Are employee stock purchase plans worth it?

Yes, employee stock purchase plans are worth it. There are four major benefits to employee stock purchase plans (ESPP), including:

• Discounted buying opportunities

  Non-qualified and qualified employee stock purchase plans both benefit from an employee discount. This is set by the company of which you are an employee.

  This discount averages 2% to 14% for qualified employee stock purchase plans, and non-qualified employee stock purchase plans, it averages 2% to 25%.

• ESPPs have cash options.

  When your company performs proper management practices and increases its worth in terms of market value, you can earn more cash with your ESPP. The maximum for qualified ESPPs is $25,000 per year, while non-qualified ESPPs cap limits at 10% to 30% of your salary.

• ESPPs provide retirement savings opportunities.

  When you receive earnings from the sales of your shares, you can devote those funds to a 401k retirement plan or a Roth IRA. You might have to pay taxes on these funds when they go into your retirement account, or you might have tax obligations at a later date.

• ESPPs give short-term saving opportunities.

  The increase in your company's value means an increase in the stock you hold, and you can put any funds you earn from the sales of your shares into a savings account. However, these gains are subject to taxes as soon as you transfer funds.