The story of Sara's ESPP education journey

3 min read

Sara works for a technology company which has recently introduced an Employee Stock Purchase Plan (ESPP) to its employees. Intrigued by the opportunity to invest in her company's success, Sara decided to sign up for the ESPP. Here's her benefit education journey and all the things she needed to know along the way.

The ESPP announcement

One sunny morning, Sara is sitting at her desk, sipping her morning coffee and a personalized notification pops up on her screen. It’s from nudge, and says "Sara, ESPP enrollment is now open", she clicks to find out more and is directed to a nudge article that introduces her company’s new ESPP. The content gives her guidance on how she can purchase company stock at a discounted price. Sara was intrigued by this opportunity.

[Awareness of the ESPP benefit has been increased but Sara realizes there are several things she needs to understand before signing up.]

Understanding the ESPP fundamentals

Sara launches into some research by reading about the ESPP on her benefit portal. Here's what she learned:

• Purchase period: The ESPP has a 12-month offering period made up of two six-month purchase periods.
• Discount: Employees can buy company stock at a 15% discount from the current market price at the end of the offering period.
• Contributions: Sara can contribute up to 15% of her salary to the ESPP through payroll deductions.
• Limits: Keep in mind that the maximum pre-discount contribution in a calendar year is $25,000. So, if your ESPP discount is 15%, your maximum contribution amount will actually be $21,250.
• Review tax implications: Sara has uncovered that while ESPPs offer tax advantages, she needs to find out what the tax implications are for her.

[Understanding of the ESPP benefit has grown but there are further considerations Sara needs as she starts to take action.]

Enrolling in the ESPP

Feeling confident in her understanding of the basics, through benefit education Sara takes action and decides to enroll. Here's what she has to do:

• Complete enrollment form: She fills out the form specifying her contribution percentage.
• Decide on contributions: Sara choses to contribute 10% of her salary, which she believes is manageable, and allows her to take full advantage of the discount.

[Action is taken on the ESPP benefit because Sara enrolled, but the story of benefit education doesn’t end there, she still needs to extend her financial education and nurture her investment.]

Education expands

With her enrollment complete, Sara waits for the start of the first offer period. During this time, she continues to educate herself about investing and retirement through nudge. The offer period begins and Sara’s contributions are automatically deducted from her pay checks. A year later, she sees that her shares have grown in value.

The Future
Sara watches her stock thrive, and her ESPP investment grow, her ESPP decision guided through benefit education has been life changing, helping her both financially and professionally. And so, Sara’s benefit education journey has a satisfying conclusion, all while contributing to the success of her company.

Want to find out how to increase benefit utilization, like Sara's ESPP journey? With education, employers can expect 34% better understanding and 21% more take up of benefits.

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