Microsoft ESPP Plan worth investing?
I max out my ROTH $401(k) contributions and plan to put a decent amount into my ROTH IRA. But in terms of more immediate return on investment I’m considering maxing or significantly funding the ESPP plan this quarter (up to 15% of income) and sell maybe half of that immediately to turn some cash over. Minus short term capital gains tax that should net me around 6% after immediate sale. I’ll have to actually crunch the numbers to see what that is, but it would be around average YoY stock market gains. I already have significant stock from sign on bonus that i consider long term so I’d be using this just to make more short term profits. Are there more tax implications to this than just considering capital gains tax. Or are there other strategies people here use to leverage the ESPP plan effectively that I should consider also?
What’s your level and joining stock award?
Just got promoted to L60, 1.5 years of experience out of undergrad, joining stock was 120k
Are they still offering the 10% discount?
You should contribute all the way to the limit in ESPP (if you can) before putting a dollar in Roth IRA. This is because you get 10% instant return. You can immediately sell it, pocket the 10% and then invest that in Roth IRA, if Roth IRA is what u want. Tax wise also you don't have to worry about ESPP. Sell immediately and you have no capital gain tax. You only have the ordinary income tax on the 10% discount. This tax you will pay even if u hold it for 2 years and more. The discount is always taxed as ordinary income irrespective of how long u hold.
Look at https://aka.ms/invclub/
Good info, and I concur with the advice, but that last bit isn't quite right. Do some research into qualified and disqualified dispositions
The way I see it...a 10% discount warrants a buy. Sell it as soon as you get it if you’re not a long term believer
Do you like free money? Then yes. Just instantly sell it after. What was your starting base salary at L59 and now at L60?
What was your sign on stock?
120k