Boeing Employee Stock Purchase Plan (ESPP) allows employees to purchase company stock at a discount.
The initial discount is expected to be 5%.
Purchases are made using Aftertax payroll deductions. ESPP shares are liquid and generally can be sold at any time.
Because you are purchasing Boeing stock below the current market price, your gains could be higher and your losses more manageable than if you had bought the same stock via a brokerage account. This can add some valuable flexibility to your portfolio and tax planning as you build Real Wealth through retirement.
Employees can typically contribute between 1% and 15% of their eligible Base Salary to the ESPP annually. The IRS limits the amount of stock that can be purchased in a calendar year to $25,000, regardless of the percentage of your salary you contribute.
When sold, the discounted portion of the purchase is taxed as ordinary income.
Any gains above that discounted portion are taxed as capital gains.
The specific capital gains tax rate depends on how long you held the shares (see below).
To qualify for lower long-term capital gains tax rate, shares typically need to be held for at least 2 years from the offering date and 1 year from the purchase date.
How do your ESPP shares complement your overall portfolio balance and diversification strategy?
Do you anticipate needing to sell your ESPP shares in the early stages of retirement? Before you’re eligible for the long-term capital gains rate?
How will the ESPP discount affect other Real Wealth strategies, such as tax-loss harvesting or your lifetime tax liability.
Questions? Visit the Boeing Benefits Glossary.