How We Serve
Amazon Employees
A clear, goals-based plan designed around
your equity compensation (Amazon RSU)
Your salary and compensation structure
We're here to help you make educated financial decisions based on your
options as an Amazon employee.
As an Amazon employee, you have a lot of benefits options and opportunities. What is right for one of your colleagues may not be right for you. Work with an experienced CFP® Professional that will help you navigate and leverage your benefits, to develop a comprehensive custom plan that prioritizes your goals, objectives, and life stage.
How We Can Help
We have the expertise to help you strategically navigate your Amazon equity options
Amazon 401(K) Options
Amazon will match 50% of every dollar you contribute up to 2% of the IRS limit and 4% of your eligible pay, whichever is less.
You become vested in matching contributions after three years of vesting service. A year of vesting service is defined as a calendar year in which you complete 1,000 hours of service.
You can contribute from up to 90% of your eligible pay on a pre-tax basis, Roth, or traditional after-tax basis, up to annual IRS limits.
For 2023, that means you can contribute $22,500 and get $7,000 (2% of $22,500) in Amazon 401k match up to 4% of your eligible pay. If you are 50 or older, you are eligible for an additional $7,500 in catch-up contributions. However, Amazon does not match additional “catch-up” contributions.
The Amazon 401k has a Roth 401k option. You can contribute the same $22,500 for 2023, but you do not get a tax reduction in your current year. Instead, the Roth 401k allows those earnings to grow tax deferred and offers tax-free withdrawals, when planned correctly, in retirement (59.5+ years old). You still receive the full Amazon 401k match on your Roth 401k contributions.
Note: Contributing to Amazon’s Pre-tax 401k vs. Amazon’s Roth 401k depends on your unique situation. The saying “You will be in a lower tax bracket when you retire” is not always true. You also do not know what the tax code and tax brackets will be when you retire.
The limit for total 401k contributions in 2023 is $66,000 (not including “catch-up”). This means you can put an additional $36,600 into your Amazon 401k via after-tax contributions.
Example: Personal 401k contributions of $22,500 (not including “catch-up”) + Amazon 401k match of $7,000 (2% of $22,500) + after-tax contributions $36,600 = $66,000
After-tax money grows on a tax-deferred basis until retirement. When taking a distribution in retirement, the contributions can be withdrawn tax-free, but the earnings are considered taxable ordinary income when withdrawn.
Note: The Amazon 401k has an amazing feature called “Mega Backdoor Roth” which is not offered in all 401k plans. Refer to the next option for details.
The Amazon 401k Mega Backdoor Roth works along with the after-tax 401k option. The limit for total 401k contributions in 2023 is $66,000 (not including “catch-up”). This means you can contribute an additional $36,500 into your Amazon 401k via after-tax contributions and unlike the Roth 401k, this option does not have income limits.
Example: Personal 401k contributions $22,500 (not including “catch-up”) + Amazon 401k Match of $7,000 (2% of $22,500) + After-tax contributions $36,500 = $66,000.
However, instead of stopping there and leaving it in the after-tax, it gets converted to the Roth 401k side. Meaning that your contributions AND the earnings will be withdrawn tax-free in retirement.
Should you contribute to the Amazon Pre-tax 401k vs. the Amazon Roth 401K? Should you max out your Amazon Mega Backdoor Roth? What should you do with your Amazon RSUs? These are all great questions, and the simple answer is “It Depends”. In addition, the answer can change with over time as your household situation and goals change.
Amazon restricted stock units (RSU)
Amazon employees are given a large chunk of stock awards when they are hired as part of the compensation package. Amazon employees get additional Amazon RSU grants on an annual basis during their annual review and a total compensation adjustment at the start of each year.
A main unique feature for Amazon Employees is the on-hire vesting schedule for Amazon RSUs:
- Year One: 5% will vest at the end of year one
- Year Two: 15% will vest at the end of year two
- Year Three: 20% will vest at the 6-month mark, followed by another 20% at the 12-month mark for a total of 40%
- Year 4: Has the same vesting schedule as year three
Note: There are currently talks to change the Amazon vesting schedule to help retain employees
Think of Amazon RSUs as a form of cash flow in your financial plan, goals, and investment strategy. Upon each vesting you have many different options: continue to hold, diversify to other investments, strategies targeting your goals, contribute to a college 529 plan, go on vacation, make charitable contributions, buy real estate, etc. The possibilities are endless and the right strategy varies based on your unique situation. What ends up hurting people the most is not having a financial plan and investment strategy in place ahead of time, which leads to inconsistent and emotional decision-making.
With 80% vesting occurring in years three and four, Amazon’s unique RSU vesting schedule can cause an unexpected tax surprise. When your Amazon RSUs vest, they are taxed at your income rate. However, in many cases by default, sell-to-cover elections means 22% are sold to cover federal taxes. This can be significantly lower than your tax bracket, also causing surprise tax bills, but Amazon allows you to change your stock withholding election to cover additional tax liabilities.
The higher your position at Amazon, the more of your total compensation is tied to RSUs, requiring custom planning and investment strategies.
Amazon Insurance
Amazon Employees are offered several types of traditional health plans that also include dental and vision. A health savings account (HSA) is available if you are enrolled in a high-deductible health plan (HDHP).
The HSA is a triple tax-advantaged account, offering pre-tax contributions, tax-deferred growth, and tax-free withdrawals as long as they are used for qualified medical purchases. The 2023 limit is $3,850 for individuals and $7,750 for families. Amazon contributes $500 per person up to a $4,500 maximum.
- Amazon currently provides twice your annual base salary for Basic Life and AD&D Insurance at no cost to you.
- You can buy supplemental life insurance coverage for yourself, payable to your designated beneficiaries if you die, in the amount of 1-10 times. your base annual earnings, up to $2,000,000.
- You can buy life insurance to cover your spouse/domestic partner in amounts of $25,000 or half to five times your base annual salary, up to $250,000 not to exceed 100% of your total amount of life insurance (basic and supplemental).
- You can buy life insurance to cover your children in certain amounts up to $20,000.
- An accelerated death benefit is available in certain situations involving a terminal illness.
- You can buy supplemental AD&D insurance to cover just yourself, or yourself and your eligible dependents, in amounts of one to ten times your basic annual earnings, up to $2,000,000.
- Depending on your situation, a private-term policy may be a better option.
Amazon provides both short-term and long-term disability coverage at no cost to you, for employees working 30+ hours a week. Both plans provide partial income (60% of eligible salary up to certain limits) if you become medically disabled. Depending on your situation and compensation, purchasing supplemental disability coverage to account for more of your total income may be a good option.
You can contribute up to $3,050 for many out-of-pocket medical expenses with tax-free dollars. If you are expecting a large expense for the year or have a qualified recurring expense, this can be a great tool to take advantage of. Keep in mind, you can only roll over $610 into the following year.
- Birth parents and primary caregivers can gradually return to work on a reduced schedule over an eight-week period immediately following pregnancy or parental leave.
- You can select one of three reduced-hour options: 50% for eight weeks, 50% for four weeks/75% for four weeks, or 75% for eight weeks.
- Your base pay, sign-on bonus payments, and RSU vesting will be proportional to the option you select.
A new Amazon RSU vesting schedule will be established upon return to full-time work.
Frequently Asked
Questions
We work with Amazon Employees with at least $500,000 in investible assets who are wanting a long-term relationship with custom financial/retirement planning and asset management Because of the level of holistic custom strategies and goals, we do not accept one-off transactional clients.
We are not tied to any firm’s proprietary investment products and engage in no investment banking activities, which means our research and market insights are independent and we are free to recommend any investments that will help you pursue your financial goals.
Yes, we work with clients across the country and have many clients who have never set foot in our office. We implement robust technology for a seamless virtual client experience.
This information is designed to be educational only, and does not constitute financial advice. Atkinson Wealth Strategies is not affiliated with Amazon. While Atkinson Wealth Strategies communicates with its clients regarding their Amazon employee benefits, and provides education on Amazon’s Benefits, there is no guarantee that the information provided is accurate or up-to-date. Amazon employees should rely on their employer for the most up-to-date information on their benefits, and for answers to any questions regarding their specific situation. There is no guarantee as to the current accuracy of, nor liability for, decisions based on such information and it should not be relied on as such.
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