More often than not, when an employee enrolled in an ESPP leaves a company there are two available options for the assets in the Plan:
- The former employee ("leaver") is required to clear their ESPP accounts within 60 to 90 days. Generally, if the leaver does not withdraw their shares during this time they may need to be removed from the plan. This occurs through sale or certification of their shares at the end of the notice period and could result in adverse tax implication to the ex-employee.
- The holdings are not pushed out, and the company maintains administration of the leaver employee's account. Over time these accounts add to the administration costs to the company.
But there is a third option that can help companies mitigate this expense, while allowing their leaver employees to retain their ESPP holdings. Companies can offer their former employees — known as "leavers" — the option to have Computershare continue to administer their account, at no additional cost to the company.
These plans are similar to our popular RRSP & TFSA offerings for former employees. Should your company choose to offer a Leaver ESPP account, Computershare would contact your former employees enrolled in your ESPP and offer to take over the maintenance of these accounts at the end of the notice period. The holder account can be kept at Computershare with no adverse tax impact to your former employee, and the account — not the company — is debited for annual administration fees.
To learn more, please contact your relationship manager or a member of our sales team.
