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Employee Stock Purchase Plans – Understanding the Essentials Part 2

Employee Stock Purchase Plans – Understanding the Essentials Part 2

Photo Credit: Borman818

In our last blog post we introduced two of the four essentials that anyone with employee stock purchase plans should be aware of. In this post we will get acquainted with the remaining two essentials and introduce new details for understanding your employee stock purchase plans.

They remaining two essentials are:

3. Be aware of life changes and their impacts: There are countless occurrences that could impact the existence of employee stock purchase plans. Being aware of your own plan inside and out will help ensure that you are prepared for changes as they come down the line. These job or life changes can include anything from termination, resignation, mergers and acquisitions or even death and divorce. Prepare yourself with a wealth of knowledge in relation to your employee stock purchase plans and seek professional advice if necessary.

4. Know your holding periods: If a change in employee stock purchase plans occurs before the appropriate timeline is fulfilled it can result in what is called a disqualifying disposition. This happens if any kind of transfer happens before satisfying your employee stock purchase plan holding periods. While they do differ from plan to plan, it is common for holding periods to be 2 years after employee stock purchase plans are granted, and 1 year after actual purchase. Keep this timeline in mind as there are various penalties that could come with a disqualifying disposition including removal from eligibility for favorable tax treatments.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

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