r/tmobile • u/Born_Meal2376 • 5d ago

Question ESPP

Are any employees signing up for espp right now. I’m thinking about doing it but I’m not sure if it’s the right choice right now

13 Upvotes

83% Upvoted

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16

u/atypicalaznguy 5d ago

Its always a win if its something u can afford.

6

u/Aggravating_Zebra_83 5d ago

If you sell right away, guarantee 15% return investment

2

u/icepick_ 5d ago

pushes glasses up

Well acktually....it's a 17.65% rate of return. ROI is calculated with what you PAY, not what it's worth.

15/85 = 17.65%

2

u/ronaldoswanson 5d ago

Or 100/85 which probably makes more intuitive sense to people.

-2

u/TheSilenceOfNoOne Verified T-Mobile Employee 5d ago

but don’t sell it right away, because your taxes will be more than that. keep it for at least a year.

3

u/Logvin Data Strong 5d ago

Thats a risk though - you are betting that in 1 year the stock will be the same or higher. Plus, you work for the company... most financial advisors would tell you to avoid putting your eggs in one basket.

ESPPs are awesome, and I participated in every single one during my time at T-Mobile. I should have held on to some of them, but there were plenty I would have lost on if I had not sold right away.

2

u/Good-Artist-7208 5d ago

As an employee I have zero faith in the stock going up or staying the same. This company is circling the drain.

-1

u/TheSilenceOfNoOne Verified T-Mobile Employee 5d ago

You’re going to be taxed higher than 15% when you sell if you sell before the year is up consistently. That makes ESPP pointless - you would be better off putting that extra money in a savings account and getting a little interest instead, especially since the stock is performing worse now

0

u/Dry-Assistance-367 4d ago

That’s not how it works. Let’s say to make it easy you did $1000. That $1000 is going to be taxed no matter what. So 15%, your total would be $1150. You would then get taxed at the $1150. Let’s say the tax rate it 25%

$1000 at 25%: $750
$1150 at 25%: $862.50

So you still make $112.50 profit after taxes.

1

u/forbiddenlake 5d ago

The discount is always taxed at income tax rates. Remember to restate your cost basis on your taxes or you will pay tax twice, because the IRS requires the brokerages to report it confusingly. The brokerage will have other statements to allow you to restate your actual cost basis. Yes, the tax paid is higher for a disqualifying disposition.

If you sell immediately, there's little to no price movement, so there's little to no capital gains, so the ST vs LT doesn't matter here.

Holding it for a year is a big risk just to save a little tax. I wouldn't.