Amazon 401k Plan 2023 Guide


Amazon offers a 401(k) plan to employees who work a certain number of hours for the company. The Amazon 401(k) plan for employees has a three-year vesting period, is transferrable, and matches 50% of your savings contributions. After you leave the company, you have several options for moving the money into a new account.

Most companies, including Amazon, offer a 401(k) plan to their employees, but not all plans are created equal. Rules for access, vesting, changing jobs, and employer contributions can all vary from job to job, and it can get confusing if you aren’t sure what to look for. If you work for Amazon (or hope to someday), we’ll address the big questions you have about the Amazon 401(k) plan, inform you of available employee benefits, and help you plan for a comfortable retirement.

What is a 401(k) plan?

A 401(k) plan is a pretax retirement savings account offered to employees by the company they work for. The United States established 401(k) plans as investable assets for employees through the Revenue Act, then structured tax laws around it. Companies often have different rules for how to access the funds, when the funds become available, and how much the employer is willing to contribute to each employee’s plan.

Essentially, your company will match your 401(k) savings contributions up to a certain percentage, but you can add more or less to your fund as you see fit. People often invest in actively managed funds or target date funds that make it easy to save for retirement.

These 401(k) funds are unique in that they are not subject to traditional income taxes, so they can grow quickly. Also, 401(k) plans are a great way to set your retirement savings aside so you don’t spend them prematurely. But some plans give you the option of taking out a loan or getting early withdrawal from your fund.

For a more in-depth look at how 401(k) plans work, check out SuperMoney’s Complete Guide to 401(k) Plans.

Getting started: Who gets an Amazon 401(k) plan?

Amazon offers its 401(k) plan to each Amazon employee when they are hired, but they must be regularly scheduled for 30 or more hours of work per week. Employees who are not scheduled for 30 or more hours become eligible to enroll in the plan after 1,000 hours of work over a 12-month period.

How much does Amazon match?

Amazon employees can contribute up to 4% of their eligible pay to their fund, and Amazon will contribute matching funds up to 2%. Keep in mind that Amazon’s company match program will not match catch-up contributions if you are eligible and over the age of 50.

You can, of course, opt out of joining Amazon’s 401(k) plan. Just remember that your 401(k) contributions are not taxed as income, and matching contributions are free money. So it probably makes more sense to invest in your 401(k) and make use of that tax-free growth if you can.

Pro Tip

The Amazon 401(k) program is not available to employees in every state. If you live in Connecticut, Illinois, Michigan, Indiana, Maryland, North Carolina, Pennsylvania, Utah, or Wisconsin, you have a different set of benefits than Amazon employees in other states.

When are my savings available to me?

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. So, it takes a total of 3,000 hours over a three-year period for your funds to vest and for you to gain access to them. You always have access to the contributions you make, but you will not be able to use Amazon’s matched contributions until the vesting period is up.

This three-year vesting period also means that you completely forfeit your contribution match from Amazon if you leave the company before the three years are up.

What are the rules for accessing my fund?

If you need to utilize your funds before you leave Amazon or retire, you can either take out a loan from your 401(k) account or make a withdrawal.

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. You can pay the amount back over a period of up to five years if you request a deferral. There is a minimum loan amount of $1,000, and a maximum amount of half of your vested balance in the fund (up to $50,000).

Making a withdrawal from your 401(k) is permitted when you reach age 59 1/2 or when you want to withdraw money that you rolled over into your Amazon employee fund from a previous employer. Additionally, 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.

What happens to my fund if I leave Amazon?

Amazon employees have several options for what to do with their 401(k) savings. But remember: if you terminate your employment before your three-year vesting period has elapsed, you will not be able to take Amazon’s matching contributions with you. However, you can keep all the money that you contributed to your fund.

Options for moving your fund after you quit

Your 401(k) can go with you if you cease working for Amazon, and it can do so in a few different ways. Just keep in mind that moving your 401(k) funds to a different type of account could turn those pretax dollars into a tax burden.

Roll it into a new 401(k)

Your first option is to roll your Amazon 401(k) savings into a 401(k) fund provided by your new employer, if applicable. 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 it into an IRA

You can also roll your Amazon 401(k) savings into an IRA account. An IRA is basically a personal retirement fund that you keep track of, unlike a 401(k), which is mainly managed by your employer. Check out this article for more information on how to roll savings over to an IRA.

Invest in the stock market

You might choose to invest the funds you saved in your Amazon 401(k) in the stock market. Keep in mind that this can be risky, though. You might face early withdrawal penalties and lose any benefits of a company-sponsored plan.

Move it into a savings account

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. Traditional savings accounts also tend to have low returns.

When will Amazon stop matching my savings?

Amazon will stop matching funds after you have been paid your final paycheck and you have made your final contribution. Remember, though, 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).

Amazon uses Fidelity Bank as its plan administrator for the employee 401(k) program. Check Fidelity’s 401k site for more information.

Get help with your investments

If you’re ready to put those Amazon benefits to good use, use our comparison tool to find a brokerage that can help you make sense of index funds and other options.

Key takeaways

  • 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%.
  • Amazon’s 401(k) program has a three-year vesting period but allows withdrawals and loans with certain conditions.
  • You can take a loan from your Amazon 401(k). There is a minimum loan amount of $1,000, and a maximum amount of half of your vested balance in the fund (up to $50,000).
  • You have a few options for when you leave Amazon, including moving your 401(k) savings to your new employer’s plan, investing your savings, or rolling it into an IRA.
View Article Sources
  1. Benefits Overview – Amazon
  2. 401k Plan Overview –
  3. Complete Guide to 401k Plans – SuperMoney