- WHAT IS AN ESPP?
An ESPP is a way for you to purchase shares of your company’s stock through payroll deductions, sometimes at a discounted price. Once you have enrolled in the plan, your company will collect your payroll contributions to purchase shares on a specific date. The shares are then deposited to an account at Morgan Stanley. Morgan Stanley is the service provider for your ESPP and provides web tools and Service Center Professionals to help you monitor your purchases and answer questions.
- WHAT ELSE DO I NEED TO KNOW ABOUT AN ESPP?
There are several terms that will help you understand your ESPP, such as: Enrollment Period, Plan Offering Period, Purchase Period, and Purchase Date. These terms are defined throughout this guide.
- HOW DO I ENROLL IN MY COMPANY’S ESPP?
Please visit StockPlan Connect, Morgan Stanley’s website for Plan Participants. Click on the “Enroll or adjust your contributions” link (found under the section titled “Employee Stock Purchase Plans” at the bottom of the “Login to Your Account” box) on the homepage. Once you complete the validation process, you may continue to the enrollment page to indicate the portion of your salary that you would like to contribute to the plan.
- WHAT INFORMATION WILL I NEED TO COMPLETE THE ENROLLMENT VALIDATION PROCESS ONLINE?
You may need to provide:
- Your company’s stock ticker symbol
- Your Participant Unique Identifier (PUID, which is most often the Employee ID number that your employer has provided), your Social Security Number (SSN), and/or your company-assigned Global ID (GID)
- Your date of birth or date of hire
- HOW LONG DO I HAVE TO ENROLL?
The time period during which you can enroll in your company's ESPP is referred to as the enrollment period. This period is determined by your company and can last anywhere from weeks to several months. During this time period, you’re permitted to enter your contribution election or make changes to your current selections. You can find your company’s specific enrollment dates in your company’s plan documents and online when you begin the enrollment process on StockPlan Connect.
What is the plan offering period? & What is a purchase period?
- WHAT IS THE PLAN OFFERING PERIOD?
The plan offering period is the time period during which payroll deductions are collected and shares are purchased. For some plans, the offering period and the purchase period have the same timeframe. Some plans may have an offering period that contains several purchase periods. For example, the offering period may be a 12-month period, containing four purchase periods of three months each.
- WHAT IS THE PURCHASE PERIOD?
The purchase period can be part of or the same length as the plan offering period. At the end of this period, shares will be purchased using your accumulated contributions. The purchase date is usually the last day of the purchase period. Your company defines the length and dates of the purchase period, as well as the purchase date.
How much can I contribute to my ESPP? (among other contribution questions)
- HOW MUCH CAN I CONTRIBUTE TO THE ESPP?
Your employer determines what percentage or dollar amount of your salary can be contributed to the ESPP, as set forth in your company’s plan documents. This information is reflected on StockPlan Connect. For example, “You can contribute between 1% and 10% of your salary per pay period,” or “You can contribute between $1 and $500 of your salary per pay period.”
- HOW MUCH WILL I PAY FOR MY ESPP SHARES?
The price that you pay is determined by your company’s ESPP plan documents. Your company’s ESPP may, but is not required to, offer a discounted price on the shares you purchase. You will also see the price for each purchase date listed on the Transaction History screen on StockPlan Connect. Note: in most jurisdictions, you are not taxed when the shares are purchased, even though they may be purchased at a discount. Please check with your local payroll or tax advisor for more details.
- WHEN CAN I MAKE CHANGES TO MY CURRENT ENROLLMENT ELECTION?
You can make changes to your current enrollment election during specific time periods that your company has established. For example, your company may allow you to change your contribution amount or withdraw from the ESPP at any time during the purchase period. Please check your company’s plan documents for the specific information pertaining to your company’s plan.
- CAN I CHANGE MY CONTRIBUTION AMOUNT?
Yes, if your plan allows it. You can find this information by referring to your company’s plan documents. If your plan permits contribution changes, you can go to the StockPlan Connect login page, click on the “Enroll or adjust your contributions” link, and follow the prompts. If you already have an account established, you can also change your contribution amount by logging in to StockPlan Connect with your User Name and Password.
- HOW DO I STOP MY CONTRIBUTIONS? AM I RESPONSIBLE FOR NOTIFYING MY EMPLOYER?
You can stop or suspend your contributions by clicking on the “Enroll or adjust your contributions” link on StockPlan Connect or logging in to your account; click on the “Withdraw” or “Suspend” button. Morgan Stanley will notify your company within one payroll cycle.
- WHAT’S THE DIFFERENCE BETWEEN WITHDRAWING FROM THE ESPP AND SUSPENDING MY CONTRIBUTIONS?
Both withdrawing and suspending will stop your ESPP contributions. Your company may give you the option to either obtain a refund or purchase your shares with the funds you have already set aside in the current purchase period. Please refer to your company’s plan documents to determine the specific rules regarding withdrawals and suspensions in your company’s ESPP.
- IF I SUSPEND MY CONTRIBUTIONS OR WITHDRAW FROM THE ESPP BEFORE A PURCHASE, WHAT HAPPENS TO ANY MONEY THAT HAS ALREADY BEEN COLLECTED?
Depending on your company's ESPP plan documents, your employer will stop your contributions and either refund the money you’ve contributed or use the money you’ve contributed up to that point to purchase shares on the purchase date.
How do I view my ESPP information on StockPlan Connect?
- WILL I HAVE A USERNAME AND PASSWORD FOR STOCKPLAN CONNECT?
As your first ESPP purchase approaches, you will receive either an e-mail from StockPlan Connect containing a link or a hard copy mailer with temporary login credentials enabling you to access the site. Your password will be mailed separately from your User Name. Prior to your first share purchase, you will not have a User Name or Password and will be required to access the site via the “Enroll or adjust your contributions” link.
- AFTER MY FIRST PURCHASE, HOW DO I LOG INTO STOCKPLANCONNECT.COM?
Leading up to your first ESPP purchase, you will receive an email from StockPlan Connect with a link to the online validation steps. You will be required to provide your Social Security Number (SSN) or Global ID (GID), company ticker symbol, and date of birth. Following this step, you will create a User Name and Password and answer several personal security questions, which you will be asked in the event you forget your User Name or Password in the future.
- HOW DO I VIEW MY ESPP INFORMATION ON STOCKPLAN CONNECT?
Once you log into the site, you will see a list of your stock plans on the Overview page (you may need to scroll down).
- DO I HAVE TO VISIT STOCKPLANCONNECT.COM PRIOR TO EACH PURCHASE PERIOD TO MAKE MY ENROLLMENT ELECTION?
Typically, an enrollment election will carry forward from one purchase period to the next. Contributions will not be changed or stopped unless you make a change on StockPlan Connect. Please refer to your company’s plan documents for additional information.
How do I sell my shares on StockPlan Connect?
- HOW SOON CAN I SELL MY SHARES?
Your shares are typically deposited into your Morgan Stanley account within three to five business days after your purchase date. However, your company may require that you hold your shares for a certain period of time after the purchase date before selling or transferring them. Please refer to your company’s plan documents to determine if a holding period is required.
- HOW DO I SELL MY SHARES ON STOCKPLAN CONNECT?
Once you have accessed the ESPP section of the site, you will see a link to “Model” or “Sell Shares.” You can select a certain number of shares from the list of shares available. You can sell your shares at the current market order or enter a limit order. You can also select how you’d like to receive your proceeds (check, overnight, wire, or deposited into your Morgan Stanley account).
What are the tax implications of selling my ESPP shares?
- WHAT ARE THE TAX IMPLICATIONS OF SELLING MY ESPP SHARES?
The tax treatment of the sale of shares acquired under your ESPP will differ depending on the timing of your sale of shares. If shares are sold more than two years from the first day of the offering period and one year from the purchase date, the sale is considered a Qualifying Disposition and a gain is taxable in two parts. When you sell the stock, any discount that you received when you bought the stock is generally considered additional compensation that you have to pay taxes on as ordinary income. Any further gain may be considered long-term capital gain. Shares sold within two years from the beginning of the offering period, and one year from the purchase date, are considered Disqualifying Dispositions. When a disqualifying disposition occurs, the difference between the Fair Market Value on the purchase date and the purchase price is treated as ordinary income on your W-2 in the year of the sale. You should contact your tax advisor if you have any questions about the tax implications of selling your ESPP shares.
- WHO CAN I CONTACT WITH ADDITIONAL QUESTIONS?
Please contact the Morgan Stanley Service Center toll-free at 1-800-367-7444 (U.S. participants) or 1-801-617-7414 (non-U.S. participants).
Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for legal matters.