There are a number of factors to consider before quitting, especially if your job offers an Employee Stock Purchase Plan (ESPP). If you decide to leave your employer, remember that you can no longer participate in or contribute to their ESPP.
If you’re considering quitting your job, you might be wondering what will happen to the stock that you own under an Employee Stock Purchase Plan. This article will help you understand how ESPPs work, and how they may be impacted when you leave the company.
While the decision to leave your current employer is one you have to make yourself, the answers to these common questions should help you make a better informed decision. You should always check with your employer about specific policy details since plans can vary.
What is an ESPP?
An Employee Stock Purchase Plan (ESPP) is a benefit offered by certain public companies, where employees can purchase stock through payroll deductions. In many cases, employers also give a discount on the price of the shares or provide matching contributions. Read more in our in-depth blog, Employee Stock Purchase Plans (ESPP) | What It Is and How We Help Boost It.
Thinking About Quitting? Consider These 5 Key Questions Related To Your ESPP First:
1. How Much ESPP Benefit Will I Lose if I Quit?
If you’re considering leaving, it’s worth going over your compensation package and calculating how much your ESPP is earning you each year. Many people don’t consider their total compensation which includes their ESPP benefit that can earn a couple extra thousand a year.
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It’s also worth noting that if you’re in between purchase periods or have any contributions that have not yet been used to buy shares, the money that was withheld from your paychecks will be returned to you. The purchase of company stock at a discounted price will not take place and you won’t earn any interest on the returned funds.
2. Do I Need to Sell ESPP Stock Before I Quit My Job?
Many people wonder if they must sell their ESPP shares before they quit their job. The simple answer is no. Any shares that you already own will remain yours, but there may be some restrictions on selling if your employer requires you to hold them for a certain period.
3. Do I Lose My ESPP if I Quit?
Not necessarily, but it depends on your situation.
- If you leave your job, but still have ESPP shares that have already vested, you can keep the shares and sell them at any time.
- If you leave the company and have any contributions that have not yet been used to buy shares, the money that was withheld from your paycheck will be returned to you and the purchase of company stock will not take place.
- If you leave your employer, you can no longer participate in their ESPP and will no longer be able to buy company stock at a discounted price.
4. Do I Need to Return ESPP Shares When I Quit?
No, if you’ve already received ESPP benefits once becoming fully vested, then they’re safe from repossession from your former employer even if you decide to quit.
If you have contributed towards shares that you have not received yet, your employer will typically refund you the amount you contributed.
5. Can I Keep My ESPP Shares After Quitting?
While you can no longer participate in the company’s Employee Stock Purchase Plan if you quit, you own any stock you’ve already purchased, regardless of whether you stay with the company.
You will not lose any shares that you already own if you are vested at the time of leaving your job.
Contributing to Your ESPP Just Got Easier
Benny makes participating in your ESPP easy and accessible, no matter what your current financial situation is. We give you cash to max out your ESPP benefit so you can take full advantage of your earning potential.
Use our calculator to figure out how Benny can help boost your earnings!
Looking for more information about ESPPs? Read about how Employee Stock Purchase Plans (ESPP) | What It Is and How We Help Boost It or Contributing to Your Employee Stock Purchase Plan (ESPP) FAQs.