Amazon Employee Benefits

How Do I Maximize My Amazon Employee Benefits in 2024?

As your career evolves at Amazon, your salary increases and stock awards compound. Your benefits can help you realize financial security when leveraged correctly.

We know how busy you are and value your time. We help you optimize your equity compensation, reduce taxes, and plan for your long-term goals.

Understanding Your Amazon Compensation

Your Amazon compensation package contains several components: base salary, on-hire cash bonus, and Restricted Stock Units (RSUs):

RESTRICTED STOCK UNITS (RSUs)

The total amount of on–hire RSUs that are granted to you will be determined when you are hired. These RSUs will vest over the first four years of employment. RSUs are taxable income and can make up a significant portion of your total compensation.

Your Amazon Stock Awards

Amazon Restricted Stock Units (RSUs) are shares of AMZN stock that are paid out over time.

For many employees, stock awards can be a significant portion of total compensation. RSUs become available to you as they vest over time.

Amazon RSU Vesting Schedule:

Stock vests will begin on your first anniversary.

Year 1: 5% of your total RSU grant vests.

Year 2: 15% of your total RSU grant vests.

Years 3 and 4: 40% of your total RSU grant vests in 2 installments (20% every 6 months).

Bonus: Many employees receive additional RSU grants throughout their tenure at Amazon.

We demonstrate Amazon’s vesting schedule in more detail on our Amazon RSU page.

When AMZN RSUs vest, the proceeds you receive are treated as taxable income.

Amazon directs your custodian (typically Fidelity) to automatically withhold shares of your AMZN stock for taxes, so you won’t actually receive every share that was granted to you in your brokerage account.

Treat Your RSUs Like Cash

When your RSUs vest, it’s basically the same as Amazon giving you cash – only the cash comes in the form of stock. Rather than let your RSUs compound in your brokerage account, we suggest you sell these shares at the time they vest.

There are a couple of reasons to consider using this strategy:

It helps you maintain a diversified portfolio and avoid building up a concentrated position of AMZN stock with embedded capital gains.

You free up cash from your salary to allocate towards your Amazon tax-advantaged accounts like the 401(k) and Mega Backdoor Roth, and HSA.

Investing as an Amazon Employee

If you work at Amazon, it’s important to understand how your compensation structure works. Your salary, bonuses, and RSUs differ significantly in the first two years versus years three and beyond.

Knowing how you receive your salary, bonuses, and RSUs will help you develop an investment strategy.

Amazon 401(k)

The Amazon 401(k) allows employees to invest a portion of their salary into long-term investments and save for their retirement.

2024 401(k) Contribution Limits:

• Under 50: $23,000
• 50 and older: $30,500 ($23,000 + $7,500 catch-up contribution)

How Much is Amazon’s Employer Match?

Amazon will match 50% of your contributions, up to 4% of your annual salary. Essentially this means Amazon will match 2% of your salary. To receive the full match, you must contribute at least 4%.

Amazon Mega Backdoor Roth Conversion

The Mega Backdoor Roth is provision within your Amazon 401(k). This powerful benefit enables you to contribute after–tax dollars to your 401(k) up to the federal limit. You can convert these dollars to a Roth.

The 2024 federal contribution limits for 401(k) plans are:

• $69,000 if you’re under 50
• $76,500 if you’re 50 or older

Save even more for retirement.

If you are already contributing the maximum amount to your Amazon 401(k), this is a fantastic way to save even more for retirement. You can use the Mega Backdoor Roth provision to contribute thousands to a Roth each year.

The Mega Backdoor Roth is often under-utilized and overlooked. We explain this benefit in more detail in our 2024 blog, “How Does the Amazon Mega Backdoor Roth Conversion Work?”

Additional Benefits Available for Amazon Employees

Amazon provides full-time (blue badge) employees robust benefits[1], including health insurance starting day one, up to 20 weeks paid parental leave, free mental health resources, and more. Below is a summary of what may be provided:

FamilyFlex Program

This program provides employees with resources to increase overall wellbeing. Employees have access to financial and mental health counseling. Amazon provides enhanced cancer care benefits for employees and their families who have received a cancer diagnosis and are undergoing treatment and recovery. [2]

Health Benefits

Amazon offers its employees the option to enroll in a Health Savings Account (HSA). The HSA comes with three significant tax benefits: contributions are tax-free, money grows tax-deferred, and you can withdraw money tax-tree if the funds are used for qualified medical expenses.

Life Insurance and Other Coverage

[1] https://www.aboutamazon.com/news/workplace/amazon-health-benefits

[2] https://www.aboutamazon.com/news/workplace/new-benefits-for-amazon-employees