[Anonymous]

Can someone explain to me how exactly this works. I just took a position with a public company and its part of my benefits, but I dont quite understand it. Must have skipped over it while studying for REG.

[acamp]

Employee Stock Purchase Plan = Buy stock at a discount, the public I work on, its like 15% off market price.

Good, discounted stock, hoooray!

Bad, unless you are extremely heavy in your regular investing, you'll slowing build an un-diversified portfolio. That is, if you're putting the same amount into ESPP and 401K, you'll end up 50% 401K (mutual funds most likely) and 50% in a single stock (your company). That said, most company's have a cap on how much you can buy through the ESPP

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[Thrawn]

Its a type of stock compensation plan, which allows you to buy discounted stock, however there are special tax quirks to it (the discount is income, and the amount of income varies depending on the selling price compared to your basis and the holding period). The total value of stock you can purchase in a year for tax rules is $25k which includes the value of the discount.

BEC 87 Feb 14
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AUD 86 Feb 15

[Author]

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