Employee stock purchase plans offer 'free money' — but also carry complexity and risk, experts say

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If you work for a publicly traded company, you may have access to discounted company shares via an employee stock purchase plan, or ESPP. While the benefit can be valuable, you need to know the rules and risks before opting into your company's plan, financial experts say. In 2020, roughly half of public companies offered an ESPP, according to a 2021 survey from the National Association of Stock Plan Professionals and Deloitte Tax. If you have access to one, it's worth considering because "there's free money to be had," said certified financial planner Matthew Garasic, founder of Unrivaled Wealth Management in Pittsburgh. More from Personal Finance: Here are key things to know before tapping inherited IRAs $8.8 billion in Inflation Reduction Act home energy rebates may be coming soon Biden administration believes new student loan forgiveness plan will survive But whether and to what extent you decide to participate depends on other short-term priorities and "how comfortable you are sacrificing cash flow" during the offering period, Garasic said. With limited income, yearly goals like investing up to your employer's 401(k) match should come before your ESPP, said CFP Kristin McKenna, president of Darrow Wealth Management in Boston. "People get really excited about them," she said. "And it doesn't always make sense."