Amazon 401(k): How To Max It Out

If you work at Amazon and you’re not taking full advantage of the 401(k), that’s basically leaving free money in your manager’s inbox.

Let’s fix that.

This guide breaks down how the Amazon 401(k) works, what’s changed recently, and how to actually use it like someone who likes Future You.

Quick note: Amazon can and does update its benefits. Always double‑check the latest plan details in your Amazon Benefits portal or with Fidelity (Amazon’s 401(k) provider in the U.S.). This post gives you a clear framework so updates are easy to plug in.

Your Amazon 401(k) is basically a “Future You” funding machine—if you actually turn it on.

What is the Amazon 401(k) in plain English?

Your Amazon 401(k) is an employer‑sponsored retirement plan managed through Fidelity. You put in a percentage of your paycheck, Amazon adds its own contributions (subject to eligibility and limits), and the money is invested for the long term.

Key pieces:

• Pre‑tax or Roth contributions (and sometimes after‑tax, depending on plan options and role)
• Amazon contributions (employer match and/or non‑elective contributions depending on program and eligibility)
• A lineup of investment options (target‑date funds, index funds, etc.)
• Tax advantages now, later, or both

Think of IRS limits as three buckets: your contributions, catch‑up if 50+, and the combined total cap.

How much can you contribute to Amazon’s 401(k)?

The IRS sets the annual 401(k) contribution limits, and your Amazon plan has to obey those.

For 2025 (most recent IRS numbers available as of January 2026):

• Employee contribution limit: $23,000
• Age 50+ catch‑up: additional $7,500 (so $30,500 total employee contributions)
• Overall limit (employee + employer): $69,000 (or $76,500 with catch‑up)

These limits apply across all 401(k) plans you participate in during the year. If you changed jobs mid‑year, you need to make sure you don’t overcontribute.

Two streams—yours and Amazon’s—flow into the same 401(k) vault, but Amazon’s usually unlocks over time.

Amazon 401(k) match and employer contributions (conceptually)

Amazon’s exact match formula and eligibility can vary by role, region, and employment status, and it has changed over the years. But here’s how the structure typically works so you can plug in your specifics from the benefits site.

1. Employee contributions

You choose a percentage of your eligible pay to contribute each paycheck. You’ll usually see options like:

• Traditional 401(k): Pre‑tax, lowers your taxable income today. You’ll pay taxes when you withdraw in retirement.
• Roth 401(k): After‑tax, no deduction now, but qualified withdrawals in retirement are tax‑free.

You can split contributions between the two as long as the total stays under the IRS annual limit.

2. Amazon contributions

Amazon may:

• Match a percentage of what you contribute (up to a cap), and/or
• Provide non‑elective contributions (money they put in regardless of whether you contribute, depending on program and eligibility)

The exact formula (e.g., “X% match on the first Y% of pay”) is in your Amazon Benefits documentation. The logic, though, is universal:

• There’s a magic percentage of your pay that unlocks the full company contribution.
• Contributing less than that = leaving money on the table.

3. Vesting (when Amazon’s money becomes fully yours)

Your own contributions are always 100% vested—you can’t lose them.

Amazon’s contributions often have a vesting schedule, meaning you earn ownership over time (e.g., a percentage per year of service). If you leave before you’re fully vested, you may forfeit some of the employer money.

Check in your plan details:

• Vesting schedule: Is it immediate, graded (e.g., 20% per year), or cliff (e.g., 100% after 3 years)?
• Hire date and service years: These determine your vested percentage.

Traditional helps cut taxes now; Roth helps future you keep more of your withdrawals later.

Traditional vs Roth in the Amazon 401(k): which should you pick?

Let’s talk taxes (but in a way that doesn’t put you to sleep).

Traditional 401(k>

Traditional 401(k)

• Contributions are pre‑tax.
• They lower your taxable income now (good if you’re in a high bracket today).
• Withdrawals in retirement are taxed as ordinary income.

Roth 401(k)

• Contributions are made after tax.
• No tax break now, but qualified withdrawals in retirement are tax‑free.
• Great if you expect your future tax rate to be equal or higher than today, or you’re early in your career at a relatively low income.

A simple Amazon‑employee rule of thumb

This is not personalized tax advice, but here’s a common approach:

• Early‑career / lower tax bracket: Tilt more toward Roth 401(k).
• Mid‑ to late‑career / higher tax bracket: Tilt more toward Traditional 401(k) to reduce taxes now.
• Unsure? Split contributions (e.g., 50/50). That gives you tax diversification later.

Your RSUs and base pay live in different lanes. Your 401(k) percentage is tied to eligible pay, not vesting stock.

How Amazon 401(k) works with RSUs (stock) and other comp

Amazon comp can include:

• Base salary
• RSUs (restricted stock units)
• Bonuses (in some roles/levels)

Your 401(k) contributions are usually based on eligible pay, which typically includes base salary and sometimes bonuses, but not the value of RSUs when they vest (those are taxed as income separately, but they don’t automatically flow into the 401(k)).

A realistic scenario

Example:

• You make $150,000 base salary.
• You also have RSUs that vest worth, say, $80,000 this year.
• You decide to contribute 10% of your salary to the 401(k).

You’re contributing: 10% of $150,000 = $15,000 (toward the $23,000 annual IRS limit). The RSU income you recognize when they vest does not automatically increase your 401(k) contributions.

A lot of Amazon employees who get meaningful RSU income choose to:

• Max out their 401(k) early in the year via paycheck percentage, and
• Use vested RSUs (after paying taxes) to build additional brokerage investments or an emergency fund.

Picking investments can be simple: a single target‑date fund beats analysis paralysis every time.

Investment options inside the Amazon 401(k)

Your 401(k) doesn’t just sit in cash (unless you pick the cash option). It’s invested in funds you choose from the plan menu.

Common options in the Amazon 401(k) lineup generally include:

• Target‑date funds (TDFs):
  • You pick a fund closest to your expected retirement year (e.g., 2050).
  • The fund automatically adjusts from aggressive (more stocks) to conservative (more bonds) as you age.
  • Easiest “set it and mostly forget it” option.
• Index funds:
  • Track broad markets like the S&P 500, total U.S. stock market, or international stocks.
  • Typically low‑cost and tax‑efficient.
• Bond funds:
  • Provide stability and income.
  • Useful as you get closer to retirement or want lower volatility.
• Other specialized funds:
  • May include sector funds, global funds, or stable value funds.

A simple portfolio framework for Amazon employees

Not investment advice, just a common pattern:

• If you don’t want to think about it: Choose a single target‑date fund that matches your retirement year.
• If you’re comfortable being hands‑on:
  • 80–100% in a U.S. and international stock index mix when younger
  • Gradually add bond index funds as you approach retirement or if volatility stresses you out.

Leaving Amazon? Your 401(k) doesn’t quit with you—you get to choose where it lives next.

Vesting, leaving Amazon, and what happens to your 401(k)

Life happens. Maybe you’re moving, switching industries, or just deciding you’ve had enough of orange badges. What happens to the 401(k)?

1. Your contributions

• Always 100% yours, no matter when you leave.

2. Amazon contributions

• You keep the vested portion.
• Any unvested employer contributions are forfeited when you leave.

3. Your options when you leave

Typically, you can:

1. Leave it in the Amazon 401(k) (if your balance meets the plan’s minimum requirement).
2. Roll it over to:
   • A new employer’s 401(k), or
   • An IRA (Traditional or Roth, depending on tax treatment).
3. In some cases, cash out (usually a bad idea):
   • You’ll owe income tax.
   • If you’re under 59½, you’ll likely owe a 10% early withdrawal penalty on top.

Most financially savvy Amazon alumni either leave the account where it is for a while or roll it over to consolidate everything into one place.

Think in tiers: grab the match, push toward 10–15%, then chase the IRS max if your budget allows.

How much should you put into your Amazon 401(k)?

Let’s break this down into tiers.

Give your 401(k) 30 focused minutes once, then let automation carry most of the weight.

New Amazon employee? Here’s a 30‑minute setup checklist

If you just joined and your head is spinning from onboarding, here’s the CliffsNotes version.

Step 1: Log into Fidelity via Amazon Benefits

• Find your 401(k) section.
• Turn auto‑enrollment ON (or bump up the default percentage if you’re already auto‑enrolled).

Step 2: Choose your contribution rate

• Find out what percentage unlocks the full Amazon contribution.
• Set your contribution at least to that.
• If possible, round up another 1–2%—you’ll barely notice it after a couple of paychecks.

Step 3: Pick Traditional vs Roth (or both)

• Early career / lower bracket? Lean Roth.
• Higher income / high bracket? Lean Traditional.
• Indecisive? Split 50/50 and revisit in a year.

Step 4: Select your investments

• Easiest option: pick a target‑date fund closest to your planned retirement year.
• More advanced: build a simple 2–3‑fund mix of U.S. stock index + international stock index + bond index.

Step 5: Turn on automatic increases (if available)

• Enable a 1% per year auto‑increase until you hit your target savings rate.
• That way, your savings grows quietly in the background without you constantly revisiting it.

Avoid the usual traps: skipped match, idle cash, and too much AMZN in every corner of your life.

Common mistakes Amazon employees make with their 401(k)

A few patterns show up over and over:

1. Not contributing enough to get the full Amazon employer contribution
   • This is the big one. Always at least hit the match.
2. Letting everything sit in cash or the default fund without checking
   • Make sure your money is actually invested in a way that fits your age and risk tolerance.
3. Overlapping risk with too much Amazon stock + RSUs
   • If your RSUs already give you big exposure to Amazon stock, it’s often wise to keep your 401(k) mostly in diversified funds, not more AMZN.
4. Ignoring vesting schedules when planning to leave
   • If you’re close to a vesting milestone, know what’s at stake.
5. Waiting years to start contributing
   • Starting at 4% today usually beats starting at 10% 10 years from now. Time in the market > timing the market.

A few small decisions now can mean Future You is on a beach—not still checking Slack.

Final thoughts: your Amazon 401(k) is a tool, not homework

It’s easy to treat your 401(k) like yet another corporate portal you’ll “deal with later.” But later quietly turns into years—and those are years of lost compound growth and free employer money.

If you do nothing else this week:

1. Log into your Amazon 401(k) account.
2. Confirm you’re contributing enough to get the full employer contribution.
3. Make sure your investments match your age and risk comfort (a target‑date fund is perfectly fine).

Do that, and you’re already ahead of a huge percentage of people.

Future You—probably somewhere on a beach, not checking Slack—will be very, very grateful.