If you work at Apple, you may be eligible to enroll in the employee stock purchase plan (ESPP). To help you make the most of this opportunity, we’ve put together a comprehensive guide to all the ins and outs of this program, from how it works to how you enroll.

TLDR;

Apple's ESPP is one of the most underrated benefits, especially with the value it offers - allowing employees to buy Apple stock at a 15% discount.

Key Features:

• Discount: 15%

• Contributions: 10% of salary

• Lookback Feature: Yes

• Participation Period Length: 6 months

How it works:

• Payroll Contributions: Set aside up to 10% of each paycheck for the ESPP.

• Stock Purchase: At the end of 6 months, your accumulated funds buy Apple stock at a discounted price.

• Brokerage Account Deposit: Your shares go directly into your account, ready for you to sell for immediate gains or hold for potential growth.

Wondering how to get the most out of your ESPP (contributing the full 10% of your salary) without it impacting your cash flow? Learn More

Make More Money from your ESPP with Benny's New Program

Benny provides the funding and management you need to maximize your ESPP without affecting your take-home pay. Join the hundreds of employees who are gaining, on average, an extra $3,000 annually through their ESPP with Benny.

Learn More

Use our ESPP Calculator to see your potential gains

Summary of Apple ESPP

Apple's ESPP stands out with a 15% discount on stock purchases.

🔍 You can enroll twice a year in January and July. Each of these enrollments is for a 6-month period that take place:

• February 1st - July 31st

• August 1st - January 31st

Employees can contribute up to 10% of their salary, capped annually at $25,000 FMV (or $21,250 of actual contributions)​​​​.

In addition to the standard discount, Apple also offers a lookback, which can return you a gain of even more than the 15% every 6 months.

Apple’s ESPP Lookback

Apple's ESPP stands out with its Lookback feature, a huge boost to ESPP earnings. Here's how it works:

🔍 The Lookback Mechanism: Employees have the advantage of buying shares at the lower price of either the start or the end of the offering period.

For example, if the stock was $100 on January 1st but rose to $115 by June 30th, you get to buy at just $85 per share (remember, you pick the lower of the two prices, which in this case is $100 and then apply a 15% discount), resulting in a $30 gain per share.

Without a lookback feature, the discount would be on the $115, resulting in a purchase price of $97.75, returning to you a gain of $17.25. This is a nice return, but lacks the extra boost you get with the lookback.

This Lookback feature in Apple’s ESPP is nothing short of incredible, offering a significant edge in stock investment returns.

Should You Participate In Apple's ESPP?

Apple's ESPP is a great benefit. You get to buy stock at a minimum 15% discount - an instant win. If you hold the shares and the price goes up, you win again because you can sell your shares at a premium. You also have the opportunity to sell right away and this is where the ESPP shows its unique utility. Use our ESPP Calculator to see your potential gains

Here is what we've seen some folks do with their ESPP earnings:

• Build an emergency savings fund.

• Pay off high-interest debt.

• Use towards your retirement savings (funding IRA).

• Save for a down payment on a house.

• Create or contribute to a college savings account.

Before you get to participating, most folks recommend maxing out the match to your 401(K) first. After that, if cash is available, start looking at your ESPP. If you are short on available cash or simply don't want to use your own, check out how Benny can fund it for you.

What happens if the stock price goes down? Short answer: you’re protected during the participation period. ESPPs come with a built-in safeguard against such fluctuations during the participation period.

To explain: Over the period, the company sets aside money from your paycheck but doesn't buy stock immediately. Instead, they accumulate these contributions and make a lump sum purchase at the end of the period. The purchase price is then discounted by 15% (or more if a lookback is in play) from the stock price on that final day.

Let's consider two scenarios to illustrate this protection:

Stock Price Increases: Imagine you contribute $8,500 over six months, and the stock price skyrockets to $10,000 per share during that time. You would receive 1 share valued at $10,000 (your $8,500 contribution plus a 15% discount).

Stock Price Decreases: Conversely, if the stock price drops to $1 per share, you would get 10,000 shares, still equaling a value of $10,000 (your $8,500 contribution with the 15% discount applied).

As you can see, whether the stock price goes up or down, you end up with shares valued at around the total amount of your contributions plus the discount - insulated from stock price movement during the participation period.

Once you own the shares, you are now subject to stock price fluctuations.

How To Participate in Apple's ESPP?

Enrollment can be done within Apple's benefit enrollment platform, with open enrollment in January and July. Participation involves setting aside a portion of your salary, up to 10%, to buy discounted stock every six months.

Looking for help in figuring how much you want to contribute? Reach out to the Benny team.

Use our ESPP Calculator to see your potential gains

Selling Your ESPP Shares

Upon purchase, shares are deposited into your brokerage account, where you can choose to sell immediately or hold. Understanding the tax implications of selling is essential​​. If you sell right away, you’ll pay ordinary income tax on the gain from the discount.

If you wait 1.5 years after the purchase, you’ll be taxed at long-term capital gains rate (often a lower rate).

If you sell right away, you lock in the gain. If you hold, you have more upside potential but there’s nothing saying the stock price can’t go down, and you end up with shares worth less than what you would have paid.

How does Benny help me make the most of Apple's ESPP?

Benny makes participating in your ESPP easy.

First, we use our deep ESPP knowledge to help you understand the ins and outs of your ESPP. Simply start up a chat with us and we'll share what we know.

Second, we can provide you the cash you need to max out your ESPP. We do this by matching your ESPP paycheck deductions, getting you to participate fully without impacting your take-home pay.

For example, if you contribute $750 per paycheck, Benny deposits an $750 amount into your bank account​​ every pay period. Easy as that.

Make More Money from your ESPP with Benny's New Program

Benny provides the funding and management you need to maximize your ESPP without affecting your take-home pay. Join the hundreds of employees who are gaining, on average, an extra $3,000 annually through their ESPP with Benny.

Learn More

Use our ESPP Calculator to see your potential gains