What Should I Know About My Amazon Benefits?
9 MIN READ
There are many reasons to want to work at Amazon, and the way they support employees and their families from the day you first start working is one reason.
Amazon provides great benefits for all employees working between 20 - 40 hours a week. While actual benefits may vary by position and negotiated compensation, Amazon protects its employees' financial well-being by providing great financial benefits, including Amazon restricted stock unit (RSU) shares and a 401(k) plan.
Amazon is an equal opportunity employer and does not discriminate on the basis of race, religion, creed, color, national origin, citizenship, marital status, sex, age, sexual orientation, gender identity, protected veteran status, political ideology, ancestry, the presence of any physical, sensory, or mental disabilities, or other legally protected status.
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What Is an Amazon RSU?
An Amazon RSU is the right to receive a share or payout at a future date or subject to some performance condition. It is gifted by Amazon at the start of your employment. For reference, one RSU equals one share of stock once you become vested.
You receive your shares upon being hired, but they aren't worth anything just yet. You'll receive a vesting schedule based on your compensation. Your plan documents tell you the exact number of RSUs you'll receive and how you may earn additional units.
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Things You Need to Know About Amazon Restricted Stock Units
As we said above, Amazon Restricted Stock Units are a part of your compensation, but they aren't worth anything until you're vested. Once you're vested, though, you're free to do what you want with the stock.
Each unit is worth the current price of an Amazon share on the date that you become vested. However, Amazon RSUs create a tax liability when you become vested. You'll pay taxes as you would on your ordinary income at that time.
Other things to know about Amazon RSUs are:
- Make sure you understand what happens to your RSUs if you take parental leave
- Your RSUs don't expire
- You'll lose vesting if you leave Amazon before you're fully vested
- You may have specific trading windows to trade the stock once you're vested to prevent insider trading
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Amazon RSU Vesting Schedule
Most companies operate on a 25-25-25 vesting schedule, but Amazon RSUs are on a different schedule. Amazon is on the 5-15-40-40 schedule.
For example, if you are promised 200 shares of Amazon, you'd receive 10 shares on the 15th of the month of your first anniversary, 30 shares on the 15th of the month of your second anniversary, 80 shares six months later, and the final 80 shares in another 6 months.
This means your tax liabilities are much higher in years 3 and 4, so prepare your finances accordingly or get with your tax advisor.
Amazon Employee Stock Options
In a move to increase its minimum wage, Amazon revamped its compensation plan, which no longer included Amazon employee stock options, and after 2019, with RSUs vesting in 2020 and 2021, Amazon is replacing the program with a Direct Stock Purchase Program.
Related Article | 5 Things to Know About Your Restricted Stock Unit
Understanding Your Tax Impacts as an Amazon Employee
Generally, RSUs are awarded at no cost without a Section 83(b) election.
Tip: A section 83(b) Election is an IRC provision that allows employees to pay ordinary income taxes on the total fair market value of the restricted stock at the time of granting rather than the time of vesting.
As you can see in the graphic, you are given the shares at no cost. However, once you are vested, it triggers a tax liability, and you will pay ordinary income taxes on the amount of gain between fair market value (FMV) at grant and FMV at vesting. Even if Amazon typically withholds 22 percent of the value for taxes, for some (depending on your tax bracket), this may not be enough, so be prepared for a higher tax liability in the higher vested years.
Additionally, when you go to sell the shares, you will pay capital gains taxes for the amount of gain between FMV at vesting and FMV at the sale. Capital gains taxes will vary depending on how long you've held the stock, your taxable income, and your filing status. f you sell the stocks right away once vested, you'll pay ordinary capital gains taxes. If you hold onto the stock for longer than a year, you'll pay long-term capital gains taxes. So, it's important to prepare yourself for liability.
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Other Amazon Job Benefits
Health Care Coverage
Amazon offers a variety of health plans for employees, including a health savings account for their high deductible plans. Employees can choose from various plans with different deductibles, co-insurance, and out-of-pocket maximums.
In addition, Amazon employees may get dental and vision coverage. There are two plans to choose from in each category and various health support programs, including fertility benefits, digital, physical therapy, mental health care coverage, diabetes support, and virtual health care options.
Child Care and Elder Care
Amazon offers its employees resources for parents and eligible family members. The resources help parents find reputable daycare centers or caregivers for elderly parents by providing free membership to SitterCity (for daycare) and YearsAhead (for senior caregivers).
Amazon provides adoption assistance for its employees to help with domestic or international adoption expenses. The adoption assistance includes up to $5,000 for a single adoption or up to $10,000 for adopting a sibling group.
Amazon offers a variety of options for paid parental leave before, during, and after the birth or adoption of a child. To be eligible, you must have one year of continuous service and can then take advantage of a variety of leave options, including:
- Pregnancy leave - If you have doctor orders to stay home, you can get up to 14 weeks of paid leave
- Parental leave - After birthing or adopting a child, you can get up to six weeks of paid leave
- Leave share program - If you don't use your entire parental leave, you can 'share' it with your spouse if they don't have parental leave from their employer. In exchange, you'll receive pay for the unused portion of your leave to compensate for your spouse's time off.
- Ramp back program - Amazon allows employees on Amazon maternity leave or other parental leave options to work their way back into a full work day by working 50% days for eight weeks, 50% for four weeks and 75% for four weeks, or 75% for eight weeks. Your pay will vary.
Amazon Tuition Reimbursement
The Amazon Career Choice program is for hourly employees only. If you qualify, Amazon will pay up to 95% of your tuition, school fees, and textbooks to attend school for a new career. The program is open to various careers, including paralegals, medical technicians, solar panel installers, and robotics engineers.
Amazon benefits include support to help employees achieve financial security. This includes estate planning and financial counseling.
Amazon benefits include fair pay if you work over 40 hours or on holidays.
If you work more than your regularly scheduled hours, Amazon pays overtime when you work more than 40 hours.
Amazon Holiday Pay
If you work on any of the following holidays, Amazon pays time and a half to its employees:
- New Year's Day
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Christmas Day
Amazon benefits also include free access to a variety of support, including:
- An employee assistance program
- Resources for parents with children with disabilities
- Help finding child or elder care
Understanding Your Amazon Employer Plan
Your 401K contributions also have tax liabilities, depending on how you invest. If you choose a standard 401K, Amazon invests your funds pre-tax (before taxes). You get the benefit of a lower tax liability now, which means a slightly higher paycheck. You owe taxes on the contributions and earnings when you withdraw them during retirement. You'll pay your current tax bracket at the time that you withdraw the funds.
You may also choose a Roth 401K, which means after-tax contributions. You pay standard taxes on your paycheck, and the 401K withdrawals are made after taxes. Your contributions and earnings grow tax-free in this account. You can withdraw the funds without a tax liability during retirement, as long as you wait until you're 59 ½ years old.
Amazon 401(k) Match
Amazon helps employees plan for the future by contributing to their 401K. Eligible employees receive $0.50 for every $1 they contribute to their retirement account. The Amazon company match contributions totaling up to 4 percent of its employees' salaries - Amazon contributes a maximum of 2 percent.
Amazon doesn't match catch-up contributions for those over 50 years old, and the employee match is in Amazon stock. You are free to do what you want with the match, whether you stay invested in the company stock or you diversify your portfolio more to reduce its risk.
Employees aren't immediately vested in their matching contributions, though. You must have at least 3 years of vesting service. Each year that you work 1,000 hours or more is a vested year. Once you work three of these years, you're vested and can keep the matching contributions.
Employees may contribute up to $19,500 (the 2020 limit for 401K and Roth 401K), or between 1 percent and 90 percent of their eligible pay. Employees may make pre-tax contributions (regular 401K) or after-tax contributions (Roth IRA). The $19,500 limit is a combination of both accounts (if you have both).
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How Much Do Amazon Drivers Make?
Amazon delivery drivers make an average of $21 an hour. Because they are hourly employees, they are subject to overtime and holiday pay.
Amazon Flex drivers make an average of $20 an hour. While it's slightly lower pay than an Amazon driver, Amazon Flex drivers have much more flexibility because they are self-employed.
Does Amazon Pay Weekly?
Most full-time employees at Amazon get paid bi-weekly, but hourly employees receive payments weekly.
Do Amazon Employees Receive Discounts?
Amazon employees do receive an Amazon employee discount. The Amazon employee discount code is good for 10% off and can be up to $100 per year. There is also an employee discount program for reduced ticket prices, cell phone plans, and more.
Amazon's RSUs and 401(k) Plan Sweeten the Compensation Deal
As you look at your employment options, think of the benefits Amazon offers. Even if you have a slightly lower salary, the ability to own shares of Amazon stock upon becoming vested is a large benefit, especially given its high stock price today; not to mention their other great perks.
While there's no guarantee where the stock prices will be when you become vested, chances are pretty good that it will still be a nice benefit that will help you in your financial future.