Written by Henry Supinski, MBA, ChFC®, founder of Blackshire and a former SAP VP of Customer Success · Last reviewed July 2026
The first decisions you will need to make
- Review your severance offer carefully: Before you sign, understand the payment structure, the tax implications of a lump sum, what happens to your unvested equity, and whether the effective separation date can be adjusted relative to an upcoming vest date.
- Map your equity situation: Unvested RSUs are typically forfeited at separation. If you have a significant grant vesting within the next few weeks, the timing of your last day matters. Even a short adjustment can protect a meaningful amount of compensation.
- Understand your benefits window: Your SAP health coverage ends on or near your last day. COBRA continuation is available but expensive. You need to know your options and costs before your coverage lapses.
- Decide what to do with your 401(k): You can leave it in the SAP plan, roll it to an IRA, or roll it to a new employer's plan when you land. Rolling to an IRA typically gives you the most flexibility and control over investment options.
The tax implications nobody talks about upfront
A large severance lump sum in a single tax year can push your total income well into the highest federal brackets, potentially triggering the additional Medicare tax on earned income and IRMAA surcharges on future Medicare premiums. If your package allows for installment payments, spreading the income over two tax years can reduce the overall tax cost meaningfully.
Many employees sign and cash a severance check without this analysis. Running the numbers first takes a few hours and can save a significant amount of money.
Building your income bridge
Once you know your severance timeline and your liquid assets, you can map exactly how long your financial runway lasts and plan your account drawdown strategy during the gap. The order in which you draw from accounts matters for tax efficiency. Taxable accounts, Roth accounts, and traditional IRAs each have different implications depending on your income level in the gap year.
Why Henry's background is relevant here
Henry spent six years at SAP, rising to VP of Customer Success. He understands the organizational context of an SAP layoff, how the severance process works, what is typically negotiable, and how to think about the equity that is at stake. He works with SAP clients on exactly these transitions.
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