How Can I Best Utilize My Amazon Employee Benefits Package?
You have questions about your Amazon benefits. We have the answers and are here to help. Feel free to give us a call or click the button below to schedule a strategy session with one of our advisors.
You have questions about your Amazon benefits. We have the answers and are here to help. Feel free to give us a call or click the button below to schedule a time to chat one-on-one with an advisor.
Amazon 401(k) Plan
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. Your $19,500 in contributions are eligible to be either pre-tax contributions or Roth contributions.
Mega Backdoor Roth Conversion
This benefit is relatively new in the 401(k) world and became available to Amazon employees in 2020. This feature allows you to make additional after-tax contributions to your 401(k) up to 10 percent of your salary. These contributions are then converted to tax-free Roth dollars on a quarterly basis. Check out the video for a more detailed explanation of this benefit.
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, 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).
Amazon Stock Awards
Restricted Stock Units (RSUs)
For many employees, stock awards can be a significant portion of total compensation. These awards come in the form of Restricted Stock Units (RSUs). These RSUs become available to you as they vest over time. As the stock shares vest, you are taxed at ordinary income tax rates based on the total value of the vesting shares of stock.
Amazon directs your custodian (Fidelity or Morgan Stanley) to automatically withhold shares for taxes so you won’t actually receive every share that was granted to you in your brokerage account. 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 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.
This one is pretty straightforward. Note that as of 2020, the max base salary for any Amazon employee is $160,000 ($185,000 for NY Metro and San Francisco/Bay Area Metro). Even if you are being hired on at a higher level, don’t be surprised if your starting salary is lower than $160,000. Amazon wants there to be some room for future raises.
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 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. Five percent of these will vest at the end of year one, 15 percent will vest at the end of year two, 40 percent will vest in year three and 40 percent will vest in year four. Note that in years three and four, you will actually see 20 percent of your RSUs vest over each six-month period.
While we work closely to communicate with Amazon’s HR division regarding employee benefits, there is no guarantee that the information we have provided is accurate. We do not offer tax advice. Please consult with your tax professional to determine what is right for your particular tax situation.
Latest Articles about Your Amazon Benefits
At Avier Wealth Advisors, client education is the bedrock of our service model. Our advisors regularly publish articles on how you can best leverage the benefits available to you as an Amazon employee. Take a moment and check out their latest tips below.
Using the Amazon Mega Backdoor Roth Conversion to Save for Retirement
How Do I Incorporate Sustainable Investing Options Within My Amazon 401(k)?
Executive Compensation Explained
Amazon Benefits Video Library
We invite you to peruse our video library to learn more about the key benefits available to you as an Amazon employee. Our advisors break down complex financial topics into the basics of what you need to know to get the most out of your plan.