Personal Investments • 401K vs ESPP

The joke among us engineers is that we would contribute 100% of our salary into ESPP if we could (and meanwhile, borrow the six months of living expense from the bank).
Alas, my current stinking company only limit us to 10% of our salary.
Furthermore, from big, mean IRS standpoint, there is a limit of $25K per year.

I have been at 4 separate companies and all of them allow you to do the next day sell of your ESPP.
You can instruct your brokerage house to do market-order sell the next day.
Of course, there is a very small risk where the stock price may "gap down" more than 15% the next day and you will end up losing money.
In my 30+ year experience with ESPP purchases, this never happens.

Your purchase of ESPP should not conflict with your 401K contribution since you mention that your company does not do any matching.
You can hold off on 401k contribution until your money comes in after the sales of each batch of your ESPP (most companies will not match your 401K in any pay check that you do not have any 401K contribution - so this force you to have to contribute consistently every pay check in order to capture this matching - but this is not applicable to you and so you can do "lumpy" contributions).

Statistics: Posted by tippedears — Tue Jun 04, 2024 1:45 am — Replies 9 — Views 518

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