It is surprising to learn that there are employees of companies who offer ESSPs who have never actually taken advantage of them. They are actually considered a great deal and financial experts all encourage employees who qualify to sign up for them. Here are some of the benefits that these Employee Plan Services provide.
These types of accounts are funded in the same way that 401K accounts are funded. The employee opts to have a set amount transferred from their paycheck to their employee stock purchase plan. This amount is deducted after taxes are deducted and sits interest-free during what is called an offering period. After this offering period is concluded, stocks can be purchased and a new offering period begins.
The biggest benefit that employees enjoy from these types of employee plan services is that they are able to purchase company stock at a reduced price. The amount of the discount can vary but is typically 15%. However, if the plan offers a lookback option, then it is completely feasible that your discount could be significantly higher. No matter which way you look at it, discounted company stock is always a good thing.
There are also advantages to these plans beyond the discounted stock purchases. The taxes on the discounts are not calculated until the stock is sold. The amount of taxation also depends on how long the stock is kept before selling.
If you would like more information on these types of employee plans, contact EquityTrack at https://www.equitytrack.co/.
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