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Amazon workers who join full time must stay for three years before they vest in the company match. Leave after two years and 11 months? You're out of luck. Whi

Amazon workers who join full time must stay for three years before they vest in the company match. Leave after two years and 11 months? You're out of luck. While Amazon's policy does seem incredibly limited, this particular jab makes no sense. Three years is the point at which you can begin contributing. So if your hypothetical worker survived that extra month and made it to three years instead of 2 years 11 months, he'd only get an employer contribution match on one month's paycheck.

jayess 11y ago
This sort of vesting schedule is pretty common. I'm not sure busting Amazon's balls on this one is very genuine.
- deleted 11y ago
  [deleted]
- icefox 11y ago
  > The match of employee contributions into their 401(k) plans is below average and made entirely in Amazon stock, which leaves employees dangerously exposed to the company's fortunes. How about this other aspect of their 401k plan? I have never worked at a company that does that. Being so closely tied to your place of work financially is usually not recommended.
  - bpodgursky 11y ago
    My employer matches in company stock too. It's not a big deal, you can exchange it immediately for a portfolio if you want via the 401k management portal (T Rowe Price for me). It's probably just politically easier for the board to issue more shares than to spend cash.
    - s73v3r 11y ago
      But now you've got the added tax implications of having to sell stock right when you get it.
      - bdonlan 11y ago
        It's a 401k, there are no taxes upon sale.
      - pbhinder 11y ago
        It's not the tax that is the problem but the risk that an employee is taking with single company stock in their retirement portfolio.
- LoSboccacc 11y ago
  Yeah this is only relevant as news if the implementing company also has an habit of firing people at the 34 month mark. I mean, it does suck, but it is what one sign for, so no amount complaining later will change that
- rdtsc 11y ago
  Is it? I worked for 3 companies. 2 allowed matching right away, other gave a % of the salary every year, but you couldn't contribute yourself.
  - sahhhm 11y ago
    It seems fairly common to the point that 401k vesting horizons are something that can be expected. Filtering on "Vesting" against the Bloomberg data, 2 of the top 10 have similar conditions (with MasterCard requiring 4 years instead of 3, though their match is considerably better than Amazon's). Outside of the top 10 there is still a healthy representation of companies that do not immediately vest. Well-funded 401k matching plans that vest immediately certainly help with mobility, for those who care to stick around for the match!
- gorena 11y ago
  All employers should have their "balls busted", whenever possible. Demand more.
- s73v3r 11y ago
  I would say busting anyone's balls over that one is genuine. Especially because it sounds like their competition in hiring doesn't do that.
ZenoArrow 11y ago
I'm surprised it's not common, is that just for particular industries or for most US employers?
delecti 11y ago
You can begin contributing to your own 401k immediately upon starting. They begin matching immediately as well, but you lose that match when you leave if you aren't vested. Source: am an Amazon employee
- TwiztidK 11y ago
  Does the match partially vest over those 3 years, or is all or nothing?
  - delecti 11y ago
    All or nothing.
- moron4hire 11y ago
  These sorts of vesting rules are extremely common for 401(k)s. It's why I don't include such things in trying to figure a "total compensation package" when considering a new job. It's either money in your hand or it's not. A lot can happen in 3 years.
  - madcaptenor 11y ago
    The company I work at also has 401(k) contributions vesting at 3 years. In my mental accounting I basically see this as a retention bonus - if I stick around for three years they'll pay me a bonus of roughly 15% of a year's salary. As far as I know there's no tendency to fire just before vesting. But it wouldn't surprise me if you see less employees quitting between 30 and 36 months after hire, and more quitting between 36 and 42, than you would otherwise.
ruraljuror 11y ago
So you are saying employees can't contribute to their 401(K) until after 3 years of employment, but then are fully vested?That doesn't sound right. How do you know this?
LordKano 11y ago
If what you describe is accurate, I agree with you. It's just that what you describe sounds different than what most companies do. My employer has a three year vesting period too but they begin contributing on day 1. Until you reach your 3 year anniversary, the only part of your account that you're entitled to is the part that came from your contribution.
givehimagun 11y ago
It's the same policy at General Motors. 3 years and if you leave before, you're out all your matched money.
- serge2k 11y ago
  Why is Amazon being compared to GM? What's the policy at MS, Facebook, Google, Apple, etc... ?
wfo 11y ago
The other thing to note is that much like a warranty designed to cover your machine up until a month before it's expected to fail, the hell they unleash on their employees means most don't make it to 3 years so for most of them vesting doesn't meaningfully exist and it's just a lie told to entice potential new victims.
- pm24601 11y ago
  Agreed: per the article: "There's evidence that lower-paid workers aren't widely participating in Amazon's 401(k) plan—and that creates a problem for high earners at the online retailer. For a plan to maintain its tax status, it can't disproportionately benefit what the IRS calls "highly compensated employees." A lack of participation by the rank and file means higher-paid employees can't max out their contributions to the IRS limit and may even get some of their planned savings back. Every year since at least 2011, Amazon has had to repay amounts "withheld and contributed to the Plan that exceeded the amounts allowed under the Code," according to the company's 2013 regulatory filing for its 401(k) plan. This year, it repaid more than $5 million in excess contributions made in 2014. For employees, that can mean paying more income tax and filing an amended tax return."
- potatolicious 11y ago
  Yep, every aspect of Amazon's compensation packages are designed to either not pay out, or keep employees involuntarily. Their RSUs vest at an exponential rate, rather than the linear vesting that's standard in industry. You vest only 5% in your first year, 15% in your second year, and 40% each in years 3 and 4. Tellingly, Amazon's median engineering tenure is 18 months - you tell me this vesting schedule wasn't designed with that in mind ;) Ditto, Amazon's signing bonuses are usually structured with a 2-year clawback. I'm not sure if this is an attempt to increase the median tenure or avoid paying out - or maybe a bit of both.
seattle_spring 11y ago
This is not how 401k matching or vesting works.

jayess 11y ago

This sort of vesting schedule is pretty common. I'm not sure busting Amazon's balls on this one is very genuine.

deleted 11y ago
[deleted]
icefox 11y ago
> The match of employee contributions into their 401(k) plans is below average and made entirely in Amazon stock, which leaves employees dangerously exposed to the company's fortunes. How about this other aspect of their 401k plan? I have never worked at a company that does that. Being so closely tied to your place of work financially is usually not recommended.
- bpodgursky 11y ago
  My employer matches in company stock too. It's not a big deal, you can exchange it immediately for a portfolio if you want via the 401k management portal (T Rowe Price for me). It's probably just politically easier for the board to issue more shares than to spend cash.
  - s73v3r 11y ago
    But now you've got the added tax implications of having to sell stock right when you get it.
    - bdonlan 11y ago
      It's a 401k, there are no taxes upon sale.
    - pbhinder 11y ago
      It's not the tax that is the problem but the risk that an employee is taking with single company stock in their retirement portfolio.
LoSboccacc 11y ago
Yeah this is only relevant as news if the implementing company also has an habit of firing people at the 34 month mark. I mean, it does suck, but it is what one sign for, so no amount complaining later will change that
rdtsc 11y ago
Is it? I worked for 3 companies. 2 allowed matching right away, other gave a % of the salary every year, but you couldn't contribute yourself.
- sahhhm 11y ago
  It seems fairly common to the point that 401k vesting horizons are something that can be expected. Filtering on "Vesting" against the Bloomberg data, 2 of the top 10 have similar conditions (with MasterCard requiring 4 years instead of 3, though their match is considerably better than Amazon's). Outside of the top 10 there is still a healthy representation of companies that do not immediately vest. Well-funded 401k matching plans that vest immediately certainly help with mobility, for those who care to stick around for the match!
gorena 11y ago
All employers should have their "balls busted", whenever possible. Demand more.
s73v3r 11y ago
I would say busting anyone's balls over that one is genuine. Especially because it sounds like their competition in hiring doesn't do that.

ZenoArrow 11y ago

I'm surprised it's not common, is that just for particular industries or for most US employers?

delecti 11y ago

You can begin contributing to your own 401k immediately upon starting. They begin matching immediately as well, but you lose that match when you leave if you aren't vested. Source: am an Amazon employee

TwiztidK 11y ago
Does the match partially vest over those 3 years, or is all or nothing?
- delecti 11y ago
  All or nothing.
moron4hire 11y ago
These sorts of vesting rules are extremely common for 401(k)s. It's why I don't include such things in trying to figure a "total compensation package" when considering a new job. It's either money in your hand or it's not. A lot can happen in 3 years.
- madcaptenor 11y ago
  The company I work at also has 401(k) contributions vesting at 3 years. In my mental accounting I basically see this as a retention bonus - if I stick around for three years they'll pay me a bonus of roughly 15% of a year's salary. As far as I know there's no tendency to fire just before vesting. But it wouldn't surprise me if you see less employees quitting between 30 and 36 months after hire, and more quitting between 36 and 42, than you would otherwise.

ruraljuror 11y ago

So you are saying employees can't contribute to their 401(K) until after 3 years of employment, but then are fully vested?That doesn't sound right. How do you know this?

LordKano 11y ago

If what you describe is accurate, I agree with you. It's just that what you describe sounds different than what most companies do. My employer has a three year vesting period too but they begin contributing on day 1. Until you reach your 3 year anniversary, the only part of your account that you're entitled to is the part that came from your contribution.

givehimagun 11y ago

It's the same policy at General Motors. 3 years and if you leave before, you're out all your matched money.

serge2k 11y ago
Why is Amazon being compared to GM? What's the policy at MS, Facebook, Google, Apple, etc... ?

wfo 11y ago

The other thing to note is that much like a warranty designed to cover your machine up until a month before it's expected to fail, the hell they unleash on their employees means most don't make it to 3 years so for most of them vesting doesn't meaningfully exist and it's just a lie told to entice potential new victims.

pm24601 11y ago
Agreed: per the article: "There's evidence that lower-paid workers aren't widely participating in Amazon's 401(k) plan—and that creates a problem for high earners at the online retailer. For a plan to maintain its tax status, it can't disproportionately benefit what the IRS calls "highly compensated employees." A lack of participation by the rank and file means higher-paid employees can't max out their contributions to the IRS limit and may even get some of their planned savings back. Every year since at least 2011, Amazon has had to repay amounts "withheld and contributed to the Plan that exceeded the amounts allowed under the Code," according to the company's 2013 regulatory filing for its 401(k) plan. This year, it repaid more than $5 million in excess contributions made in 2014. For employees, that can mean paying more income tax and filing an amended tax return."
potatolicious 11y ago
Yep, every aspect of Amazon's compensation packages are designed to either not pay out, or keep employees involuntarily. Their RSUs vest at an exponential rate, rather than the linear vesting that's standard in industry. You vest only 5% in your first year, 15% in your second year, and 40% each in years 3 and 4. Tellingly, Amazon's median engineering tenure is 18 months - you tell me this vesting schedule wasn't designed with that in mind ;) Ditto, Amazon's signing bonuses are usually structured with a 2-year clawback. I'm not sure if this is an attempt to increase the median tenure or avoid paying out - or maybe a bit of both.

seattle_spring 11y ago

This is not how 401k matching or vesting works.