Amazon Employee Benefits

AMAZON 401(K)
& ROTH CONVERSION

AMAZON
RSU

AMAZON’S OTHER BENEFITS
& COMPENSATION

Avier Wealth Advisors is not affiliated with Amazon. While Avier communicates with its clients regarding their Amazon employee benefits, and educates itself on the Amazon Benefits, there is no guarantee that the information we have provided is accurate. Amazon employees are encouraged to contact their employer should they have any questions regarding their specific employee benefits. The information about Amazon Employee Benefits Plan has been updated for 2022.

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Amazon New Hire Compensation

If you are a new employee of Amazon, it may be a bit confusing when trying to understand how you get paid, particularly in the first few years. There are three ways in which you will be compensated upon being hired at Amazon: a base salary, a new hire bonus, and restricted stock units (RSUs).

Check out the video for a more detailed explanation of compensation for new Amazon employees.

Base Salary

The way you earn your base salary is pretty straight-forward. In early 2022 Amazon announced that they were more than doubling their maximum base pay from $160,000 to $350,000. This is fantastic news for current and future Amazonians who now have potential to earn a larger, more predictable salary, and not be so reliant on RSUs and Amazon’s stock price to supplement income needs.  

New Hire Bonus

This occurs in the first two years of employment and generally is spread out over each paycheck. Typically, your year one new hire bonus will be a bit larger than your year two new hire bonus.

Restricted Stock Units (RSUs)

The total amount of onhire RSUs that are granted to you will be determined when you are hired. These RSUs will vest over the first four years of employment. Five percent of these will vest at the end of year one, 15 percent will vest at the end of year two. In years 3 and 4, you will receive RSUs vests twice a year (every 6 months), you will receive 20% of your RSU vests every 6 months –a total of 40 percent will vest in year three and 40 percent will vest in year four. The percentage you receive over time is explained in more detail in this article. We walk you thru an example of your compensation timeline over 4 years.

Investing as an Amazon Employee

It’s important for Amazonians to understand how their compensation structure works and to develop an investment strategy. The way you are compensated in your first two years of employment looks very different than how you are compensated in years three, four, and beyond which in turn shapes the ways in which you should think about investing.

In the video we walk you through an example of how to automate your investing year by year, helping you grow your retirement savings, decrease your concentrated stock risk, and boost your short and mid-term saving goals.

Amazon Stock Awards

Restricted Stock Units (RSUs)

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. 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. 

Currently the automatic withholding percentage is 22%. Many high-income earners find it necessary to have more taxes withheld, Amazon allows you to adjust this figure.

There is nothing that can be done to defer taxable income generated by these vesting shares of stock.  Typically, Amazon employees let their stock grants accumulate in their investment account while covering common living expenses with their salary.

We encourage our clients to take a different approach and use the proceeds of these vested shares to help cover living expenses. This frees up more of your salary, allowing you to take full advantage of the many tax-preferred benefits available to you, such as your 401(k) and the Mega Backdoor Roth Conversion benefit. This also allows you to diversify out of your potentially concentrated position in Amazon stock. Restricted Stock Units vest multiple times per year and can vary in amount. We can work with you to organize and plan your cash flows in order to implement many of these tax-saving strategies.

Amazon 401(k) Plan 

Contribution Matching

Amazon matches 50 percent of contributions up to four percent of your salary. Essentially, this means Amazon will match two percent of your salary. However, you will need to contribute at least four percent to get that match. We encourage you to make the most of Amazon’s offer by maxing out your 401(k) contributions before utilizing any other benefits available to you. You can contribute up to $20,500 if you’re under 50 years old and a maximum of $27,000 if you are 50 years or older.  Your contributions are eligible to be either pre-tax contributions or Roth contributions. The primary 401(k) plan at Amazon is administered through Fidelity and open to all Amazon employees, but the matching contributions will only vest after three years of service at Amazon.

Mega Backdoor Roth Conversion

A powerful employee benefit within your 401(k) that allows Amazon employees to convert your after-tax dollars into a Roth 401(k) for tax-free growth and tax-free access in retirement. There was an exciting update to the Amazon 401(k) provision announced in early 2022.  Now employees can save ~$37,000 into the Mega Backdoor Roth portion of their 401(k).  This means Amazonians will be able to contribute up to the Federal 401(k) limit of $61,000 towards the after-tax portion of their 401(k), which can then immediately be converted to Roth.

BrokerageLink Option 

BrokerageLink is one of 26 options offered within your Amazon 401(k) plan. This option gives you access to thousands of additional mutual funds not available with the standard plan, including funds managed by Vanguard, PIMCO and Eaton Vance. Why does this matter? For starters, it allows you to invest in asset classes that would otherwise be unavailable to you in your standard 401(k). This can allow you to increase the diversification of your investments within your 401(k), which may potentially create opportunities to achieve greater long-term returns.

Sustainable Investing

Sustainable Investing, also known as Socially Responsible Investing (SRI), means incorporating Environmental, Social and Governance (ESG) criteria into the investment selection process. Essentially, it allows you to invest in a way that aligns with your values without necessarily compromising diversification or returns. While there is currently just one socially focused fund option within your standard Amazon 401(k), you can access hundreds of SRI mutual funds and ETFs through BrokerageLink. These options allow you to create a Sustainable Portfolio within your 401(k).For more on how to assess and take advantage of this option, see our longer HowTo article.

Additional Benefits Available for Amazon Employees

Amazon offers its fulltime, Class F employees a wide range of benefits to support themselves and their families. Benefits vary by location and by scheduled hours worked, below is a summary of what maybe provided to fulltime (blue badge) employees.

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

Amazon provides two times your annual base salary for Basic Life and AD&D insurance to employees. Additional coverage is offered at discounted rates.

Employees can purchase additional insurance for themselves, spouses, and children.Employees can purchase home, renters, auto, and pet insurance, at a discounted rate, through various providers. Amazon has an exclusive platform for employees which makes it easy to compare rates.

Time Off

Amazon’s paid time off (PTO)and vacation will vary and is based on your situation at the time of hire. Amazon allows employees to take a leave of absence for illness or to tend to the illness of an immediate family member. This may be granted as unpaid time off.

Pregnancy, Parental, and Shared Leave

All fulltime employees (40 hours/week) or reduced time (3039 hours/week) are eligible for leave. Pregnancy leave enables mothers to take time off before and after the birth of their baby. Parental leave allows employees to take up to 6 weeks of time off for the birth or an adoption of a child. The Leave Share program allows employees to share unused Parental Leave with their partner if they do not have access to paid leave through their employer.

New moms have access to the Ramp Back Program, which allows them to gradually return to work on a reduced schedule over an 8-week period. This time can be taken immediately follow Pregnancy or Parental Leave. 

Other Benefits

Fulltime employees receive a discount for purchased made on Amazon.com.

MORE AMAZON INSIGHTS

For more information and advice from our Amazon-focused advisors visit our main Amazon page, or other pages focused on Amazon Compensation and Miscellaneous Benefits, or Amazon RSUs.

AMAZON 401(K)
& ROTH CONVERSION

AMAZON
RSU

AMAZON’S OTHER BENEFITS & COMPENSATION

LATEST ARTICLES ABOUT YOUR AMAZON BENEFITS

How Does Compensation Work at Amazon?

How Does Compensation Work at Amazon?

This article has been updated for 2022. In February 2022, Amazon increased their maximum base salary from $160,000 to $350,000. We created this video to help you understand how you get paid at Amazon. If you just started at Amazon, are considering employment, or have...

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