As an Amazon employee, it’s essential to understand your available benefits, including the company’s 401k match and retirement plan.
In this comprehensive guide, we will provide you with valuable insights into the company match plan, retirement withdrawal options, and other related topics. We’ll cover everything from the basics of the plan to the available options for withdrawals. Let’s dive in!
Amazon’s benefits package includes a 401(k) plan, allowing employees to invest in target date funds or actively managed funds for their retirement savings.
The company offers matching contributions up to a certain percentage of an employee’s annual base salary. This “free money” can help Amazon employees grow their retirement savings and enjoy tax-free growth on their investments.
To maximize the benefits of the company’s 401(k) plan, employees can contribute up to the IRS limit, which is subject to change annually.
Moreover, Amazon’s matching funds and match catch-up contributions can help employees reach the federal limit faster. Contributions can be made on a pre-tax or after-tax basis, depending on the employee’s preference and financial situation.
By participating in the 401(k) plan, employees can reduce their taxable income and avoid paying the maximum amount of taxes.
To manage their 401(k) investments, employees can access their Fidelity NetBenefits account, which provides various tools and resources for making informed decisions.
Amazon 401k Withdrawal Options
Regarding Amazon 401k withdrawal options, there are a few things to consider. First, you can withdraw funds from your account once you reach the age of 59 1/2. Alternatively, you can access funds that you rolled over into your Amazon 401k from a previous employer.
The company offers hardship withdrawal options for employees facing significant financial hardships, such as medical expenses, foreclosure or eviction payments, tuition costs, or funeral expenses.
If you leave Amazon before the three-year vesting period ends, you forfeit the company’s matched contributions, but you can still retain your contributions.
There are a few options that you can take. You can either roll your 401k funds into a new employer’s 401k plan or an IRA, invest in the stock market or index funds, or move the funds into a personal savings account.
Comparing Amazon's 401k Plan to Other Tech Giants
Compared to other tech giants, Amazon’s 401k match is similar to what Facebook, Microsoft, and Google offer – matching 50% of employee contributions. However, Amazon’s maximum contribution is 4%, while Microsoft and Facebook offer 6% and 7%.
Additionally, Facebook and Microsoft provide immediate 401k vesting, while Amazon requires employees to remain with the firm for three years to access the matched funds.
Exploring the Benefits for Amazon Employees
Beyond the Amazon 401k match and retirement plan, the company offers several other advantages that can significantly impact your future wealth. Some of these Amazon benefits include:
Base pay: Amazon’s base pay may not be the highest among tech giants, but it remains competitive. A software engineer job position at Amazon pays around $162K annually, while the same role at Google or Facebook might offer slightly more.
Impressive Sign-On Bonus: The company provides a sizable sign-on bonus, accounting for up to 35% of an employee’s total compensation. This bonus is distributed over the first two years of employment, making it an attractive incentive for joining the company.
Lower Cost of Living: Amazon employees based in Seattle benefit from a lower living cost than those working for Facebook and Google in Silicon Valley. Moreover, this financial advantage can significantly impact one’s lifestyle and savings potential.
Generous Relocation Packages: It offers substantial relocation packages to make the moving process smoother. These packages include a lump-sum payment of around $10K for moving expenses or a comprehensive package that covers housing and moving services.
Restricted Stock Units (RSUs): RSUs are paid out over four years, with an increasing vesting amount that starts at 10% in the first year. The company’s above-average stock performance over time makes these RSUs one of the most valuable aspects of the benefits package.
Additional Considerations: While Amazon boasts an impressive business reputation, it’s essential to evaluate other factors when considering its benefits package. Before joining the team, you should also consider factors, such as work-life balance, fast-paced work environment, and unique corporate culture.
The Bottom Line
Understanding the Amazon 401k match and retirement plan is crucial for employees to pay taxes in lesser amounts and maximize their savings for retirement.
By contributing at least 4% of your eligible pay, diversifying your investments, and monitoring your account’s performance, you can make the most of the employer match and other benefits Amazon offers.