Unemployment benefits and stock options
We have an Ask The Experts feature on www.myStockOptions.com along with a special subsection on Job Termination. I usually handle the answers and at times the questions provide useful insights into how plan participants are thinking and their concerns.
We received the following question below which I thought members of this group would both find of interest and have some insights on. My assumption is the answer can vary by state.
In short, the question gets at how stock option exercises impacts unemployment benefits.
Question from individual:
"After my employment termination, I applied and now receive unemployment
benefits. I have 90 days to sell my vested ISOs and NQs and the sale will
take place during my unemployment benefit period. My question is whether the sale of options needs to be reported on the unemployment questionnaire under question 6 - Did you work or earn any money, whether you were paid or not ?
The earnings examples in the form do not mention sale of options, nor does the list of examples reference any other kinds of sales needed to be reported. And if the sale is required to be reported, is it considered income that will disqualify my unemployment benefit for the week ?"
Thank you for your insights
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The act of earning the income from the options occurred during the period of employment. The form of the question does not appear intended to cover such. As you note, the answer possibly could vary by state and depends on knowledge of applicable state law. I can certainly speak privately with you.