Qualified Employer Stock Purchase Plans

These instructions refer to employer stock purchases that qualify for the Capital Gain tax treatment and allow you to account for the Capital Gain tax liability on the sale of the stock.

There is a small amount of ordinary income tax that isn’t accounted for with this method, but this is the closest method currently available.

When you buy stock under an employee stock purchase plan (ESPP) the purchases are withheld from after-tax income.

STEP 1: Navigate to to My Plan > Income > Income for Work and press add a job ➕. Give the job a descriptive name, “ACE Employee,” for example. Enter your monthly gross income.


STEP 2: Navigate to to My Plan > Accounts and Assets and enter the value of the stock purchase as a contribution to an after-tax account with the Capital Gains tax treatment as a one-time contribution by selecting the same start and end age for the contribution

Create and after-tax account with the Capital Gains tax treatment :

  • Navigate to My Plan > Accounts and Assets

  • Press Add an account➕ and select Investment/Savings/Checking account

  • Select manual entry

  • Give the account a descriptive name, "ACE Employee ESPP," for example

  • Enter $0 for the balance

  • Select Capital Gains as your tax treatment

  • Enter $0 for the your cost basis

  • Enter 0 for the turnover rate

  • Select your optimistic and pessimistic rates of return

  • Exclude the account from your withdrawal strategy

  • Press Add a contribution ➕ and enter the the net dollar amount you compute for the ESPPS

  • Select the same start and stop age for the contribution


STEP 3: If you want to account for Capital Gains tax on the sale of the stock at a later date, follow these steps:

  • Navigate to My Plan > Money Flows> Transfers

  • Add a transfer ➕ to an after tax savings account with an Ordinary Income tax treatment on the date you plan to to sell the stock. This transaction will incur long term Capital Gains tax but further withdrawals from the savings account will not.

There is a small amount of ordinary income tax that isn’t accounted for with this method, but this is the closest method currently available.


STEP 4: If you receive extra shares, you may wish to add those to the account as a Windfall. Head over to My Plan > Income > Windfalls

  • Add ➕ a windfall

  • When asked "Which account do you want to model a contribution to?" select the new ESPP account

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