is worth more than your strike price, there's real money there. If it's not, the options are worthless.

RSUs (Restricted Stock Units) are a promise of actual shares. When they vest, you get shares (or cash equivalent). No purchase required. They're only worth zero if the company is worth zero.

The key word in both cases: vested. Unvested means you haven't earned them yet. When you quit, unvested equity disappears. No negotiation, no partial credit, no refund.

What happens to unvested equity when you quit

Simple: you lose it. All of it. The day your employment ends, every unvested option and every unvested RSU is cancelled. You walk out with nothing for it.

This sounds obvious. It isn't, because compensation offers make unvested equity look real. "You'll receive 10,000 shares over four years." Sounds like a $200,000 commitment. It's actually a $200,000 incentive to stay four years. Leave early, and you're leaving pro-rated chunks of that on the table.

The only way to keep unvested equity is to negotiate for it — either accelerated vesting as part of an exit package, or a buyout. That's rare and almost never offered unless you're senior or the company needs something from you.

The 90-day clock on stock options

Here's where people get blindsided. You've already vested options. They're yours. You can exercise them. But only for a limited time after you leave.

For Incentive Stock Options (ISOs) — the type most startup and tech employees have — the standard post-termination exercise window (PTEW) is 90 days. That's it. Three months. After that, your vested ISOs expire worthless.

Miss the 90-day deadline and you get nothing. The company keeps what you earned.

Grant type	Standard PTEW	What happens after
ISO (Incentive Stock Option)	90 days	Options expire worthless
NSO (Non-qualified Stock Option)	Varies — often 90 days to 10 years	Options expire per grant agreement
RSU (Restricted Stock Unit)	No exercise window — already shares	Vested shares are already in your account

Some companies have extended the PTEW to 1 year, 5 years, or even 10 years. Pinterest, Cloudflare, and others made news for doing this. But these are the exception. Check your actual grant agreement — don't assume.

ISOs vs. NSOs: the tax difference that matters

If you don't exercise your vested ISOs within 90 days of leaving, they convert to NSOs. This is an IRS rule, not a company policy. And it matters because ISOs and NSOs are taxed differently.

ISO (qualifying disposition): If you hold the shares for at least 2 years from the grant date and 1 year from exercise, the gain is taxed at long-term capital gains rates. That's 0%, 15%, or 20% depending on your income. Much better than ordinary income rates.

NSO: The spread between strike price and fair market value is taxed as ordinary income at exercise. That means up to 37% federal income tax, plus state taxes. On $100,000 of spread, you might owe $40,000–$50,000 in tax — before you've sold a single share.

AMT: the ISO trap nobody warns you about

ISOs also have an Alternative Minimum Tax (AMT) issue. When you exercise ISOs, the spread — even if you don't sell — can trigger AMT liability.

Say you exercise 10,000 ISOs at a $5 strike price when the fair market value is $25. You've paid $50,000. You haven't sold anything. But you have $200,000 of AMT "income" (the $20 spread × 10,000 shares). Depending on your situation, you could owe tens of thousands in AMT that year.

If the stock later tanks or the company fails before you can sell, you still owe that AMT bill. This has wiped people out after dot-com and startup busts.

Run the AMT calculation before exercising any ISOs. A CPA who works with equity compensation can model this for you in an hour. Worth every dollar of the fee.

What happens to vested RSUs when you quit

Good news here: vested RSUs are already shares in your brokerage account. When an RSU vests, it becomes a real share — typically delivered to a brokerage account set up by your company (E*Trade, Fidelity, Schwab). Those shares belong to you and don't disappear when you leave.

What you lose is unvested RSUs — everything that hasn't vested yet by your last day.

Status	What you keep	What you lose
Vested RSUs	All shares already delivered to your account	Nothing
Unvested RSUs	Nothing	All future vesting tranches
Vested stock options	Right to exercise during PTEW (typically 90 days)	Options after PTEW expires
Unvested stock options	Nothing	Everything

One RSU wrinkle: if your company withholds shares to cover taxes at vest (the most common approach), your brokerage account holds the net shares. Make sure you know what's sitting there before you leave. Don't assume it's zero.

How to calculate what you're actually leaving behind

Before you hand in your notice, do this math.

Pull your grant agreements. For each grant, you need: total shares, grant date, vesting schedule, strike price (for options), and current share price or last 409A valuation (for private companies).

Then calculate your unvested balance by grant date:

• If monthly vesting: (months remaining / total vesting months) × total shares
• If cliff + monthly: add cliff shares not yet reached plus remaining monthly tranches
• Current value: unvested shares × (current price − strike price for options, or current price for RSUs)

That number is what you're walking away from. It may be zero (if the stock has no value above strike). It may be life-changing. Either way, you should know it before you decide when to leave.

What to negotiate before you quit

Most people don't negotiate equity treatment at exit. They should try.

Accelerated vesting: Some companies will vest you through your next cliff date as part of a negotiated departure. This is more common if you're senior, if the separation is mutual, or if you have leverage (knowledge only you have, ongoing project, etc.).

Extended exercise window: If you have valuable ISOs and can't afford to exercise them now, ask if the company will extend your PTEW. Some will — especially if they want to maintain goodwill or the equity is unlikely to be liquid anytime soon anyway. Get it in writing.

Cash buyout of unvested equity: Rare, but it happens in layoffs or structured exits. If the company is planning to cut you loose, there may be more flexibility on equity treatment than you'd get in a voluntary quit.

You won't always get a yes. But you usually won't get anything if you don't ask.

ESPP: the one people forget

Employee Stock Purchase Plans (ESPPs) work differently. You contribute a percentage of your paycheck over an offering period (usually 6–24 months), and at the end you get to buy company stock at a discount — typically 15% below the lower of the start or end price.

When you quit mid-offering period, contributions accumulated in that period are typically returned to you as cash. You don't get the discounted stock for that period. You only keep shares from completed offering periods that you haven't sold yet.

Check your ESPP plan documents. Some plans have a shorter "purchase period" within a longer offering period — in that case you might be mid-purchase-period rather than mid-offering, and the rules differ.

Tax planning around your last day

If you have options to exercise, the timing affects your taxes. A few considerations:

Income year: Exercising options in a year when your income is lower (say, the year after you quit, when you have no salary) can reduce the tax hit significantly. If you're leaving in October and your PTEW expires in January, you may have the option to exercise in a low-income year. Model both scenarios with a CPA.

ISO holding period: To get capital gains treatment, you need to hold ISO shares for 1 year after exercise AND 2 years after the grant date. If you're in the 90-day window, exercising now starts that clock. But if the company is private, you can't sell anyway — so the holding period is moot until a liquidity event.

83(b) election: If you exercise stock options before they vest (early exercise), you can file an 83(b) election within 30 days to start the capital gains clock at the current low value. This only applies if your company allows early exercise. If you miss the 30-day window, it's gone.

Checklist before your last day

• Pull every grant agreement and note the type (ISO, NSO, RSU), vesting schedule, and next vest date
• Calculate unvested shares by grant and their current value
• Identify your post-termination exercise window for each option grant
• Check your brokerage account balance for already-vested RSUs and shares
• Ask HR for confirmation of your equity status in writing on your last day
• Model the AMT impact of any ISO exercise before you do it
• Ask about extended PTEW or accelerated vesting if you have valuable unvested grants
• Check your ESPP contribution balance and when the next purchase date is
• Talk to a CPA before exercising anything worth more than a few thousand dollars

The number most people don't calculate

People spend months planning their quit savings runway. They obsess over COBRA costs, burn rates, and emergency funds. Then they walk out the door and leave $50,000 in unvested RSUs on the table without fully accounting for it.

Unvested equity is real compensation you're giving up. Add it to your mental cost of quitting. Factor it against your total financial picture. If you're 8 months into a 12-month cliff on a major grant, that's a cost of quitting today vs. waiting 4 months.

The calculation isn't just "can I afford to quit." It's "what's the full cost of quitting now vs. quitting in 3 months." Sometimes staying a few extra weeks or months is the most lucrative financial move you'll ever make.