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Lesson 16. Frequently Asked Questions > Exercising Your Options - Pg. 79

Frequently Asked Questions Question: How much of a discount will I get on the stock I buy through an ESPP? 79 Answer: There is no fixed amount and, in fact, you may not get any discount at all. However, many plans offer a 15-percent discount. Your actual discount from fair market value can be quite a bit more. Remember that you pay 85 percent of either the value of the stock at the beginning of the offering period or the value of the stock at the end of the offering period. Whichever one is lower is the discounted price. If the stock increases significantly during the offering period, you could end up with a bigger discount than 15 percent. If the stock drops significantly during the offering period, you still get the discount off the lower current price. Either way, it's hard to lose. Question: If I leave the company during an offering period, what happens to the stock I already own and the accumulated money? Answer: You should be able to keep the stock you own. You get back any money collected during an offering period, but not used to purchase stock. Tip Employee stock purchase plans are a painless and efficient way to buy company stock. Question: How much do I have to put in each pay period? What are the maximum and minimum? Answer: First, you don't have to put anything into the plan. Employee stock purchase plans are completely voluntary. However, they are a good deal and you should seriously consider participat- ing. If you want to participate, the minimum contribution is 1 percent of your salary. The maximum you can contribute is 15 percent. Tax code puts a limit of $25,000 per year of stock regardless of the percentage you contribute.