ESPPs

Key Dates And Terms You Must Know For Your Company's ESPP

Matt Simon
NEW! Your company's employee stock purchase plan (ESPP) may be one of the best benefits in your total compensation package. However, to maximize its value, you must know its key dates and terms. This article explains the basics you need to know for your ESPP participation.

Fundamentals Of Employee Stock Purchase Plans (Part 1): Basic Structure And Terms

Alisa Baker
Your company's employee stock purchase plan (ESPP) may be one of the best employee benefits in your total compensation package. However, to maximize the value of your ESPP, you need to understand how it works. This starts with knowing its basic structure and key terms, and how ESPPs work in both up and down markets.

ESPP Choices: Flip Or Hold? (Part 1)

Timothy A. Farmer and Gregory G. Geisler
After you decide to participate in your company's employee stock purchase plan, your next decision is whether to sell the stock soon after purchase or to hold it (and for how long). This article series examines different ways to participate in your ESPP according to relative risk tolerance, timeframe, and needs for money.

Avoid Tax Return Mistakes With Stock Options & ESPPs: What You Need To Know In 2010

Bruce Brumberg and Lynnette Khalfani
Tax returns can be onerous. Read this article if you are puzzled by Form 1099-B or don't know how and where to report sales of company stock from options or employee stock purchase plans.

Fundamentals Of Employee Stock Purchase Plans (Part 2): Design Limitations And Enrollment Procedures

Alisa Baker
Part 1 looked at the basic structural elements and terms of employee stock purchase plans (ESPPs). Part 2 considers more advanced design concepts, including tax code limits and enrollment rules.

ESPP Choices: Flip Or Hold? (Part 2)

Timothy A. Farmer and Gregory G. Geisler
You can build your employee stock purchase plan into your long-range savings and retirement strategy. This article compares buying company stock at a discount through your ESPP to putting the same money into your 401(k) or another retirement plan.

Fundamentals Of Employee Stock Purchase Plans (Part 4): Down Markets And Other Tax Topics

Alisa Baker
In Part 4 we consider the taxation of employee stock purchase plans (ESPPs) that are not qualified under Section 423, and the tax issues of down markets, death, and withholding.

Employee Stock Purchase Plans & Your Financial Planning (Part 1)

Bruce Brumberg
Employee stock purchase plans (ESPPs) are popular and prevalent at most public companies. However, the structure of these plans is changing. These modifications may affect your decision to participate in your ESPP and its place in your financial planning.

Employee Stock Purchase Plans & Your Financial Planning (Part 2)

Bruce Brumberg
Employee stock purchase plans (ESPPs) are changing in many ways, largely in response to accounting rules. For Part 2, myStockOptions.com asked financial and wealth advisors what they are recommending to clients about ESPP participation.

Fundamentals Of Employee Stock Purchase Plans (Part 3): Tax Treatment Of Your Purchases And Sales

Alisa Baker
Now let's look at the employee tax issues associated with employee stock purchase plans (ESPPs). ESPP tax rules can be more confusing and less logical than those that govern stock options.

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What is an employee stock purchase plan?

An employee stock purchase plan (ESPP) is a type of stock plan that permits employees to use after-tax payroll deductions to acquire shares of their company's stock. Plans can have...

How will I be taxed when I sell the stock if I meet the holding-period requirements under Section 423 for tax-qualified ESPPs?

You may have both ordinary income and capital gain when you meet the holding-period requirements (this is a qualifying disposition under the tax code). The answer depends on whether...

If I do not meet the ESPP holding-period requirements to receive favorable tax treatment, how will I be taxed when I sell the stock?

If you sell or otherwise dispose of the stock without meeting the holding period rules, then you owe taxes for the spread between the...

Can my ESPP go underwater or be affected in other ways by a down market?

Employee stock purchase plans cannot be "underwater" in the traditional sense of having a purchase price greater than the current stock price. Down markets can create special opportunities and unique issues for ESPPs. For example, with an ESPP...

My company's stock is now essentially worthless because of securities fraud by senior executives. Can I claim a casualty or theft loss on my tax return?

A casualty or theft loss would allow you to deduct the lost amount against your ordinary income, subject to some limits. However, Treasury regulations and court rulings would probably stand in your way. Nevertheless, what you can do is...

How does an ESPP differ from a stock option plan?

Employee stock purchase plans tend to be viewed as a benefit while stock options are a form of compensation. From an employee perspective, there are some differences in operations, eligibility, and design...

What are the most common eligibility requirements for ESPPs?

With ESPPs, the most common criteria for eligibility is...

Why do companies offer employee stock purchase plans?

ESPPs offer many benefits to companies and employees. Surveys show that...

Are there different kinds of employee stock purchase plans?

Yes. The most popular type of ESPP is known as a Section 423 plan, after the federal tax-code section that sets the requirements for this type of plan. Through an ESPP that qualifies under Internal Revenue Code Section 423, an employee subject to US tax law can...

When did ESPP expensing become mandatory, and how may my ESPP change?

Mandatory expensing started on January 1, 2006. Companies must recognize an earnings charge unless their ESPPs fit into the discount safe harbor rule. This has led companies to re-examine features of their ESPPs, including...

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