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Today DH's ESPP bought his company stock at a 15% discount. It happens every three months. It's been a good savings vehicle for us for tuition, home repairs, etc. We save 10% of our salary and get about a 10% return when we sell the stock immediately. However, it does take a few days to process the purchase, then process the sell order, then transfer the money. So at a minimum it takes usually 15 days to really see the money after the quarter ends.
Until now we've always needed the money immediately. We used it earlier this year to pay for tuition which was due in May. However, now that our Roth IRAs are maxed out for 2008, we're done with tuition until February 2009, we really have no pressing need to sell the company stock.
So the question is should we? No matter what we will likely need to sell it in January 09 but that will give us July 08 and October 08 to accrue the company stock and sell it at one time in January 09. It will save us the cost of multiple transactions.
But the risk is what if the stock goes down? Should we gamble the stock will go up and we'll have more than we need in January? Or should we sell now and bank the cash in our money market account?
If it matters it's around $3200-3500, we'll get October and January that amount as well.
I have a few days to mull over, right now DH is leaning to taking the risk because we have no pressing bills. Plus if it tanks, we could sell it immediately and DH follows the company stock closesly obviously. Fortunately there is no blackout sell dates.
As for taxes we get the 15% discount as income, but anything above and beyond that is short term capital gains. If we held it for 2 years the 15% discount would be refunded and we'd get to deduct it off income. It's a complicated tax situation but we have the forms to prove it. Unfortunately we can't afford to hold it right now for 2 years. So we've been selling and putting money aside for taxes.
Until now we've always needed the money immediately. We used it earlier this year to pay for tuition which was due in May. However, now that our Roth IRAs are maxed out for 2008, we're done with tuition until February 2009, we really have no pressing need to sell the company stock.
So the question is should we? No matter what we will likely need to sell it in January 09 but that will give us July 08 and October 08 to accrue the company stock and sell it at one time in January 09. It will save us the cost of multiple transactions.
But the risk is what if the stock goes down? Should we gamble the stock will go up and we'll have more than we need in January? Or should we sell now and bank the cash in our money market account?
If it matters it's around $3200-3500, we'll get October and January that amount as well.
I have a few days to mull over, right now DH is leaning to taking the risk because we have no pressing bills. Plus if it tanks, we could sell it immediately and DH follows the company stock closesly obviously. Fortunately there is no blackout sell dates.
As for taxes we get the 15% discount as income, but anything above and beyond that is short term capital gains. If we held it for 2 years the 15% discount would be refunded and we'd get to deduct it off income. It's a complicated tax situation but we have the forms to prove it. Unfortunately we can't afford to hold it right now for 2 years. So we've been selling and putting money aside for taxes.
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