An employee stock purchase plan is an employee benefit that allows you to purchase shares of your employer’s company stock. It’s a convenient way to buy the shares, thanks to ...
An employee stock purchase plan is an employee benefit that allows you to purchase shares of your employer’s company stock. It’s a convenient way to buy the shares, thanks to the fact that contributions are often deducted pre-tax directly from payroll. Some purchase plans offer more than convenience, too, with additional perks like discounts on the share price. This can make participation in a plan seem like a no-brainer. However, before you make the decision to enroll, you should consider potential complications or downsides. If you maintain a significant position in company stock through your other equity compensation holdings, such as incentive stock options, non-qualified stock options, or other restricted stock units (or awards), adding more exposure through an ESPP may or may not align with the objectives of your overall financial plan. Or, if you’re risk-averse or otherwise unsure about owning stock, buying shares through an ESPP may not be the right choice for you. This doesn’t mean you shouldn’t participate — only that you should carefully consider how an employee stock purchase plan fits into your overall financial plan. To understand why it’s helpful to evaluate some of the key advantages of using an employee stock purchase plan.… Read More »