Employee Share Purchase Plan. What would you do?

[muleskinnerblues]

As the title suggests, I have stock in an employee share Purchase plan and just trying to figure out the best way to go about what to do next. I don't particularly want to sell and reinvest then suffer capital gains tax, and am unsure if trying to transfer to my TFSA is possible or would be any different.

It also has a dividend so I also gain quarterly for extra info.

But anyways, what would you fine folk do?

 

[shloppysloppy]

@muleskinnerblues I work at one the big 6 Canadian banks, it has an employee share purchase plan I can either have it as an rsp or non registered I opt for it to be all non registered. I contribute as much as I am able to each pay period which is 10% of my pay and the company matches 1/3 of that amount. The matching portion is considered other income so when I file my taxes I have to add that to my taxable income, So I also contribute to my RSP to lower my taxable income. Even if I didn't contribute to my rsp and I was taxed on the 33% instant return it would still be worth while to do it.

It is good to know all the finer details of your company's share price buying plan some might have limits on how many times you can pull the money out, how long you have to be an employee before you can pull out the employee matching amount, how long it takes to get the money out and into your bank account etc. With my company there are some rules and hoops to jump through but I still think it is worth it for the matching amount I get.

Each year I take out a portion of my company stock and deposit it into my TFSA and then invest in etfs. I do this to limit my investment exposure to one single stock. The company I work for is a good investment imo but I'd rather be diversified than having a large investment in one single company. This does open me up to capital gains my rsp contributions help with the tax depending on your employee matching % it can still be worth while to pay cap gains in order to be diversified.

 

[muleskinnerblues]

@shloppysloppy Ours matches up to 5% pay for contributions so I have been using 5% of my pay. I didn't even consider that their contribution would count as income, thank you for that.

I have been employed here for a year and we can withdraw once every 6 months unless there is a blackout, however I haven't done so yet.

I'm starting to think I'm more concerned about capital gains than what I should be.

 

[shloppysloppy]

@muleskinnerblues I thought I would also add that there are some companies investing in their stock is a good long term investment like if the company is a mature company with proven track record, or blue chip, or dividend aristocrat, etc.
If it is a micro cap company or one that hasn't been around for awhile then it could be a more riskier speculative investment. I knew someone who worked for a micro/small cap company and invested in their employer share buying program. When the company went under they lost their job and a lion share of their investment. So the company/employer matters a lot when you decide to invest in their stock.

 

[pyrhonn]

@muleskinnerblues Taxation differs whether it’s a public company vs private and whether the purchase plan involves pricing “in the money” vs “out of the money” (ie price lesser or greater than fair value or trading price at exercise date)