New ESPP Regs Proposed
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I see in today's BNA DTR that IRS has new regs proposed for ESPPs. Most appear to be clarifications, but the one on equal rights and privileges applied to overseas employees appears to be of interest as you can discriminate against them when required to comply with foreign law (still doesn't appear that you can exclude them if employed by a participating corporation with US employees). This will be REG-106251-18 and is published in the July 29, 2008, Federal Register for public comment. Cheers!
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Tahir,
Thanks for letting us know about this. I have posted the pdf of the proposed regs in the Files and Media discussion forum.
http://equitycompensationexperts.collectivex.com/uploads/files/x/000/00c/567/_E8-17255.pdf
I think it would be great if members read through it and posted their thoghts, questions or opinions on this message thread. I will keep this highlighted on the main page until the end of the comment period.
Dan
I just read a good summary of the proposed rules from the American Benefits Council. Here's the link:
http://www.americanbenefitscouncil.org/documents/irs_espp_propreg_summary072808.pdf
Pam Chernoff
Seems to me these proposed regs should be causing more of stir than they are... If these are adopted as they are this could mean "the death of the lookback" unless you have a beginning price limit or some other sort of share limit.
Since you can't know grant date until the number of shares is fixed, and if you have a lookback and no share limit you don't know that, AND you can't have a discount greater than 15% on grant date...
Do most plans you encounter have a share limit other than the $25K limit? I've not seen a lot of plans with a limit and per the NASPP survey data, only 46% of plans DO have a share limit (which is more than I would have thought, but still not a majority).
I have also been surpirsed by how the professionals in our industry have said and done very little about these proposed regs. I agree with Elizabeth that this will be a major change for the majority of companies with ESPPs.
I will send out and email poll on this issue today.