Amazon RSUs
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 RSUs has been updated for 2022.
What Are Amazon RSUs?
Restricted Stock Units (RSUs) are shares of Amazon stock that Amazon employees are awarded as a part of their total compensation package. Rather than receiving these shares all at once, shares vest over time. For many Amazon employees, these RSUs can make up a large portion of their total compensation package. RSUs can be awarded as a part of an initial compensation package and can also be awarded over time during an employee’s tenure with the company.
Limited Time Pilot Program: Cash or RSUs?
Enrollment window: May 3rd – 17th 2024
During this time some Amazon employees who receive RSUs as part of their compensation package will be able to participate in a pilot program.
The program provides you with the option to reduce the amount of stock you receive in exchange for cash. If you are L4 – L8 and will receive at least 16 RSUs that will vest in 2025 you’re eligible for the program.
During the enrollment window you have the following options to make:
Option 1: Do not participate in the pilot and receive 100% of your RSUs, as planned. If you don’t want to participate there is nothing you need to do.
Option 2: Receive 25% of your vesting RSUs as cash (at Amazon’s preset planning price of $173.12) and your remaining 75% as RSUs. If you decide to receive 25% of these RSUs in cash, that cash will be paid quarterly beginning in May 2025.
Your decision this May will be for shares that are vesting 12-21 months down the road between May 2025 and February 2026.
This video is for illustrative purposes only.
When Do Amazon Employees Receive RSUs and When Do They Vest?
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. The following is a breakdown of Amazon’s initial grant vesting schedule. In this example we will assume you received $600,000 in RSUs and for simplicity, the stock price does not change.
- End of year one – 5% of the initial grant ($30,000)
- End of year two – 15% ($90,000)
- Six months later – 20% ($120,00)
- End of year three 20% ($120,000) for a total of $240,000 in year 3
- Six months later – 20% ($120,000)
- End of year four – 20% ($120,000) for a total of $240,000 in year 4
- Your total stock vests = $600,000
What Should I Do With My Amazon RSUs?
When your Amazon RSUs vest, it’s like Amazon just handed you cash. Cash that you decided to purchase Amazon stock with IF you allow your RSUs to accumulate in your investment account.
We encourage you to sell your RSUs as soon as they vest and make your own decision with what you’d like to do with the proceeds. This may include diversifying your dollars into thousands of companies, using the proceeds to save for a down payment on a home, investing into a 529 college savings plan, or increasing cash flow so you can more easily contribute to the Mega Backdoor Roth within your 401(k).
Amazon RSU Tax Withholding
When you receive RSUs, they are treated as income, no matter what; so, Amazon is going to automatically withhold 22% of those shares for taxes. For high-earning individuals, 22% might not be enough, and you might find yourself with a surprise come April when you learn that you owe $10,000 or more in taxes than you initially anticipated. This is why a major element of our work with Amazon employees focuses on limiting the tax burden from RSUs.
Investing Strategies for Amazon Employees
As an Amazon employee it is important to understand how your compensation structure works and to develop an investment strategy. Compensation 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 managing and investing your RSUs.
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.
How Does Market Volatility Affect Amazon RSUs?
The value of your RSUs are directly tied to the stock price of Amazon. Obviously, if Amazon does really well, you could experience positive spikes in your compensation. However, if Amazon’s stock price doesn’t do as well, you could see your total compensation remain relatively flat, or if the stock price drops you could see your total compensation go down.
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
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