do i lose my stock options if i quit

Do I Lose My Stock Options If I Quit?

Short answer: Whether you lose your stock options if you quit depends on the award type, what’s vested vs unvested, plan and grant terms, and the reason and timing of your departure. This page explains the rules that commonly apply in US and private‑company settings and gives practical steps to protect vested equity and deadline‑driven actions.

What this article covers

This guide answers the central question “do i lose my stock options if i quit” across common equity types (ISOs, NSOs, RSUs, RSAs), explains post‑termination exercise (PTE) windows including the typical 90‑day rule, discusses tax and liquidity issues for private companies, and provides a step‑by‑step checklist to follow before you resign or negotiate an exit.

Key concepts and definitions

Before answering “do i lose my stock options if i quit”, it helps to define frequently used terms so you can read your grant documents with clarity.

• Stock options: Rights to buy company stock at a fixed price (strike price) for a limited time. Two common U.S. types are Incentive Stock Options (ISOs) and Non‑Qualified Stock Options (NSOs or NQSOs).
• Restricted Stock Units (RSUs): Promise to deliver shares (or cash equivalent) once vesting conditions are met.
• Restricted Stock Awards (RSAs): Shares granted at or near issuance but subject to repurchase or forfeiture if vesting conditions fail.
• Vesting: The schedule by which an employee earns rights to equity (e.g., monthly over four years with a 1‑year cliff).
• Cliff: Initial period (commonly 12 months) before any vesting occurs.
• Exercise: Buying vested option shares by paying the strike price (and possibly taxes).
• Fair Market Value (FMV) / 409A: For private companies, a 409A valuation sets the FMV used to determine option spread and tax treatment.
• Post‑Termination Exercise (PTE) window: The time after your employment ends during which you may exercise vested options. Missing it usually cancels the options.

Vested vs. unvested equity — the core distinction

When someone asks “do i lose my stock options if i quit”, the main factor is whether the awards are vested. Generally:

• Unvested awards are usually forfeited immediately when you leave, unless the company has acceleration clauses or negotiates otherwise.
• Vested awards survive termination of employment but remain governed by the equity plan and grant agreement — most critically by the PTE window.

Always read your grant agreement and the company stock plan to confirm how they define termination and vesting treatment.

Post‑Termination Exercise (PTE) windows and expiration

One of the most decisive answers to “do i lose my stock options if i quit” is the PTE window. The PTE window is the period after your exit during which you may exercise vested options. Important points:

• Common PTE: 90 days after termination for many companies and plans. If you don't exercise within this window, vested options typically expire (are forfeited).
• Variations: Some employers set shorter or longer PTE windows (e.g., 30 days, 180 days, 1–10 years), and some extend windows in the case of layoffs, disability, or death.
• Conversions: If you miss the 90‑day rule for ISOs, the options often convert into NSOs (losing ISO tax advantages) or simply expire depending on plan terms.
• Negotiations: Executives and senior hires may negotiate PTE extensions in offer letters or severance agreements; employees affected by a reduction in force may receive extended terms as part of severance.

The 90‑day rule and ISOs

ISOs offer favorable tax treatment if you meet holding period requirements — but only if you exercise within regulatory timeframes. A key requirement is that ISOs generally must be exercised within 90 days of termination to preserve ISO status for tax purposes. Missing the 90‑day window typically converts the vested ISO into an NSO (or forfeits it), which changes the timing and character of income taxation.

Company‑specific exercise periods and exceptions

Employers can set custom terms. Examples include:

• Longer PTEs for layoffs or retirements (e.g., 12 months or more).
• Automatic acceleration or extended exercise in the event of death or disability.
• Severance or separation agreements that grant extended exercise windows in return for release agreements.

Treatment by award type

Answering “do i lose my stock options if i quit” also requires knowing the award type. The table below summarizes typical outcomes on leaving employment.

Stock options (ISOs & NSOs)

Vested options: you retain the right to exercise as described in your grant and plan documents, subject to the PTE window. Exercise requires paying the strike price and managing tax consequences.

Unvested options: generally forfeited on leaving. Some companies accelerate vesting in certain departures.

Tax difference: ISOs may provide favorable long‑term capital gains treatment if holding requirements are met; NSOs are taxable as ordinary income on exercise spread.

Restricted Stock Units (RSUs)

Vested RSUs become shares (or cash) according to the plan. If vested at termination, you usually receive shares or a cash equivalent without an exercise step. Unvested RSUs are normally forfeited unless an acceleration provision applies.

Restricted Stock Awards (RSAs) & early exercise

RSAs are actual shares subject to repurchase by the company if vesting conditions fail. Early exercise of options to receive RSAs can change the mechanics on departure — unvested repurchase rights may allow the company to buy back shares at the original purchase price if you leave.

Common departure scenarios and their effects

The reason for leaving materially affects whether and how you lose equity. Below are typical scenarios and common plan responses.

Voluntary resignation (quit)

When you voluntarily resign, the usual outcomes are:

• Unvested awards are forfeited unless the company agrees otherwise.
• Vested options are exercisable only for the PTE window stated in your plan (commonly 90 days).
• Limited negotiation leverage — you can sometimes negotiate an extended PTE or partial vesting if you are a key employee or near a vesting date.

If you are asking “do i lose my stock options if i quit”, the most likely short answer for typical employees is: you keep vested options (but must act within the PTE), and you lose unvested awards.

Layoff / termination without cause

Employers often provide more favorable treatment in a layoff, such as:

• Longer PTE windows.
• Acceleration of a portion of unvested awards.
• Cash severance in exchange for releases.

Always check whether severance agreements modify exercise windows or vesting.

Termination for cause

Terminations for cause (as defined in the plan) often result in forfeiture of both vested and unvested awards, especially under "bad leaver" provisions. Provisions vary widely; "cause" definitions can be narrow or broad.

Death or disability

Many plans provide special treatment — extended exercise periods, transfer to beneficiaries, or accelerated vesting — so beneficiaries should carefully review the plan and grant language and contact HR promptly.

Mergers, acquisitions, IPOs and acceleration provisions

M&A and IPO events can change the answer to “do i lose my stock options if i quit” in several ways:

• Single‑trigger acceleration: Options vest automatically upon change of control.
• Double‑trigger acceleration: Options accelerate only if a change of control occurs and you are terminated (without cause) within a set period.
• Cashouts: In an acquisition, the acquirer may cash out or assume awards; cashing out may remove your later upside but provides immediate liquidity.
• Post‑IPO lock‑ups: After an IPO, shares received on exercise or settlement may be subject to lock‑ups that prevent immediate sale.

Tax and accounting considerations

Tax rules are central to the decision to exercise vested options after you leave. Key themes:

• NSO tax treatment: On exercise, the spread (FMV less strike) is taxable as ordinary income; employers typically report this as wages.
• ISO tax treatment: No regular income at exercise for ISOs, but exercising ISOs can trigger Alternative Minimum Tax (AMT) liabilities.
• RSUs: Vested RSUs are taxed as ordinary income when they vest (i.e., when shares are delivered or settled).
• Holding periods: For ISOs to get long‑term capital gains treatment on sale, you must hold at least 2 years from grant and 1 year from exercise. Termination can interrupt timing decisions.

Alternative Minimum Tax (AMT) and ISOs

If you exercise ISOs after quitting, the difference between the FMV and the strike price may be an AMT preference item in the year of exercise. AMT can create a cash tax liability even when you don’t sell shares. Managing potential AMT exposure is a major factor in deciding whether and when to exercise.

Exercise timing and holding periods for capital gains

To secure long‑term capital gains treatment for ISOs, you must meet both holding periods. If you quit and exercise an ISO within the post‑termination period, consider whether you can or want to hold through the required periods and the liquidity and concentration risks that involve.

Practical issues for private‑company employees

Private company employees face extra considerations when answering “do i lose my stock options if i quit”:

• No public market: Exercising options turns rights into shares that may be illiquid for years.
• Funding the exercise: You must pay the strike price (and possibly taxes) without an ability to sell immediately.
• 409A and FMV: The company’s 409A valuation determines the FMV for tax calculations; high FMV at exercise increases tax cost.
• Company repurchase / ROFR: Many companies have repurchase provisions or rights of first refusal that restrict transfers and give the company the right to buy back shares on departure.

Financing an exercise

Common ways to fund option exercise include:

• Personal savings or family funds.
• Loans from banks or brokerage firms (where available).
• Third‑party financing or non‑recourse financing arrangements specific to private‑company option exercises.
• Early exercise combined with a Section 83(b) election for RSAs in certain circumstances (consult a tax advisor).

Each approach has risks and costs; consult a tax advisor and your company’s plan administrator before using leverage to exercise options.

Secondary markets and tender offers

Private companies occasionally allow secondary sales, tender offers, or company repurchases that provide liquidity. These opportunities usually require company approval, and the company may enforce transfer restrictions including ROFRs.

Legal and contractual protections and risks

Grant agreements and equity plans often include clauses that strongly affect outcomes:

• Leaver provisions: "Good leaver" vs. "bad leaver" rules that treat departures differently.
• Clawbacks and forfeiture: Conditions that can force return of awards for misbehavior or restatements.
• Restrictive covenants: NDAs, noncompetes, and non‑solicit provisions that may have post‑termination effects.
• Amendment clauses: Plans often allow companies to amend terms; however, vested rights are generally protected under the grant agreement language.

Steps to take before you quit

If you’re considering resignation and want to answer “do i lose my stock options if i quit” for your particular situation, follow this checklist:

1. Locate and read your equity grant agreement and the company’s equity plan.
2. Confirm what is vested today and what will vest before your intended departure date.
3. Note the PTE window and any acceleration clauses that may apply.
4. Talk to HR or the stock plan administrator to confirm exact deadlines and required paperwork.
5. Obtain the latest 409A valuation or FMV if you hold private company options.
6. Consult a tax advisor/CPA and an employment or benefits lawyer, especially if you hold ISOs or a large concentrated position.
7. Evaluate financing options and costs to exercise if you intend to exercise vested options.
8. If appropriate, negotiate severance that includes a longer exercise period or partial vesting — get any changes in writing.

Decision framework: exercise, hold, sell, or forfeit?

When answering “do i lose my stock options if i quit”, you must weight financial, tax, and career factors. Consider:

• Cost to exercise: Strike price × number of options, plus potential taxes.
• Liquidity timeline: When can you reasonably convert shares to cash?
• Concentration risk: How big a portion of your net worth would remain tied to one company?
• Tax impact: AMT risk for ISOs, ordinary income for NSOs and RSUs.
• Company prospects: Your view on expected future value and timeline.
• Alternative options: Partial exercise, exercise then sell on secondary, or walk away and forfeit.

There is no one right answer. For many employees the rational path when facing a short PTE and no liquidity is to weigh how much they’re willing to pay for the option to participate in future upside.

Examples and timelines

Illustrative scenarios help make timelines concrete. In each example below, read your plan for precise rules.

Example 1 — You quit with vested options and a 90‑day PTE

Situation: Sarah has 10,000 vested NSOs with a strike price of $2, private company FMV of $5 per share, and a 90‑day PTE. She quits on March 1. She must exercise by May 30 (90 days) or the options expire. Exercising costs $20,000 plus she will have ordinary income if the company reports spread as compensation (or face tax consequences on sale). If she doesn’t exercise, she forfeits the vested options.

Example 2 — Laid off and receives extended PTE

Situation: James is laid off on April 15. His company gives laid‑off employees a 12‑month exercise window. James thus has until April 15 the following year to decide whether to exercise 5,000 vested ISOs. The extended window reduces pressure to exercise immediately and helps manage AMT timing.

Example 3 — ISOs converted after missing 90 days

Situation: Mia holds vested ISOs but does not exercise within 90 days post‑termination. Under her plan, the ISOs automatically convert into NSOs immediately after the 90‑day window. This conversion changes tax treatment: future exercise will create ordinary income at exercise on the spread, rather than AMT considerations and potential long‑term capital gain benefits tied to ISO holding rules.

Frequently asked questions (FAQ)

Q: If I quit, will I always lose unvested options?

A: In most cases yes — unvested options are forfeited on voluntary resignation. Exceptions exist where a company offers acceleration or you negotiate severance that includes vesting.

Q: What if I miss the 90‑day window?

A: Missing the 90‑day PTE typically causes ISOs to convert to NSOs or to expire, depending on plan terms. For NSOs, missing the PTE usually causes options to expire. Check your grant documents and speak with HR immediately if you miss a deadline.

Q: Can I negotiate more time to exercise if I quit?

A: Possibly. Senior employees or those with bargaining leverage can sometimes negotiate extended PTE windows or partial vesting, often in exchange for release agreements. Document any agreement in writing.

Q: Do RSUs behave differently when I quit?

A: Yes. RSUs that are unvested usually get forfeited on voluntary departure. Vested RSUs convert to shares (or cash) and do not require exercise, but timing for delivery and tax withholding should be confirmed with your plan administrator.

Q: How are exercised shares taxed after quitting?

A: Tax treatment depends on award type. NSO exercises are typically ordinary income events on spread. ISO exercises can trigger AMT and require careful holding to realize capital gains benefits. RSUs are taxed as ordinary income upon vesting. Consult a tax advisor for your specific circumstances.

Where to get help

If you need help answering “do i lose my stock options if i quit” in your case, consult:

• Your company’s HR or stock‑plan administrator for plan copies, deadlines, and administrative instructions.
• A CPA or tax advisor experienced in equity compensation to model tax outcomes (including AMT for ISOs).
• An employment or securities attorney for contract interpretation or negotiation.
• Firms that specialize in option exercise financing or private secondary sales if you need liquidity — evaluate terms carefully.

For Web3 wallets and custody when working with tokenized or crypto‑native equity, consider Bitget Wallet and Bitget services for secure custody and trading solutions. For trading or conversions post‑liquidity event, explore Bitget exchange products and documentation to understand execution and fees.

References and further reading

Primary guides and firm resources commonly cited when researching this topic include Carta, Charles Schwab, Secfi, Darrow Wealth Management, Smitheylaw, Forge, Summitry, Foundry Finance, Zajac Group, and Vestd. These sources cover plan language, PTE norms, ISO tax rules, and private‑company liquidity considerations. Check authoritative IRS guidance for ISOs and AMT rules for tax specifics.

As an example of recent practice trends: 截至 2026-01-22，据 Carta 报道, many private companies still use the 90‑day PTE as a default but an increasing share of employers offer extended exercise windows to attract and retain talent. Always verify the specific terms in your company documents.

Notes on scope and limitations

This article provides general information based on common US practices and typical private‑company and public‑company equity plans. It does not constitute legal, tax, or investment advice. Specific results depend on your employer’s stock plan, grant agreement, and local laws. Consult qualified advisors for personalized guidance.

Final practical reminders

If you’ve searched “do i lose my stock options if i quit” and are preparing to leave, do these now: (1) confirm what’s vested, (2) note your exact PTE deadline, (3) consult a tax professional about AMT and timing, and (4) contact HR to document options and potential negotiation points. If you’d like custody or trading support when liquidity arrives, explore Bitget Wallet and Bitget exchange tools for secure handling and competitive execution.

Need help interpreting a grant? Start by requesting your grant agreement and plan documents from HR, then speak with a CPA and employment attorney. For blockchain or tokenized equity custody, Bitget Wallet offers secure wallet solutions tailored to Web3 assets.