Your Amazon 401(k) & Retirement Benefits [2025]
As an Amazon employee, one of your most valuable benefits is the company's 401(k) plan. Understanding the details of your 401(k) can help you maximize your savings and plan for a better retirement.
In this guide, we’re going to cover everything you need to know about the Amazon 401(k) plan to make informed decisions for your future. Let’s get started!
Eligibility and Enrollment
Who Is Eligible?
All Amazon employees ages 18 or older are eligible for the Amazon 401(k) plan immediately upon their hire date. You can enroll right away. If you don’t enroll yourself, you will be automatically enrolled 90 days after your hire date unless you opt out. If you're automatically enrolled, Amazon will set a default contribution rate and investment selection for you.
How to Enroll
To enroll in the Amazon 401(k) plan:
Visit the Fidelity NetBenefits website or contact Fidelity directly
Set up your user ID and password if you haven't already
Select your contribution percentage
Choose your investment options
Designate your beneficiaries
Amazon's 401(k) Employer Matching Program
One of the most valuable features of the Amazon 401(k) plan is the company match. For every contribution you make up to 4% of your eligible pay, Amazon will contribute an additional 50%, up to a cap of $7,000. This means Amazon adds 2% of your salary to your retirement savings when you contribute at least 4% of your pay.
For example, if you earn $200,000 annually and contribute at least 4% of your salary ($8,000), Amazon will contribute an additional 2% ($4,000) to your 401(k) account. This would bring your total funds to $1,200.
Contribution Limits for 2025
For 2025, you can contribute up to $23,500 to your Amazon 401(k) in either pre-tax or Roth contributions. If you are 50 or older, you can contribute an additional $7,500 in catch-up contributions, for a total of $31,000. This is based on IRS annual limits, which are adjusted every year.
The limit on total 401(k) contributions from employers and employees is $70,000 for 2025 ($77,500 for employees 50 and older). This combined limit includes your personal contributions, Amazon's matching contributions, and any after-tax contributions you make outside of the pre-tax and Roth limit given above.
Contribution Types: Pre-Tax vs. Roth
The difference between a traditional 401(k) and Roth 401(k) comes down to when you pay taxes:
With a traditional pre-tax 401(k), you make your contributions before taxes are applied. Your contributions do not count as income, reducing your taxable income for that year. When you make your withdrawals later, they will be taxed as ordinary income.
With a Roth 401(k), you make your contributions after taxes. Your contributions count as income now, but when you withdraw savings for retirement, those withdrawals are tax-free.
In short, it comes down to whether you pay taxes now or later. Both options have their benefits, and the right choice will depend on your financial situation and plans for the future.
Vesting Schedule
While your personal contributions to the Amazon 401(k) plan are always 100% yours, Amazon's matching contributions follow a vesting schedule. These funds won’t fully vest until you have completed three years of work. Amazon defines a year (for purposes of vesting) as 1,000 hours of labor within a calendar year, so it takes a total of 3,000 hours over a three-year period for your funds to vest.
If you leave Amazon before reaching that three-year vesting period, you will forfeit the employer matching funds in your 401(k). However, you will still have control of your own contributions.
Investment Options
Amazon's 401(k) plan, administered by Fidelity, offers a variety of investment options to help you build a diversified retirement portfolio. Your options include:
Target-date funds: These funds automatically adjust their asset allocation to become more conservative as you approach your target retirement date.
Index funds: Low-cost funds that track major market indices like the S&P 500.
Mutual funds: Professionally managed investment vehicles that pool money from many investors.
BrokerageLink options: Utilizing the BrokerageLink option within your 401(k) provides you with more investment choices, letting you customize your investment strategies further.
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Mega Backdoor Roth Conversion
One of the most powerful features of the Amazon 401(k) plan is the ability to make after-tax contributions and convert them to a Roth IRA, a strategy known as the mega backdoor Roth conversion. This lets you make additional investments beyond the IRS limits for standard pre-tax and Roth 401(k) contributions.
Here’s how it works:
Maximize regular contributions: First, contribute the maximum allowed to your Traditional and/or Roth 401(k) ($23,500 for 2025, or $31,000 if you're 50 or older).
Calculate your after-tax limit: The current limit on total 401(k) contributions from employers and employees is $70,000 for employees under 50 and $77,500 for employees 50 or older. Subtract your regular contributions and Amazon's match from this limit to determine how much you can contribute after-tax.
Set up after-tax contributions: With the mega backdoor Roth program, Amazon will let you invest these additional after-tax funds to your 401(k).
Convert to Roth: You'll see a small dropdown menu below your after-tax enrollment on your contributions page in Fidelity NetBenefits that defaults to "don't convert my after-tax to Roth." Make sure to switch this to "convert my after-tax to Roth.”
This strategy enables you to put significantly more money into tax-advantaged accounts than would otherwise be possible through standard contribution limits.
Withdrawal Options
Once you turn 59½, you can start withdrawing funds from your 401(k). Withdrawing funds before that age would usually result in a 10% early withdrawal penalty in addition to regular income taxes. However, there are some exceptions.
Rule of 55
If you retire early at 55 or older, the rule of 55 lets you make penalty-free withdrawals from your Amazon 401(k).
Hardship Withdrawals
Amazon offers hardship withdrawal options if you experience serious financial hardship. Financial hardships could include medical expenses, payments to prevent foreclosure or eviction, the cost of tuition, or funeral expenses.
401(k) Loans
Taking out a loan from your 401(k) means borrowing a sum from the account with the obligation of paying it back, with interest. To pay the loan amount back, your paycheck is reduced by the amount you borrowed plus interest.
We recommend exploring all other options before taking an early withdrawal from your 401(k), as this can significantly impact your long-term retirement savings.
What Happens If You Leave Amazon?
If you leave Amazon before retiring, you have several options for your 401(k) funds. You can:
Keep your money in the Amazon 401(k): If your balance is over $5,000, you can leave your money in the Amazon 401(k) plan. You won't be able to make additional contributions, but your investments will continue to grow tax-deferred.
Roll over to a new employer's 401(k): If applicable, you can roll your Amazon 401(k) savings into a 401(k) fund provided by your new employer. Your new company will likely have different rules for contribution matching and accessing your money, so make sure you know your new plan details when you roll your savings over.
Roll over to an IRA: You can also roll your Amazon 401(k) savings into an IRA account. An IRA is a personal retirement fund that you keep track of, unlike a 401(k), which is mainly managed by your employer. This option often provides more investment flexibility and potentially lower fees.
Cash out: Finally, you can move your 401(k) savings into a personal savings account and use it for whatever you want. Just remember, your 401(k) fund is specifically meant to be used when you retire, so keeping it in a more secure savings account (like another 401(k) or an IRA) is a good idea.
Remember, the total amount of Amazon's matched contributions to your savings fund is only available to you after three years of service with the company. If you leave Amazon before your three-year vesting period is up, you lose any contribution matches Amazon has made to your 401(k).
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Additional Amazon Retirement Benefits
In addition to a 401(k), Amazon offers a range of other benefits to help you save for retirement.
Restricted Stock Units (RSUs)
At Amazon, most employees have the ability to become owners of the company through the granting and vesting of restricted stock units (RSUs). As these stocks vest, you can sell them for quick profits or hold them for long-term gains.
Health Savings Account (HSA)
FSAs provide a convenient way to pay for certain eligible health care and/or dependent care expenses with pre-tax dollars. The Health Care FSA has a minimum contribution of $120 and a maximum of $3,050 per plan year to use for eligible health care expenses. For 2025, you can open a healthcare FSA with a minimum of $100 and a maximum of $3,300 per plan year.
Health Savings Account (HSA)
If you're enrolled in a high-deductible health plan, you may be eligible for an HSA, which offers triple tax advantages and can serve as another retirement savings vehicle.
Tips for Maximizing Your Amazon 401(k)
Contribute Enough to Get the Full Employer Match
Amazon employees can contribute up to 4% of their eligible pay to their 401(k) fund, and Amazon will contribute matching funds up to 2%. At minimum, contribute 4% of your salary to capture the full company match. This is essentially free money that provides an immediate 50% return on your investment.
Max Out Annual Contribution Limits When Possible
For 2025, you can contribute up to $23,500 annually in either pre-tax or Roth contributions. Those aged 50 or older can contribute an additional $7,500 as catch-up contributions. If financially feasible, try to contribute the maximum allowable amount to take full advantage of tax-advantaged growth.
Use the Mega Backdoor Roth Strategy
With Mega Backdoor Roth Conversion, Amazon now lets you put up to 10% of your base salary into the after-tax portion of your 401 (k) plan and convert it to Roth. This powerful strategy allows you to contribute significantly more to tax-advantaged accounts beyond the standard limits.
Stay at Amazon for at Least Three Years
Your fund fully vests after you have completed three years of work. Amazon defines a year (for purposes of vesting) as 1,000 hours of labor. To capture the full value of Amazon's matching contributions, plan to stay with the company until you're fully vested.
Consider Using Target Date Funds for Simplicity
If you prefer a simpler approach, you can consider investing in target date funds. These funds automatically adjust their asset allocation based on your expected retirement date. This "set it and forget it" approach can be ideal for those who prefer a hands-off investment strategy.
Balance Traditional and Roth Contributions
Strategically divide your contributions between Traditional (pre-tax) and Roth (after-tax) options based on your current tax bracket and expected future tax situation. This tax diversification can provide flexibility in retirement and help manage your tax liability.
Avoid Taking Loans or Early Withdrawals
Try not to borrow from your plan. Borrowing against 401(k) assets can be tempting if times get tight. However, doing this effectively nullifies the tax benefits of investing in a defined-benefit plan since you'll have to repay the loan in after-tax dollars. Keep your retirement savings working for you by avoiding loans or early withdrawals whenever possible.
Regularly Review and Rebalance Your Portfolio
Once you have established a portfolio, monitor its performance and rebalance it when necessary. Set a schedule to review your investments at least annually and rebalance when your asset allocation drifts significantly from your target.
Gradually Increase Your Contribution Percentage
If you can't max out your contributions immediately, commit to increasing your contribution percentage gradually. Consider boosting your contribution rate by 1% each year or whenever you receive a raise, bonus, or promotion.
Get the Most Out of Your Amazon 401(k)
Your Amazon 401(k) plan is one of the most powerful tools available for building long-term wealth and securing your financial future. By understanding how the plan works and implementing strategic approaches to contributions and investments, you can maximize this valuable benefit.
Remember that retirement planning is a marathon, not a sprint. Consistent contributions, thoughtful investment selections, and regular reviews of your strategy will help ensure you're on track to meet your retirement goals.
Work with a Trusted Team of Fiduciary Financial Advisors
Navigating your Amazon 401(k) plan can be complex, especially when balancing it with your broader financial strategies. While this guide provides a solid foundation, many Amazon employees benefit from personalized financial advice.
At TrueWealth Financial Partners, we specialize in helping professionals like you optimize their benefits and build comprehensive financial plans. As fiduciary advisors, we're also legally obligated to put your interests first, providing unbiased guidance focused on your financial success.
Take the Next Step
Don't navigate your Amazon benefits alone. Our team of experienced advisors can help you make confident decisions that align with your long-term financial goals. Schedule a free call today, and we’ll get right to work helping you make your golden years truly golden.
FAQs About the Amazon 401(k)
When can I start contributing to my Amazon 401(k)?
You can start contributing immediately upon being hired.
How much should I contribute to my Amazon 401(k)?
At minimum, contribute 4% to receive Amazon's full 2% match. Ideally, try to max out your annual contribution if your financial situation allows.
Can I contribute to both Traditional and Roth options simultaneously?
Yes, you can split your contributions between Traditional (pre-tax) and Roth (after-tax) options in any proportion you choose, as long as your total contributions don't exceed the annual limits.
Can I roll over a 401(k) from a previous employer into my Amazon 401(k)?
Yes, Amazon's 401(k) plan accepts rollovers from other qualified retirement plans.
How often can I change my investment selections?
You can change your investment selections at any time through the Fidelity NetBenefits platform. There are no limits on how frequently you can adjust your investments.
Are there fees associated with the Amazon 401(k) plan?
Yes, there are administrative fees and investment fund expense ratios. Amazon covers some administrative costs, but you'll still pay the expense ratios of the funds you select, which vary by investment option.
Can I opt out of automatic enrollment?
Yes, if you're automatically enrolled but prefer not to participate, you can opt out through the Fidelity NetBenefits platform or by contacting Fidelity directly.
Can I make catch-up contributions if I turn 50 during the year?
Yes, you can begin making catch-up contributions ($7,500 for 2025) anytime during the calendar year in which you turn 50, even if your birthday is later in the year.
Is there a waiting period before Amazon's matching contributions begin?
No, Amazon begins matching eligible contributions immediately once you start contributing to the plan. However, remember that these matching funds don't vest until you've completed three years of service.
How do Amazon’s matching contributions get invested?
Your employer matching contributions follow the same investment allocation as your own contributions. If you change your investment elections, both your contributions and Amazon's matching contributions will be affected.
How secure are my 401(k) investments?
While all investments carry risk, your 401(k) is protected from Amazon's creditors. Investment risk varies based on your selected funds, but diversification across asset classes can help manage this risk.
What happens to my 401(k) if Amazon goes out of business?
Your 401(k) assets are held in a trust separate from Amazon's business assets, so they're protected even if the company were to face financial difficulties.
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