Your work makes Intuit successful, and the Employee Stock Purchase Plan (ESPP) is another way to be rewarded. The ESPP gives you the chance to own a piece of Intuit and save for the future.
Why You Should Join
The ESPP lets you buy Intuit shares at a minimum 15% discount—an instant win! If you hold your shares and Intuit’s share price goes up, you win again because you can sell your shares at a higher price.
The ESPP is a great way to sweeten your savings strategy. Consider the ESPP for all of your short- and long-term savings goals:
- Pay off high-interest debt.
- Supplement your retirement savings.
- Save for a down payment on a house.
- Create or contribute to a college savings account.
- Build an emergency savings fund.
How to Enroll or Make Changes
You can enroll during one of these two open enrollment periods: February 15–28/29 or August 15–31.
Once you’re enrolled in the ESPP, you can make changes, suspend your contributions or withdraw from the program through the E*Trade website.
Change Your Payroll Contributions
- You may decrease your contributions once during any three-month purchase period (up to two weeks before the end of the purchase period). The new contribution percentage will be applied to the remainder of the offering period.
- You can increase your contributions only during one of our two enrollment periods: February 15–28/29 or August 15–31. No increases will be allowed outside of these windows.
Suspend Your Contributions
- You can suspend contributions and still purchase at the end of the then-current purchase period.
- You must suspend contributions at least two weeks before the purchase date. The suspension will be effective in the next payroll cycle.
- To contribute again, you must re-enroll during the next offering period.
Withdraw From the ESPP
- You can cancel or withdraw participation through the E*Trade website at any time, except two weeks prior to a purchase date.
- Once you’ve withdrawn from the ESPP, your paycheck deductions will be refunded to you within two pay periods. The refund will not be taxed.
- If you want to contribute again, you must re-enroll during the next enrollment period.
How the ESPP Works
During the enrollment period, you can elect to contribute 1%–15% of your total compensation (base salary plus incentive compensation). Once you’ve enrolled, there’s nothing more for you to do. Contributions are made to your ESPP via automatic payroll deductions. Deductions are taken out on an after-tax basis, but they’re calculated based on pretax earnings. You are limited to $25,000* in fair market value of shares in a calendar year (about $21,250 in payroll deductions, including the discount).
Every year, there are two six-month offering periods. Each of these offering periods is composed of two three-month purchase periods.
- During the September 16–March 15 offering period, the purchase periods are September 16–December 15 and December 16–March 15. The stock purchase dates are December 15 and March 15.
- During the March 16–September 15 offering period, the purchase periods are March 16–June 15 and June 16–September 15. The stock purchase dates are June 15 and September 15.
Your paycheck deductions accumulate over each purchase period. At the close of each purchase period (the “purchase date”), shares of Intuit common stock are purchased at a 15% discount from the lower of (1) the closing price on the purchase date or (2) the closing price on the first day of the offering period (the “offering date”). Shares will be available in your account three to five business days after the purchase date.
Note: If the purchase date falls on a weekend or U.S. holiday, it moves to the preceding Friday or business day.
* The Internal Revenue Service limits purchases under the ESPP to $25,000 (in USD) worth of stock for any calendar year, valued as of the first day of the offering period. Despite its name, it is not a $25,000 limit on the amount an employee can contribute each calendar year. Rather it’s a limit on the maximum value of shares that an employee may purchase under the ESPP for each calendar year in which he or she participates. This calculation can be complicated because the value given to shares an employee purchases under the ESPP is not the discounted price, but rather the full value of the shares on the first day of the offering period. If you reach this limit in a purchase period, your share purchase will be limited and your contributions in excess of the limit will be returned to you.
Special ESPP Features
These two key features of the ESPP ensure that you always receive the best possible purchase price:
- Look-back feature: If Intuit’s share price increases during the offering period, you pay 85% of Intuit’s share price on the offering date. In this scenario, the discount from the market price will exceed 15%.
- Reset feature: If Intuit’s share price on the beginning of the second purchase period is lower than the price on the offering date, the reset feature kicks in. You are withdrawn from that offering period and enrolled in a new three-month offering period. In this scenario, the discount is calculated from the lower of (1) the closing price on the first day of the abbreviated offering period or (2) the closing price on the purchase date.
Once stock has been purchased and placed in your E*Trade account (usually within two to three business days), you can sell it at any time within our open trading windows, subject to compliance under Intuit’s Insider Trading Policy. You can sell shares by logging in to your E*Trade account or by calling E*Trade.
Important Information About Taxes
The purchase of stock is not a taxable event because you’re purchasing with after-tax dollars. However, the sale of your stock is subject to federal and state (if applicable) income tax rules.
In general, how much you pay in taxes depends on how long you’ve held your shares. In the U.S., the tax consequences arising from the ESPP will depend on:
- Whether or not you meet specific holding-period requirements
- Any stock price changes between the purchase date and the date you sell the shares
How long purchased shares are held will determine the portion of any gain that will be treated as ordinary income, short-term capital gains or long-term capital gains. Gains or losses on the sale of ESPP shares are reportable on your annual tax return. Intuit will not withhold taxes with respect to any sale of ESPP shares. You will be responsible for paying any such taxes that are due. Consult a tax advisor for assistance with your individual situation.