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Once approved by the stockholders, an ESPP does not need to be approved by the stockholders again unless there is an amendment to the ESPP that would be considered the ?adoption of a new plan.? As a practical matter, this means a change in the number of shares reserved for issuance or a change in the related ...
Under a Section 423 plan, the IRS limits purchases to $25,000 worth of stock value (based on the FMV on the offering date) for each calendar year.
If you are risk-averse, you might consider selling your ESPP shares right away so you don't have overexposure in one stock, particularly that of your own employer. ESPP shares can put you in an overexposed position. If the stock value goes down, you may suffer losses and in extreme cases, even lose your job.
How is the $25,000 limit calculated? The basic rule is that each employee cannot purchase more than $25,000 per year, valued using the fair market value on the date he/she enrolled in the current offering.
You may withdraw from the ESPP by notifying Fidelity and completing a withdrawal election. When you withdraw, all of the contributions accumulated in your account will be returned to you as soon as administratively possible and you will not be able to make any further contributions during that offering period.
Qualifying disposition: You sold the stock at least two years after the offering (grant date) and at least one year after the exercise (purchase date). If so, a portion of the profit (the ?bargain element?) is considered compensation income (taxed at regular rates) on your Form 1040.
Employee Stock Purchase Plans (ESPPs) are widely regarded as one of the most simple and straightforward equity compensation strategies available to businesses today. There are two major types of ESPP: 1) Qualified ESPP offering tax advantages and 2) Non-qualified ESPP offering flexibility.
If your company offers a tax-qualified ESPP and you decide to participate, the IRS will only allow you to purchase a maximum of $25,000 worth of stock in a calendar year. Any contributions that exceed this amount are refunded back to you by your company.