Amazon (AMZN) Retirement & Benefit Planning

You’ve worked hard. Now it’s time to turn your Amazon benefits into a confident retirement strategy

Here is a central resource for Amazon employees and our advisory team to understand, evaluate, and plan around the full spectrum of retirement and benefit options

Disclosure: We’re not affiliated with Amazon. The info here is based on what we’ve seen and understand today—it’s for general education, not personal advice. Amazon’s benefits can change, and we’ll do our best to keep this page updated as we learn more. Always check with Amazon or your HR team for the latest details.

Table of Contents

Employer Retirement Plan (401k, 403b, etc)

Amazon Retirement Savings Plan 401(k)

This section outlines the structure and strategic considerations of the Amazon Retirement Savings Plan 401(k), including matching contributions & Roth opportunities.

  • 🏆 Eligibility

    • All employees are eligible immediately, no waiting period.

    💰 Employee Contributions

    • Contribute between 0% and 40% of your base salary.

    • Maximum employee contributions (2025):

      • Under 50: $23,500

      • Catch-up if 50+ by yearend: $31,000

      • Super Catch-up (in place of catch-up) if 60-63 by year-end: $34,750

    🏦 Plan Provider

    • Managed by Fidelity.

    🧑‍💼 Employer Matching

    • Amazon offers a 50% employer match on employee contributions to their 401(k) plan, up to a maximum of 4% of the employee's eligible pay.

    • Example: If an employee earns $100,000 annually and contributes $4,000 (4%) to their 401(k), Amazon will contribute an additional $2,000 (2%) to their account. 

    📅 Vesting Schedule

    Company match vests gradually over three years:

    • 33% after 1 year

    • 66% after 2 years

    • 100% after 3 years

    🔓 Full Vesting After Three Years

    After 3 years of service, all future matching contributions are immediately 100% vested.

    🌟 Additional Features

    • Roth 401(k): Available to all employees

    • Brokerage Link: Yes

    • Mega Backdoor Roth: Yes

    • In-Service Rollover: No

  • ✅ Maximize Your Employer Match
    Contribute at least 4% to get the full 100% match from the company. Not contributing enough means leaving free money on the table.

    ✅ Consider Vesting Before Changing Jobs
    The company match vests over 3 years. Leaving early could result in forfeiting part of the match.

    ✅ Maximize Mega Back Door Roth (if cash flow allows). High-income earners who have maxed out their pre-tax and Roth 401(k) contributions can further boost tax-free retirement savings by using the Mega Backdoor Roth strategy—contributing after-tax dollars to their 401(k) and promptly converting them to a Roth account..

Tax-Advantaged Accounts

HSA & FSA (Healthcare & Dependent)

Amazon offers a suite of health-related accounts designed to reduce taxable income and improve financial flexibility. These include the Health Savings Account (HSA), Healthcare and Dependent Flexible Spending Accounts (FSAs). Each account type plays a distinct role in health and retirement planning, with varying rules for contributions, rollovers, and taxation.

  • 🟢 Health Savings Account (HSA)

    • Eligibility: Only available if enrolled in a high-deductible health plan

    • Funding: Employee-funded via pre-tax payroll deduction

    • Rollover: Unused funds roll over indefinitely

    • Portability: Fully portable — account remains yours after separation

    • Contribution Limits (2025): Individual $4,150, Family $8,300, +$1,000 catch-up (age 55+)

    🟠 Healthcare FSA:

    • Eligibility: Any employee not enrolled in the High-Deductible Health Plan (HDHP).

    • Funding: Employee-funded via pre-tax payroll deductions

    • Carryover: Some unused funds can roll over (subject to IRS limit, e.g., $640 for 2025)

    • Contribution Limit (2025): ~$3,200

    🔴 Dependent Day Care FSA

    • Eligibility: Available regardless of medical plan

    • Funding: Employee-funded, $100–$5,000 annually (single or married filing jointly)

    • Rollover: None — “use it or lose it”

    • Taxation: Contributions reduce taxable income; must be used for eligible dependent care

  • ✅ Max out your HSA contributions annually — this triple tax-advantaged account can act as a long-term healthcare nest egg and retirement supplement

    ✅ Stop HSA Contributions at Least 6 Months Before Medicare: To avoid IRS penalties for excess HSA contributions, you should stop contributing at least 6 months before you apply for Medicare.

    ✅ Avoid overfunding FSAs near retirement or job changes — unused balances can be forfeited if not rolled over or if you leave AMZN.

    ✅ Spend your Dependent Day Care FSA by year-end — this account follows a strict “use it or lose it” rule with no rollover

    ✅ Use HSA funds to pay Medicare premiums after age 65 — including Part B, D, and Medicare Advantage (but not Medigap)

    ✅ Coordinate HSA contributions with spouse coverage — especially if they’re enrolled in an FSA or different health plan, which can limit HSA eligibility

    ✅ Prioritize HSA for long-term savings, not just annual spending — it’s one of the only tax-free vehicles for healthcare in retirement

    ✅ Understand tax reporting — FSAs reduce your W-2 income; HSA contributions appear on Form 8889; and HRA reimbursements are tax-free but require recordkeeping

Equity Compensation

Restricted Stock Units (RSUs)

Amazon offers performance-based compensation to reward and retain top talent. These include Restricted Stock Units (RSUs) and annual cash bonuses. While these can significantly increase total compensation, they also create complex tax implications and should be coordinated with broader retirement, tax, and estate planning strategies.

  • Eligibility

    • Available to most full-time and regular part-time Amazon employees.

    Vesting Schedule

    • Year 1: 5% of the total RSUs vest at the end of the first year.

    • Year 2: 15% vest at the end of the second year.

    • Year 3: 40% vest at the end of the third year.

    • Year 4: 40% vest at the end of the fourth year

    Taxation

    • At Vesting: RSUs are taxed as ordinary income based on the fair market value (FMV) at the time of vesting.

    • Withholding: Amazon typically withholds approximately 22–37% of the vested shares to cover federal income taxes.

    • Payroll Taxes: Subject to Social Security and Medicare taxes.

    • Reporting: The value of vested RSUs is reported on your W-2 form.

    Settlement Options

    • Delivery: Shares are delivered in Amazon stock.

    • Disposition: You can choose to sell the shares immediately or hold them for potential future appreciation.

  • ✅ Review RSU withholding — additional tax payments may be required to avoid underpayment penalties
    ✅ Coordinate equity income with other large events (bonuses, pension payouts, Roth conversions) to manage brackets
    ✅ Use charitable strategies (donor-advised funds or gifting appreciated stock) to offset high-income years
    ✅ Diversify if AMZN stock represents a large portion of net worth or retirement assets
    ✅ Work with a tax advisor before selling post-vesting RSUs to avoid surprise tax bills

Direct Stock Purchase Plan (DSPP)

A Direct Stock Purchase Plan (DSPP) is a benefit offered by Amazon that allows eligible employees to buy Amazon’s stock (AMZN) through payroll deductions or cash deposits (check or bank deposit).

  • 💸 Discount

    • No discount applied, unlike most Emplotee Stock Purchase Programs (ESPP )Amazon’s DSPP lets you buy shares at full market price, without a 5–15% employee discount ).

    📊 Contribution Limit

    • There is a yearly cap of $250,000. An initial investment of $250 is required and must be made in full, it cannot be divided into smaller, consecutive payments.

    💵 Purchase Price

    • Unlike ESPPs, there is no 15% discount on the purchase price.

    • Shares are acquired at the average market price during the settlement period—no lookback feature.

    💻 Platform

    • The plan is administered through Computershare, Amazon’s transfer agent.

  • ✅Diversify Your Portfolio

    • Assess Amazon Exposure: If you're receiving RSUs, evaluate your total Amazon holdings to ensure no single stock exceeds 10% of your portfolio.

    ✅Minimize Costs - If Planning To Actively Trade

    • Selling costs are typically higher in these types of plans. If you plan to actively trade, it may be worth considering a monthly purchase strategy through a low-cost brokerage account for greater flexibility and lower fees. While automatic investments can be set up, they cannot be made through payroll deductions.

Life Insurance

Basic & Supplemental Life Insurance

Amazon provides a multi-tiered life insurance program for employees, including Basic Life and Supplemental insurance. These benefits help protect your family’s financial security during your working years and, in some cases, into retirement. Understanding what you’re covered for, what’s optional, and what happens at retirement is key to maximizing the value of this benefit.

    • 🟠 Basic Life Insurance

      • Coverage: 2 times your base salary, up to a maximum of $300,000.

      • Cost: Paid by Amazon.

      • Eligibility: All benefits-eligible employees

      • Taxation: Premiums above $50K are reported as taxable income (per IRS rules)

      🔵 Supplemental Group Life Insurance (employee-paid):

      • Employee: 1 to 11 times your salary, up to a maximum of $2.2 million

      • Spouse/Partner: Choice of $25,000 or 1/2 to 5 times your salary, up to $250,000

      • Children: Coverage up to $20,000

      • Conversion Options: Available at separation or retirement, subject to plan rules

      • Underwriting: May be required for late elections or higher amounts

  • ✅ Keep beneficiary designations updated: especially after marriage, divorce, or family changes


    ✅ Monitor imputed income from Basic Life if you’re over $50K in coverage — it’s often overlooked in tax planning

    ✅ For Supplemental Life, review portability and conversion options well before retirement to avoid gaps in coverage

    ✅ Consider trusts for high-net-worth individuals — transferring life insurance to a trust can help with estate tax mitigation

Parental Leave

Amazon Parental Leave

Amazon supports growing families with a paid parental leave program that applies to all eligible parents — including birth, adoptive, and surrogate parents. The policy is designed to offer both financial protection and the flexibility to bond with a new child during the critical early weeks. Parental leave is distinct from disability leave and is available to all parents regardless of gender or caregiver role.

  • 🤰Maternity Leave (for Birthing Parents)

    • 🍼 Up to 20 weeks fully paid leave

      -Includes up to 4 weeks prepartum (doctor-ordered short-term disability) and 16 weeks postpartum

    • 💰 Paid Pregnancy Leave

      -100% salary paid for up to 14 weeks during short-term disability (4 weeks before birth, 10 weeks after)

    • 🏥 Continuation of Benefits

      -Healthcare, life insurance, 401(k), and vacation benefits remain active during leave.

    • 📈 RSU Vesting Continues

      -Vesting continues during leave; for leaves over 14 cumulative days, schedule adjusts upon return.

    • 🔄 Ramp Back Program

      -Flexible return-to-work options over 8 weeks:

    Options Include:

    1. 50% for eight weeks: This means working half their usual hours for the entire two-month period.

    2. 50% for four weeks, then

    3. 75% for four weeks: This allows for a more gradual reintroduction to full hours.

    4. 75% for eight weeks: This means working three-quarters of their usual hours for the entire two-month period.

    👨‍👩‍👧 Paternity & Parental Leave (Supporting & Adoptive Parents)

    • 🤗 Up to 6 weeks fully paid leave for supporting and adoptive parents

    • 🔁 Leave Share Program

      -Share up to 6 weeks of paid parental leave with a spouse or partner who lacks paid leave.

    • 👶 Adoption Assistance

      -Reimburses qualified adoption expenses: up to $5,000 for single-child, $10,000 for sibling-group

    📅 General Parental Leave Features

    • ⏳ Flexible Use

      -Leave may be taken in one block or split into two; must be used within 12 months of birth or adoption.

    • 🗣️ Manager Awareness Recommended

      -No formal approval needed; discussing your plan with your manager is encouraged.

  • ✅ Plan timing around your work calendar — especially for bonus cycles, annual reviews, or high-demand project periods

    ✅ Coordinate parental leave with disability coverage — birth mothers may receive disability (SCP) first, then parental leave

    ✅ Confirm eligibility and job protection status early — especially if you are within your first year of employment

    ✅ Review your benefits during leave — ensure continued health insurance, life insurance, and retirement contributions remain active

    ✅ Consider splitting leave time — if allowed, breaking leave into blocks may support smoother transitions or shared caregiving responsibilities

    ✅ Update beneficiary designations and guardianship documents — new family members often trigger estate planning updates

    ✅ Leverage tax credits — costs related to adoption or dependent care may qualify for tax credits or FSA reimbursement

Disability Insurance

A Salary Continuation Program (SCP)

Amazon provides income protection for employees who are unable to work due to illness, injury, or medical conditions. This includes Short-Term Disability through the Salary Continuation Program (SCP) and Long-Term Disability Insurance (LTDI). These benefits are designed to replace a portion of your income during both temporary and extended periods of disability, ensuring financial stability while you recover or transition.

  • 🟠 Short-Term Disability (Salary Continuation Program – SCP)

    • Eligibility: All benefits-eligible AMZN employees

    • Coverage: Replaces 60% of base salary

    • Duration: Up to 26 weeks of full pay

    • Start Date: 7 Day waiting period (elimination period) after claim is filed.

    • Cost: AMZN-paid benefit — no employee contribution

    • Medical Certification: Required for claim approval

    🔵 Long-Term Disability Insurance (LTDI)

    • Eligibility: Automatically provided for eligible employees

    • Coverage: Replaces 60% of base salary

    • Waiting Period: Begins after SCP ends (typically after 26 weeks)

    • Duration: Continues as long as you remain disabled and meet eligibility

    • Taxation:

      • If premiums are AMZN paid, benefits are taxable

      • If employee-paid (after-tax), benefits may be tax-free

    • Offsets: May be reduced by Social Security Disability, Workers Comp, or other income

  • ✅ Understand income replacement limits — even with 60% LTDI, there may be a gap if you rely on bonuses, stock, or commission

    ✅ Build an emergency fund equal to 3–6 months of living expenses — to cover any approval delays or out-of-pocket needs during SCP

    ✅ Coordinate disability income with Social Security Disability — if you anticipate a long-term claim, apply early to avoid benefit delays

    ✅ Understand how disability affects other benefits — vesting of RSUs and 401(k) matching may be paused or discontinued during extended leave.

    ✅ Review taxability of benefits — if AMZN pays the premiums, LTDI benefits are taxable, which reduces net income

    ✅ Prepare for transitions — If you move from SCP to LTDI, reevaluate your budget and benefit elections, especially life and health insurance continuity

Pension Income

Amazon does not offer a pension plan to its employees.

Retirement Transition

Retiring From Amazon

Whether you're actively planning or just starting to explore your options, understanding the timing and rules is key to a smooth and confident transition.

  • 💼 401(k) Plan

    • Review your current investments and assess whether your strategy still aligns with your needs now that you’ll potentially be relying on this money for living expenses.

    • Understand withdrawal options (rollover to an IRA, stay, or cash out)

    • Plan for Required Minimum Distributions (RMDs) starting at age 73–75

    📊 RSU Vesting

    • Vesting: Unvested shares are usually forfeited at retirement.

    • Retirement Provisions: Accelerated vesting may be available upon retirement, depending on your company's policy. Check your grant agreement for details.

    🧾 Tax Planning

    Be prepared for:

    • Income taxes on 401(k) withdrawals

    • Capital gains taxes on RSU sales

    🏥 Healthcare Coverage

    • Review post-retirement options: COBRA, Medicare, or marketplace plans

  • 🧩 Understand Your Retirement Benefits

    • Review your 401(k) and RSU vesting schedules.

    • Know what you’ll take with you—and what you might leave behind.

    • Confirm eligibility for retiree benefits, such as healthcare or accelerated stock vesting.

    📈 Coordinate Income & Taxes

    • Map out a withdrawal strategy to minimize taxes.

    • Take advantage of low-income years to sell RSUs more tax-efficiently, you may be able to reduce or even avoid capital gains taxes.

    • Prepare for Required Minimum Distributions (RMDs), which must begin between age 73 and 75, depending on your birth year.

    💸 Diversify & Protect Your Wealth

    • Avoid over-concentration in company stock.

    • Rebalance your portfolio to match retirement goals and risk tolerance.

    🧠 Seek Expert Guidance

    • A financial advisor can help:

      • Maximize your retirement income

      • Manage taxes

      • Navigate company-specific retirement policies

About Stonehearth Capital

Stonehearth Capital is an independent, fiduciary, wealth management firm helping families manage risk and identify opportunities for over 40 years.

Have A Question?

Send your question to: info@stonehearthcapital.com

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Disclosure: We’re not affiliated with Amazon. The info here is based on what we’ve seen and understand today—it’s for general education, not personal advice. Amazon’s benefits can change, and we’ll do our best to keep this page updated as we learn more. Always check with Amazon or your HR team for the latest details.