Amazon 401(k) Employer Match: Maximize Your Retirement Savings
When nearing retirement age after years of service at Amazon, you’re bound to have questions. Do you have enough saved up? When should you use your Amazon 401(k)? What benefits will follow you into retirement?
As an Amazon employee, one of your most valuable benefits is the company's generous 401(k) match. Understanding how to take full advantage of this benefit can significantly impact your retirement readiness and long-term financial health.
Key Takeaways
Amazon matches 50% of employee contributions up to 4% of your eligible salary (equating to a 2% maximum company contribution).
Amazon's match has a three-year cliff vesting schedule, meaning you must stay with the company for three years to keep any employer contributions.
Contributing at least 4% of your salary ensures you're not leaving free money on the table.
How the Amazon 401(k) Match Works
Amazon provides a 50% match on employee contributions up to 4% of eligible pay. In practical terms, this means:
If you contribute 4% of your salary, Amazon adds 2%
If you contribute 8%, Amazon still only adds 2%
If you contribute 2%, Amazon adds 1%
For example, if your annual salary is $120,000 and you contribute at least $4,800 (4%) to your 401(k), Amazon will contribute an additional $2,400 (2%) to your account.
Eligibility
All Amazon employees age 18 or older are eligible for the 401(k) plan immediately upon their date of hire. You can then contribute up to 90% of your eligible pay, subject to IRS limits.
Contribution Limits for 2025
In 2025, the standard IRS limit for 401(k) employee contributions is $23,500. Employees age 50 or older can make an additional catch-up contribution of $7,500 for a total of $31,000.
Vesting Schedule
Amazon has a three-year cliff vesting schedule for employer matching contributions. This means you must complete three years of vesting service to receive your employer match. A year of vesting service is defined as a calendar year in which you complete 1,000 hours of work.
If you leave Amazon before completing three years of service, you forfeit all employer matching contributions. However, your personal contributions are always 100% vested regardless of your length of service.
Tips for Maximizing Your Amazon 401(k) Match
1. Contribute at Least 4% of Your Salary
At a minimum, you should contribute 4% of your salary to receive the full employer match. This is essentially free money that shouldn't be left on the table. For someone earning $150,000 annually, the 2% employer match would mean an $3,000 per year from Amazon for free.
2. Factor the Three-Year Vesting Period into Career Decisions
If you're thinking of leaving Amazon before reaching the three-year vesting mark for your employer match, you may want to reconsider. Depending on your salary and contribution history, that could mean losing thousands of dollars in retirement savings.
3. Increase Contributions with Raises and Bonuses
When you receive a salary increase or bonus, consider directing some or all of that additional income to your 401(k) before you get used to having it in your regular budget. This strategy, known as "saving your raise," can accelerate your retirement savings without feeling like a loss.
4. Automate Your Contributions
Set up automatic contributions from your paycheck to ensure consistent investing regardless of market conditions. This maintains disciplined saving and helps you avoid the temptation to try timing the market.
5. Invest Wisely
Amazon's 401(k) plan offers a variety of investment options through Fidelity, including:
Target-date funds tailored to your expected retirement year
Index funds that track major market benchmarks
Actively managed mutual funds
Amazon company stock
Take time to pick the right strategy based on your risk tolerance, investment timeline, and retirement goals. Many Amazon employees find target-date funds to be a simple yet effective option, as they automatically adjust to become more conservative as you approach retirement.
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Additional Retirement Benefits for Amazon Employees
Along with the 401(k) employer match, Amazon provides a number of additional benefits to help employees save more for retirement.
Mega Backdoor Roth
Amazon's 401(k) plan includes the valuable mega backdoor Roth feature, which lets you make after-tax contributions beyond the standard limits, then convert those contributions to Roth status. This strategy can significantly increase your tax-advantaged retirement savings.
To use this program, you will have to:
Max out your regular pre-tax or Roth 401(k) contributions
Make additional after-tax contributions
Convert those after-tax contributions to Roth status
Restricted Stock Units (RSUs)
Amazon's compensation often includes RSUs, which can complement your 401(k) strategy. While RSUs aren't part of the 401(k) plan, they should be considered in your overall retirement planning. When RSUs vest, you can:
Sell some shares and use the proceeds to fund increased 401(k) contributions
Hold shares for potential long-term growth (being mindful of concentration risk)
Diversify your investments by selling Amazon shares and investing in other assets
Health Savings Account (HSA)
If you're enrolled in Amazon's high-deductible health plan, you can contribute to an HSA, which offers triple tax advantages:
Tax-deductible contributions
Tax-free growth
Tax-free withdrawals for qualified medical expenses
Flexible Spending Accounts (FSAs)
Amazon offers Health Care and Dependent Care FSAs that allow you to set aside pre-tax dollars for eligible expenses. While FSAs aren't specifically retirement accounts, strategic use can free up other funds for retirement savings.
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Take Your Retirement Savings Plan to the Next Level
Making the most of your Amazon retirement benefits requires careful planning and integration with your overall financial strategy. At TrueWealth Financial Partners, we specialize in helping professionals like you make the most of their benefits, from the Amazon 401(k) match to the mega backdoor Roth program.
Our team of fiduciary financial advisors can help you:
Decide the best contribution rate for your 401(k)
Optimize your investment strategy for your financial goals and risk tolerance
Create a comprehensive retirement roadmap
We understand the unique challenges and opportunities that come with Amazon's compensation structure and can provide personalized guidance to help you achieve your retirement goals.
Ready to take the next steps to a secure financial future? Schedule a free consultation, and we can get started on building your retirement strategy.
FAQs
Does Amazon match Roth 401(k) contributions?
Yes, Amazon's match applies to both traditional (pre-tax) and Roth contributions. However, the employer match itself is always made on a pre-tax basis, regardless of which type of contribution you choose.
How does Amazon's 401(k) match compare to other tech companies?
Amazon's 401(k) match is generally less competitive than other major tech companies. For example:
Microsoft offers a 50% match with no cap up to the IRS limit with immediate vesting.
Boeing provides a 100% dollar-for-dollar match on all employee contributions up to 10% of salary (with immediate vesting).
Meta (Facebook) provides a 50% match on up to 7% of salary with immediate vesting.
Google offers a 100% match up to $3,000 or 50% of all contributions up to the IRS limit (whichever is greater) with immediate vesting.
What happens to my Amazon 401(k) if I leave the company before three years?
If you leave Amazon before completing three years of service, you will keep all of your personal contributions and any earnings on those contributions, but you will forfeit all employer matching contributions.
Does Amazon match catch-up contributions for employees over 50?
No, Amazon does not match catch-up contributions for employees age 50 and older.
When can I start making withdrawals from my Amazon 401(k)?
You can begin taking penalty-free withdrawals from your Amazon 401(k) at age 59½. If you leave Amazon at age 55 or later, you may qualify for the "rule of 55," which allows for penalty-free withdrawals before age 59½.
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