Notas del episodio
Most Employee Stock Purchase Plans go underused, and usually not because employees decided against them. Industry survey data from the NASPP puts median ESPP participation at roughly 38 percent, meaning the majority of eligible employees are not enrolled. In this video I walk through how a Section 423 ESPP actually works, using the plan features that show up most often at San Diego tech, biotech, and defense employers.
We cover the two design features that determine whether a plan is worth using: the discount, capped at 15 percent for a qualified plan and now offered at the full 15 percent by 85 percent of qualified plans per the 2023 NASPP/Deloitte Tax Equity Incentives Design Survey, and the lookback provision, present in 83 percent of those plans. We also cover the IRC Section 423 limit of $25,000 of stock per calendar year measured at grant-date fair market value.
The back half covers the difference between a qualifying and a disqualifying disposition and the concentration risk of having your paycheck, ESPP shares, and RSUs all attached to the same employer. It closes with how to build a repeatable process rather than re-deciding during every enrollment window.
Sources referenced: NASPP/Deloitte Tax Equity Incentives Design Survey (2023); IRC Section 423; IRS Notice 2025-67 (2026 retirement plan limits).
This video is educational content and is not personalized investment, tax, or legal advice. Your own plan document and circumstances determine what applies to you.
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