Amazon Employee Benefits
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 2023.
How Do I Maximize My Amazon Employee Benefits in 2023?
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.
Amazon Employee Compensation
Amazon employees are compensated in three different ways:
This is very straight-forward, your base salary is paid out monthly. Base salaries vary greatly and are dependent on your role within the company. The maximum base salary is $350,000.
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. RSUs are taxable income and can make up a significant portion of your total compensation.
Amazon Stock Awards
Restricted Stock Units
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.
Stock vests will begin on your first anniversary. Additional vests will take place at the end of year 2 and then every 6 months until you’ve been with the company for 4 years. Many Amazon employees receive additional refresher RSUs as an Amazon employee over time. 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. Understanding how you receive your salary, bonuses, and RSUs will help you develop an investment strategy. Your compensation in the 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.
Amazon 401(k) Plan
The Amazon 401(k) allows employees to invest a portion of their salary into long-term investments and save for their retirement.
2023 401(k) Contribution Limits:
- Under 50: $22,500
- 50 and older: $30,000 ($22,500 + $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 2023 federal contribution limits for 401(k) plans are:
- $66,000 if you’re under 50
- $73,500 if you’re 50 or older
Amazon allows you to contribute up to the federal maximum.
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 2023 blog, “How Does the Amazon Mega Backdoor Roth Conversion Work?”
BrokerageLink Option and Sustainable Investing Options in Your Amazon 401(k)
BrokerageLink 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. 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.
Additional Benefits Available for Amazon Employees
Amazon offers its full–time, 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 may be provided to full–time (blue badge) employee
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.
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 full–time employees (40 hours/week) or reduced time (30–39 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.
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