Employee Savings Plans (ESPs)

An ESP is a non-registered account that your employer sets up to help you save.

3 things to know about ESPs

  1. You decide how your money is invested from the investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition your employer makes available.
  2. It’s not a registered plan, so your contributions are made from your after-taxAfter-tax The money you have left after you pay taxes on money that you made working or investing.+ read full definition earningsEarnings For companies, it’s the money they make and share with their shareholders. For investors, it’s the money they make from their investments.+ read full definition. Investment earnings such as interest income, dividends, or capital gains are taxable to you each year.
  3. The plan may restrict withdrawals or impose fees for making withdrawals, so understand the details of your plan before you sign up.

Key point

An ESP is not a registered plan – investment earnings are taxable to you.

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