Key insights
- The post discusses the risk/reward of participating in an ESPP with a 15% discount but a mandatory 12-month holding period and potential tax implications if shares are sold within 24 months. The user is unsure if the potential gain outweighs the risk of holding the company stock for an extended period, given their existing retirement and healthcare savings contributions. The holding period introduces risk, making immediate selling impossible and potentially exposing the employee to losses if the stock price declines.
Hi everyone. I am looking for some advice as I am new to contributing to ESPP.
My company was an operating unit which separated from a bigger and more recognized company to be its own but it is still big in size.
They offer ESPP of 15% discount but 12 month holding period before selling or transferring the shares.
In addition, I may lose some favorable tax treatment if I sell or transfer shares within 24 months after the purchase date. I may not transfer my shares to another broker during this 24-month timeframe.
Is this worth it?
I heard most people sell immediately but it doesn’t seem like I have that luxury. I currently contribute 5% of my paycheck to ESPP for 3 months and the most we can do is 10% of our paycheck but I already contribute 30% of my paycheck to max out 401K and $150 to HSA. I can afford 5% on ESPP but not sure if I should save it instead.
Thank you for any advice!