From Pissed Off to, well, That Was Sweet

[BackInTex]

Mrs BiT and I are going to have some work done on the house. Not a lot, but I wanted to use some proceeds from my ESPP fund to pay for it.

I looked at our stock today and it was at an all time high, up about $1.50 from yesterday, so I decided to pull the trigger. I log on the the benefits site, then navigate to the Computershare Site, enter the specifices (# of shares, Market order, send funds directly to my bank account, etc.) then hit "next" and get a "The Sytem is Temporarily Unavailable". What the heck! So I backed out and re-did everything. Same result. I reached out to our HR director and she told me to call Merril Lynch and they'd give me the number to call at ComputerShare. Did that. After 10 minutes of explaining the situation to the "help desk", which was obviously overseas, I was transferred to an agent who could execute the sale for me. 15 minutes on hold...and the stock keeps going up. Hmm.... Still I want to sell before it possibly drops.

So I hang up, re-call in, this time I opt to execute the sale over the automated telephone thingy. Eventually I get the order exectued, about 50 minutes after my initial attempt. Result? Sold for $2.11 higher than I would have had the system not been down. Made about $100.

Since my sale, the stock has dropped down, but still about $0.70 higher than my origianl attempt. I didn't hit the high for the day, but close.

[Beebs52]

What's an ESPP fund?

[Bob78164]

What's an ESPP fund?

I assume it stands for Employee Stock Pension Plan. --Bob

[Beebs52]

What's an ESPP fund?

I assume it stands for Employee Stock Pension Plan. --Bob

Ah. Been awhile
Ours were 401ks. Way back in the day they were called SIP. Savings and investment plan

[BackInTex]

What's an ESPP fund?

I assume it stands for Employee Stock Pension Plan. --Bob

Close.

Employee Stock Purchase Plan

Our company allows employees to buy stock via payroll deduction at a 15% discount from the market price of the day it is purchased. We can spend up to $1,000 a month. There is no hold period, you can sell anytime, but if you hold the stock for 2 years, the 15% is non-taxable.

Even if you just flip the stock right after the buy it is still free money. Assuming a 27% marginal tax rate, if the stock is at $100, you get it for $85. The $15 is taxed at 27% so you pay $4.05 tax. Net cost of the stock is $89.04, so about an immediate 11% discount. There are normal brokerage type fees when selling so not a good idea to cash out frequently.

[Bob78164]

What's an ESPP fund?

I assume it stands for Employee Stock Pension Plan. --Bob

Close.

Employee Stock Purchase Plan

Our company allows employees to buy stock via payroll deduction at a 15% discount from the market price of the day it is purchased. We can spend up to $1,000 a month. There is no hold period, you can sell anytime, but if you hold the stock for 2 years, the 15% is non-taxable.

Even if you just flip the stock right after the buy it is still free money. Assuming a 27% marginal tax rate, if the stock is at $100, you get it for $85. The $15 is taxed at 27% so you pay $4.05 tax. Net cost of the stock is $89.04, so about an immediate 11% discount. There are normal brokerage type fees when selling so not a good idea to cash out frequently.

I have a vague memory from my tax class in law school that the discount may be taxable for those who pay Alternative Minimum Tax. And in any event, on sale I'm pretty sure it's indirectly taxable as part of your capital gains. --Bob