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.
> 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.
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.
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!
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.
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.
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.
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?
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.
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.
"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."
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.
At the Canadian office, I get 3% match in RRSPs from day 1, and not (afaik) in Amazon stock. I think after a few years, it goes to 4%. Not sure if they'll claw any of it back if I leave. Probably.
Oh my gawd, a 2% match? Doesn't that violate some UN human rights convention?! </s>
It's reasonable to compare their comp package to their competitors, especially if you're considering working there. But calling the tax-advantaged retirement plan that gives you free money "brutal" is just whinging.
> That's surprising. Here in the US non-profits aren't allowed to match at all.
I'm not sure that's correct. I'm at a 501(c)3 in Boston and receive a 401k match up to 6%, fully vested at each monthly grant. According to this[1] IRS doc it looks like 401(k) plans and matching can be used by any non-governmental employer.
Love to know the actual reason for this coordinated attack on Amazon. What's about Seattle based software companies and irritated established interests? /(a big) wink
Instead of downvoting you may want to reflect on the fact that an actual story [1] got buried in 'Tech' section of the paper of record and the hear-say attack piece on Amazon went straight to front page. Front page of NYTimes is a very (very) politically hot space, don't you think? /another big wink ;)
Sometimes one company becomes the whiping boy for the bad behavior of the majority - and if your hitting major publishers where it hurts its a good idea not to give them any ammunition.
Amazon just have to hope that Rupert Murdoch doesn't go after them
There have been whisperings about Amazon's work culture for many years. I know I've read complaints from tech employees on social media for the longest time. I've also seen several articles about their warehouse employees and what they go through.
I think the reason you're seeing so many articles about it recently is that there is "blood in the water." And people love to bandwagon in the media in general, but in tech media especially.
I do think Amazon's work culture deserves some discussion, but will agree that at some point there is only so much you can say about it before you have to move on. Bringing up the 401K in particular just seems like a "me too!" article, with nothing specific to add to the discussion (i.e. this could have been a footnote in a full article on the topic).
The CEO (and other executives) coming out and saying "everything is wonderful at Amazon, I never see anyone upset!" (paraphrasing) only added fuel to the fire as it seemed so totally out of touch almost to the point of being laughable. That's what turned this from a small fire into a raging one (plus they love to try and humble CEOs).
It really was good journalism, by all acceptable definitions of that term. Just because a number of engineers report never being treated that way, that doesn't negate the hundreds of data points that the Times used in the piece, which were all approved by Amazon ahead of time.
I've heard the Times interviewed hundreds of people. NOT that the hundreds of people all said the same thing. Unless you have some confirmation of that, I suspect the quotes in the article are the result of cherry-picking.
That's not how newspaper editing works. No one is going to prove to you the editor's logic that went into selecting those interviews and that they are indeed representative (how could you ever fully quantify that?), but to suggest otherwise means that you're doubting every article ever published by any newspaper.
Well, most press about things I have direct experience with is either outright wrong or extremely misleading, so how can I trust the press on things I don't have direct experience with? I'm not sure doubting every article ever published by any newspaper is such a bad idea.
I'll take my own experience working at Amazon for 2 years and knowing dozens of hundreds of Amazon employees over blind faith in the Times's editors.
I think one of the big lessons of this experience is that there isn't such a thing as a unified Amazon culture and experience, since there are so many and numerous experiences to the contrary. You can look at the hundreds of negative reviews posted on this site and anonymous gists published to see that this really is across groups and not present in a mere dozen of cherry-picked articles by the Times. My own interviewing experiences have been fairly negative as well and the burnout and long working hours stories that I've seen published by other software engineers are in line with my friends' experiences working for AWS. Your mileage obviously varies.
That's a copout. Just because Bezos buys one large newspaper now means that any other newspaper presenting a well-documented expose of the company with hundreds of their own employees talking about systemic issues is invalid?
Amazon is widely recognized to have a horrible work culture. Microsoft, for all its evils, does not (or at least didn't, before stack ranking). I know a bunch of people from both places, and the latter group was much happier. Tellingly, when the Microsofties got sick of their work, none of them left for Amazon. None of them.
This is easily verified. A search on my LinkedIn account for previous employer Microsoft / current employer Amazon brings up 832 results (you may get more or less, depending on your LinkedIn connections.) I get 578 results going the other way.
A couple of years ago, I went to an Amazon tech social gathering and rubbed elbows with some of their people.
I wasn't looking for a job, the gathering was 5 minutes from where I work and I knew there would be free food. They were looking for people to relocate to other parts of the country. A lot of H1B people showed up at this event. Since they didn't have any ties to this area, they were a lot more receptive to the idea of moving to the West coast.
I went, ate their food, drank their beer and won the door prize. They asked me if I'd be interested in interviewing, I graciously declined and the more I hear about working there, the happier I am that I declined their interview.
I was actually interviewing with them. Had a laughably bad experience talking to one of AWS teams ( https://news.ycombinator.com/item?id=10065631 ). I kept making excuses for them "Oh it is a big company", "Scheduling conflicts happen", "It is ok if they forgot about me during lunch". But now I feel like a dodged a bullet.
The only thing I would consider a PhD level question would be something that one would see on a qualifier exam. Usually they require specific and deep knowledge that goes beyond what one could get out of textbooks in the field.
What constitutes a hard problem varies wildly between schools. Especially considering the wildly varying math standards in CS at different universities. By my junior year, I and everyone I knew doing my track had been taking senior/grad school level math courses, especially re: numerical methods.
I got cold-called through LinkedIn by one of their recruiters. Out of curiosity, I went through with the interview process. I had a number in mind that, if they could match or exceed, would have been worth giving up on all of my current plans and changing coasts. I passed and got an offer, but it wasn't going to be enough to warrant my wife leaving her job and us moving out of the DC suburbs into Seattle. Plus, the benefits package was super confusing, and I generally believe that confusion in paperwork is deliberate obfuscation. So that was a red flag. There was also a lot of stock, which seemed like a really chincy form of "compensation" considering how old the company is now.
There was zero interest on their part to consider taking me as a contractor, taking me as 100% remote, or even taking me in their office in Herndon, VA, which is accessible by train for me (oh yeah, after my car finally broke down after 380k miles, I elected to not replace it, so my wife is the only one with a car right now). I've been leading completely disconnected teams on rather successful projects for years now. I see a lack of willingness to do remote work as a sign that the institution knows they suck at project management. Who wants to work for a company that can't manage projects correctly?
I'm sticking to consulting while using my ample sparetime to build and market product offerings. You will pay a premium for the illusion of stability that working for a megacorp provides. It doesn't cost anywhere near a marginal $100k a year to give me office space and manage benefits. I mean, at that premium, I could hire myself a fulltime secretary and have him or her do a ton of other things for me. Don't get lured into thinking that Amazon or IBM or whomever won't lay you off the second it works better for their shareholders. At least as a consultant I have a contract.
It should generally be fine if you're selling immediately. What you probably don't want is to sell at the, e.g., 6 month mark, which makes you pay short-term capital gains.
But I'm not a tax professional so there may be other concerns I'm not aware of.
The day a block of stock becomes vested the value as of that date is ordinary income to you. If you sell immediately you will have no capital gains and therefore pay no capital gains tax. If you hold on to the stock for six months before selling and the stock went up, you will pay short term capital gains tax on the difference between the value on the day the stock vested and the day you sold it. However, because short term capital gains taxes are less (much less) than 100% you will still come out ahead versus having sold the stock on the day they vested.
The problem isn't short term capital gains taxes, it's the risk that the stock will go down. If that happens you will have both lost money on the stock, and have to pay ordinary income tax on the value of the stock before it went down.
I'd say the biggest problem with stock as a form of compensation has nothing to do with taxes, it has to do with the fact that it isn't paid out every two weeks, it's basically a promise to pay a bonus in two or three years if you are still with the company and in an uncertain amount. It's certainly better than nothing, but I'd discount it pretty heavily as compared to salary.
> If you sell immediately you will have no capital gains and therefore pay no capital gains tax.
That's the point. If you sell immediately, it's roughly the same as getting cash. If you sit on the stock, you need to worry about capital gains/losses and the tax implications.
> If you hold on to the stock for six months before selling and the stock went up ... you will still come out ahead versus having sold the stock on the day they vested.
Sure, you can play the market-timing game. I don't think that holding stock for less than a year is generally a good idea, due partly to the tax difference but largely because I'm not trying to time the market.
> The problem isn't short term capital gains taxes
Short-term capital gains are a pretty big deal. The gap between short-term and long-term capital gains taxes is up to 20%.
> If that happens you will have both lost money on the stock, and have to pay ordinary income tax on the value of the stock before it went down.
You can deduct the capital loss, up to 3000. You can offset more than 3000 if you have capital gains from other investments.
> That's the point. If you sell immediately, it's roughly the same as getting cash. If you sit on the stock, you need to worry about capital gains/losses and the tax implications.
No, you only need to worry about having a capital loss. A capital gain and the associated taxes are always going to put you ahead of the game.
> Short-term capital gains are a pretty big deal. The gap between short-term and long-term capital gains taxes is up to 20%.
Be that as it may, 60.4% of something is better than 100% of nothing.
> Sure, you can play the market-timing game. I don't think that holding stock for less than a year is generally a good idea, due partly to the tax difference but largely because I'm not trying to time the market.
I'd say it has less to do with timing the market per se, and more to do with already being overexposed to your employer as a source of financial risk. But I agree with your underlying point that for most people it makes the most sense to sell imminently.
I commented to clear up some things about the tax code. Although it is a mess, rarely is it the case that it reverses incentives altogether. And it certainly doesn't here. Having a short term capital gain is a good thing, not a bad thing.
> No, you only need to worry about having a capital loss. A capital gain and the associated taxes are always going to put you ahead of the game.
You can say this same thing about any stock you hold at any time for any length of time. Which means it's not particularly relevant to the specific case of an employer issuing a stock grant.
If you get a stock grant, you need to decide if you want to hold the stock or not. If you do, then plan on keeping it for a year or more. If you don't want to hold the stock, you should sell immediately. There are few scenarios where it makes sense to sit on the stock for 6 months. You'd do much better to move the money to a long-term investment immediately. Maybe if you really believe that the stock is going to continue rising (i.e. you would ordinarily hold), but you need the cash in 6 months for a home purchase. Normal volatility in the market could easily turn that 6-month hold into a significant loss, though.
> Be that as it may, 60.4% of something is better than 100% of nothing.
This statement has no utility. Sure, 60.4% of something is better than 100% of nothing. 80% of something is better still. And 100% of the initial value in cash is better than a loss of 50% if the stock crashes.
> Having a short term capital gain is a good thing, not a bad thing.
Sure, but having a long-term capital gain is a much better thing, whether that's in the original stock or a different investment.
But also given the environment there, many would want to leave before that. I've read at least 3 stories of people leaving their stocks and even paying back their bonus (Amazon will claw it back btw) just to escape. So a lot of those stock + bonus things are nice, but given the churn rate it is a little risky.
moron4hire might also have been referring to stock options, which are pretty meh for an established company. I worked for Yahoo a few years ago and when I started, they kept trying to sell me on how amazing the stock package was. The pay was good. The RSUs were okay. The options were nearly worthless. I don't recall exactly how much the options ended up worth at the end, but it was in the ballpark of a dollar per share.
Ah, yep, that was the issue. Sorry, it was a little while ago. I just remember going through the paperwork, talking with a financial advisor, and figuring out "this is not anywhere near as good as it sounds".
Yeah, options typically cost the company very little. Nothing, in fact, if the stock doesn't go up, and only the difference between the strike and market prices if the stock does go up. But companies can hand you a piece of paper promising thousands of options and it sounds really impressive if you don't understand how options work.
It vests on a sliding schedule and they don't pay a dividend, so you only make money on it when you sell. You're technically never fully vested in all of the stock they give you, because they would make your yearly bonus in stock-options rather than cash.
So, I would have agreed with this before I worked there. It's stock, it's done well, great for you as an employee!
Amazon has what they call a 'total compensation philosophy'. Basically, if the stock has done really well in the past year, your salary increase and stock bonus in your next annual review will be adjusted accordingly. If you've done really well and they'd strongly regret you leaving, you can negotiate on this, but only if you've got leverage. After my first full year there they offered me a 2.3% salary increase, zero additional stock[0], and when I pushed back said 'look how well the stock has done! you're going to make way more this year than you had expected'.
I politely informed them that they seemed to be trying to feed me a pile of bullshit, that bullshit wasn't part of my approved diet, and that if they continued trying to do so, this would be my last week with Amazon. My next meeting (a few days later) included a considerably better compensation adjustment.
[0]: This was in part due to confusion on who qualified for equity. I'd started January 3rd of the preceding year. They believed only people employed prior to Jan 1st qualified. I had brought my offer letter to the meeting, after having been warned to be prepared for these sorts of shenanigans, which clearly said that because I'd started prior to Jan 15th, I was absolutely eligible. That would be the end of the story, except they then tried the line "Well, not everyone receives an equity refresh every year". I had exceeded expectations and hit the top leadership bucket. If that didn't qualify for equity, I wasn't really interested in continuing with Amazon.
The irony: the equity grant I eventually received didn't start vesting until ~18 months after that meeting. I quit ~13 months later.
> After my first full year there they offered me a 2.3% salary increase, zero additional stock[0], and when I pushed back said 'look how well the stock has done! you're going to make way more this year than you had expected'.
I got <1% increase after my first year.
after my second review, and a "exceeds" rating, I got around 3.5% and a few new shares 2 years out.
> I see a lack of willingness to do remote work as a sign that the institution knows they suck at project management.
That seems a bit anecdotal to me. I'm not sure I would infer poor project management practices solely based on the fact that they wouldn't let you work remote.
> You will pay a premium for the illusion of stability that working for a megacorp provides.
Don't get lured into thinking that Amazon or IBM or whomever won't lay you off the second it works better for their shareholders. At least as a consultant I have a contract.
I suppose that would depend on how iron-clad of a contract you were able to have them sign? But I wouldn't hesitate for a moments notice to think that mega-corp couldn't easily find a way around an individual consultant's contract if necessary. Consultants are much more easily expendable than FTEs.
> I see a lack of willingness to do remote work as a sign that the institution knows they suck at project management.
I agree that willingness for remote work is a good sign for a company, but the lack thereof isn't a red flag. Plenty of the big tech companies who are substantially better employers than Amazon also forbid remote work.
Yes, they recruit heavily on LinkedIn regardless of your location, but the jobs are always in Seattle. Mentioning that you won't relocate stops the conversation cold.
They keep emailing and calling me now. "I see your profile in our database and you look like an excellent fit! Why aren't you here already? It says you even passed the interview." I always play dumb, "Oh, I didn't realize Amazon was open to remote work now. Yeah, I'm interested!"
This article is technically right but practically speaking incorrect. You are 100% vested after 3 calendar years in which you have worked more than (I believe) 1000 hours.
This means that if you start before about half-way through the year, you will have worked more than 1000 hours that year, then the next year, and will have reached 1000 hours approximately halfway through your third calendar year there.
The end result is that practically speaking, a full-time employee will be 100% vested after no more than about 2.5 years, and possibly as soon as 2 years.
Source: Am an Amazon employee and I've got 401k contribution confirmations wherein my "vested employee match" went from 0% to 100% after working there just over 2 years, having started in mid 2012.
Better check your math. Assuming you work 2000 hours per year, if you start in June, you vest after 2.5 years. If you start in July, you vest after 3.5 years. 3 years would be the average, and 2 years would be impossible.
I started in July 2012, and I worked at least 1000 hours before the end of 2012, so that counted as a calendar year in which i worked at least 1000 hours. I easily hit 1000 hours in 2013, having worked there the entire year. I hit 1000 hours approximately halfway through 2014, becoming 100% vested after about 2 years of employment.
Maybe my original post was misleading, if you can tell me what you misunderstood then I can edit it to clarify. Regardless, I assure you that I was 100% vested in mid 2014, after roughly 2 full years of employment spanning 3 calendar years.
> The end result is that practically speaking, a full-time employee will be 100% vested after no more than about 2.5 years, and possibly as soon as 2 years.
edit: This is correct under very specific circumstances, which as I call out in my response below strike me as a bunch of horseshit.
Either this is incorrect, has changed, or I got screwed when I left[0].
I worked at Amazon as a full-time software engineer (SDE2 then 3) for a bit over two years, starting January 3rd 2011 and leaving in mid-February 2013. When I left my entire 401k match was revoked.
[0]: I left on good terms as regretted attrition; my manager, sr. manager, director, and VP all asked to be the first person I emailed when I decided to come back (which I doubt I'll ever do, as my new gig is better for me by basically every metric, but it was a nice gesture).
Ah. Fair enough; I misunderstood the original post. I will admit to not having paid any attention to the 401k policy while I was at Amazon other than ensuring my employee contribution maxed out each year. Also the parent's assertion that you might be vested after as little as two years seems completely off base.
I didn't really care much as Amazon's match didn't amount to very much money (particularly compared to my current immediately vesting 50% match up to 100% of salary or the 18k limit). Regardless, it still feels like a good way to protect their downside losses by conditioning expected compensation payouts against probability of someone actually sticking around that long.
edit: Oh, I see, if you join exactly mid year you might be able to accomplish this. Wow, what a pile of horseshit.
There's a bunch of shit that's basically pinned to calendar start date that's sort of absurd.
Consider this: if you started June 3rd and I started January 3rd, your 2nd anniversary with Amazon would come with full vesting of your 401k while mine would wait another six months. We'd both have worked the same number of days, and overall the policy would be simpler to understand if vesting was pinned only to start date or hours reported on your paystub.
On the flip side: I was eligible for more stock in my first annual review[0]; if I'd started two weeks later I would not have been eligible for full additional year. This despite the fact that review conversations typically happen in March/April.
If I'm being uncharitable (and after having had conversations with managers about Amazon's total compensation philosophy in which raises are scaled back if the stock did well but not scaled up proportionally if the stock underperformed, I am perfectly willing to be uncharitable here), I would believe that large chunks of their compensation system are structured around an average employee tenure of roughly 18-30 months. If you assume that, it almost looks like the company has gone out of its way to minimize the amount it will actually have to pay to people while maximizing the amount it looks like they're offering.
It's not that there's anything wrong with it, it's just that it feels sleazy, particularly in retrospect.
[0]: Not that I actually saw any of it, because unlike my current gig where refreshes begin vesting immediately Amazon's refreshes don't start vesting until ~18 months after they're granted.
The law on cliff vesting 401k matches is that it has to happen in three years. If it were tied to your start date, then everyone would have to wait exactly three years. Since it's tied to calendar years, you only have to wait the full three if you start on January 1st. Even if you start on January 3rd, you come out a couple days ahead.
Actually the way to maximize the time it takes to vest your 401k is to start just late enough in the year that you can't accumulate 1000 hours. Around mid-late July, if I remember correctly from the math I did when trying to figure this out for myself.
Assuming 40-hour weeks and that you get credit for "work" on holidays (I don't know how long people are working, but if we're talking exempt employees the calculation is probably based on a 40-hour week), you'd maximize that by starting 25 weeks from the end of the year. The 175th-to-last day of the year is July 10.
So, yes, mid-July is the worst possible time to start from a 401k point of view.
I did not know that. So the options are either 100% vested at match time (which is what I have now) or a three-year cliff?
In that case I suppose you could argue Amazon is just trying for the most liberal interpretation of the law; bully for them. Except of course that the other option was to ditch the cliff entirely and give people their 401k match from the get go.
Yeah, they could just vest employer contributions immediately. That's pretty rare in my experience but not w/o precedent.
One other option I've seen is incremental vesting of 20% year over year. You only have to vest in three years if you do it all at once; otherwise you can take up to five years.
There are absolutely a lot of things at Amazon that range from less than ideal to outright sleazy, as you rightly point out. I was just saying that if you promise 3 years for a 401k vest and some people can do it in 2, that specifically isn't problematic.
I'm well aware of their shady compensation practices. I've gotten only sub-1% annual raises, in large part due to the very well performing company stock being counted as part of my total annual compensation.
> There are absolutely a lot of things at Amazon that range from less than ideal to outright sleazy, as you rightly point out. I was just saying that if you promise 3 years for a 401k vest and some people can do it in 2, that specifically isn't problematic.
Fair enough; I expect people who value being treated equitably who started in January (or worse, July) might take a different view as to whether it's problematic :).
> I'm well aware of their shady compensation practices. I've gotten only sub-1% annual raises, in large part due to the very well performing company stock being counted as part of my total annual compensation.
> If I'm being uncharitable (and after having had conversations with managers about Amazon's total compensation philosophy in which raises are scaled back if the stock did well but not scaled up proportionally if the stock underperformed, I am perfectly willing to be uncharitable here), I would believe that large chunks of their compensation system are structured around an average employee tenure of roughly 18-30 months. If you assume that, it almost looks like the company has gone out of its way to minimize the amount it will actually have to pay to people while maximizing the amount it looks like they're offering.
Absolutely.
I'm kinda on the fence about the stock price increase being used to avoid giving raises.
On one hand, yes the amount of money I can get in a year went up.
On the other, the company already allocated those RSUs. They aren't giving me anything new. They are also forcing my hand into selling them immediately if I actually want a raise in my take home pay. Plus, you quit after 2 years or so they gave out only about 20% of the total, so you leave all that money on the table. That's after they didn't give you any sort of real raise for 2 years because your were already hitting the target.
I'd be interested to hear some people from other companies talk about their employers philosophy.
> If Amazon matched employee retirement contributions in cash, a new employee earning $80,000 a year would get a maximum company contribution of $1,600.
Wow, and I thought IBM was stingy. They at least matched 100% up to 6% (of course, you forfeit all that if you aren't employed on December 15th of that year).
> They at least matched 100% up to 6% (of course, you forfeit all that if you aren't employed on December 15th of that year).
That seems like a really shortsighted policy. I expect that would seriously encourage people to leave in January. Having big blocks of people leave all at once seems far worse than having turnover spread more evenly.
The difference is that Amazon gives out stock. IBM didn't for software engineers when I was there a few years back. My base salary at Amazon is the same as it was at IBM. However including stock my total compensation at Amazon is 2-3 times what it was at IBM.
Can someone tell me, what's the actual BENEFIT to working at Amazon? Do people really go there simply because of the name? It doesn't seem like there's any reason for talent to go there as opposed to somewhere else?
Just speaking about engineering - I know a bunch of people who work in AWS/Prime Now infra teams. The opportunity to work on services of such massive scale is not something you can ignore. A lot of my friends have helped build a few AWS services from the ground up and the learning experience isn't something you would not appreciate. They definitely do technically challenging things.
The massive scale offers some pretty unique engineering challenges. But not totally unique -- you can get the same challenge at say Facebook or Google (coincidentally now across the street from Amazon HQ from what I hear).
From personal experience -- if FB and Google are the big leagues, Amazon is triple-A ball[1]. The caliber of people there is quite high, but it's still easier to get in than at the truly elite places. I don't think there are a lot of people with offers from Google working at Amazon, but Amazon can be a good stepping stone.
[1]: (Non-Americans, substitute something like "Premier League" and "whatever league the Premier League relegates to")
I actually know a number of people working for Amazon that had comparable offers from Google and decided to work for Amazon. Admittedly, many of these people made the decision for moral reasons, specifically regarding how Google handles user data.
But as with most of Amazon, I guess a lot of it has to do with the team that you're in.
I develop software for within the Amazon fulfillment centers (FCs). I get a lot of opportunities to fly around to various FCs, meet people, improve tools, reduce complexity. I try to make life a bit easier for the folks putting in four 10-hour shifts per week doing actual hard jobs. It's a really interesting environment, and it's the kind of place where 1% improvements are worth millions.
That kind of stuff motivates me.
They've also treated me really well. I started in Seattle, but really wanted to be in Toronto where my then-girlfriend (now wife) was living. A few months later, I'd transferred to a team in the Toronto office. I rarely work more than 45 hours/week, sometimes 50 if it's really bad. Hours are flexible. Good opportunities to learn and grow as well.
It's not a perfect company, but I'm enjoying being here.
I love working for Amazon. I get to work on extremely interesting problems that have a huge impact on the company's global operations. I rarely work more than 40 hours a week. I don't work on weekends. I am compensated very well. My management shows real concern for my well-being (after my father passed away I was told to take as much time off work as I needed. I returned to work after 10 days, and was immediately asked if I wanted to take more time off.) In contrast to what you hear, most people I work with seem happy to be here.
You do get paid quite a bit. They are big enough to handle visa stuff (even thought their policies regarding green cards aren't great). If you get the right team it's a good job.
It's definitely the worst on this list but my company's is even worse (scored sub-20 on the same survey but not a publicly traded company):
- Must be an employee for 1 calendar year before you can enroll. Only two open enrollment periods so potentially up to 18 months from hire before you can contribute.
- 50% match on first 2%
- Match is not distributed until end of Q2 the following calendar year. So this year's match will not hit my account until Jul/Aug 2016. This also has the nice secondary effect of making every September hell because nobody quits between January and August.
- 100% vesting after 3 years, no vesting prior
- Surprisingly, a nice selection of low-fee funds including Vanguard
If the pay here wasn't 30% above market for the area the 401(k) alone would have forced me to decline the offer.
A non-public company that is so much nicer to more senior people might be one that takes care of execs and high-level managers, and doesn't care about lower-levels for which turnover is high? That is, the 401(k) is designed not to be useful for most of the people working there.
Amazon managers abusing the workers in the warehouse is a feature not a bug.
Women not being promoted within Amazon is a feature not a bug.
For Jeff Bezos to claim he didn't know about this is a feature not a bug.
At this point, anyone who thinks that this behavior was all a big mistake really is in denial, or intentionally ignorant (looking at you, Jeff)
Update: Ah, the hate downvotes: I wonder exactly why people wish to downvote?
* Is it because they don't want to believe that Amazon is behaving badly?
* Is it because they think that I am some sort of Amazon hater and they want to punish me?
* Am I inaccurate in some way?
Full disclosure: I am buying Amazon stock, because any company that is this tight with the dollar is figuring out how to extract blood from a turnip. I also use Amazon AWS all the time.
But if you downvote: do the favor and add a comment, and attack me. Personally if you like. Get a little ad hominem rage venting. I don't mind. Just own the downvote.
For example, an average software engineer making $150,000, contributing 10% to her 401k will reduce her taxable income to $135,000. At a 28% marginal tax rate, she will save $4,200 on taxes.
2) Free money
If the employer matches 50% of the contributions, the employee will end up with an additional $7,500 on her 401k account.
3) Very few constraints
It depends on the employer but she could be free to invest the 401k money as she wants. She doesn't have to put it in a specific set of funds.
In a nutshell, she would get $11,700 more than if she hadn't used her 401k and is free to invest as she pleases.
True, but Amazon supposedly rewards their employees well to compensate for the high productivity expectations. The Amazon 401k isn't terrible, but it definitely isn't great. (It's ranked the lowest in the top 50 on the S&P.)
Amazon's argument, when I was working there from ~2011-2013, was that they had few perks, hard work, but that they paid better than other companies giving employees more freedom to choose what to do with the fruits of their labors.
I don't care for that argument generally (as I personally value my free time well beyond what anyone is willing to compensate me for it -- call it personal utility if you like), but even so, the argument only works if it's actually true. In my experience it is not; Amazon's compensation lags other "Big 5" companies considerably, but some of that lag is hidden in things like their 401k match policy and the delayed stock vesting.
I've worked at a bunch of SF tech companies, from small to big, and they all had shitty 401k plans with little or no matching. More common now are big end of year bonuses in cash or RSUs.
The 5% matching contributions for the Thrift Savings Plan (gov't 401k equivalent) is one nice part about being in the fed. Not sure if it balances out the crappy GS payscale (especially for colleagues of mine in high-cost areas like SF Bay), but it's something.
I've only worked for one place that didn't immediately vest (after a 90 day period) and that was a long time ago and the CEO is currently rotting in jail.
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[ 2680 ms ] story [ 2798 ms ] threadWhile 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.
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.
I mean, it does suck, but it is what one sign for, so no amount complaining later will change that
Well-funded 401k matching plans that vest immediately certainly help with mobility, for those who care to stick around for the match!
Demand more.
Source: am an Amazon employee
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.
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.
What's the policy at MS, Facebook, Google, Apple, etc... ?
"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."
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.
The chart Bloomberg has shows the old 401k plan for Microsoft. The new one would put it near the top instead of near the bottom.
It's reasonable to compare their comp package to their competitors, especially if you're considering working there. But calling the tax-advantaged retirement plan that gives you free money "brutal" is just whinging.
I'm not sure that's correct. I'm at a 501(c)3 in Boston and receive a 401k match up to 6%, fully vested at each monthly grant. According to this[1] IRS doc it looks like 401(k) plans and matching can be used by any non-governmental employer.
1. http://www.irs.gov/pub/irs-pdf/p4484.pdf
[1]: http://www.nytimes.com/2014/03/01/technology/engineers-alleg...
Amazon just have to hope that Rupert Murdoch doesn't go after them
I think the reason you're seeing so many articles about it recently is that there is "blood in the water." And people love to bandwagon in the media in general, but in tech media especially.
I do think Amazon's work culture deserves some discussion, but will agree that at some point there is only so much you can say about it before you have to move on. Bringing up the 401K in particular just seems like a "me too!" article, with nothing specific to add to the discussion (i.e. this could have been a footnote in a full article on the topic).
The CEO (and other executives) coming out and saying "everything is wonderful at Amazon, I never see anyone upset!" (paraphrasing) only added fuel to the fire as it seemed so totally out of touch almost to the point of being laughable. That's what turned this from a small fire into a raging one (plus they love to try and humble CEOs).
Going out on a limb here -- because it has a pretty bad work environment compared to other similar companies?
I think NYTimes is worried about losing its entirely unearned special social perch in context of distribution channels and e-markets.
I'll take my own experience working at Amazon for 2 years and knowing dozens of hundreds of Amazon employees over blind faith in the Times's editors.
Jeff Bezos owns the Washington Post -- a significant competitor to the NYT.
The NYT is in the happy position of damaging a competitor while generating clicks.
It's personal, in other words.
from an engineer https://www.reddit.com/r/Seattle/comments/3ce0s8/dear_amazon...
some stuff about the FC workers
http://www.salon.com/2014/02/23/worse_than_wal_mart_amazons_...
battles in germany with unions http://www.reuters.com/article/2015/04/16/us-amazon-com-germ...
A few years ago it was stack ranking at MS.
I wasn't looking for a job, the gathering was 5 minutes from where I work and I knew there would be free food. They were looking for people to relocate to other parts of the country. A lot of H1B people showed up at this event. Since they didn't have any ties to this area, they were a lot more receptive to the idea of moving to the West coast.
I went, ate their food, drank their beer and won the door prize. They asked me if I'd be interested in interviewing, I graciously declined and the more I hear about working there, the happier I am that I declined their interview.
Basically, PHD-level question. They knew I was a junior, but they asked me a very high level math problem.
There was zero interest on their part to consider taking me as a contractor, taking me as 100% remote, or even taking me in their office in Herndon, VA, which is accessible by train for me (oh yeah, after my car finally broke down after 380k miles, I elected to not replace it, so my wife is the only one with a car right now). I've been leading completely disconnected teams on rather successful projects for years now. I see a lack of willingness to do remote work as a sign that the institution knows they suck at project management. Who wants to work for a company that can't manage projects correctly?
I'm sticking to consulting while using my ample sparetime to build and market product offerings. You will pay a premium for the illusion of stability that working for a megacorp provides. It doesn't cost anywhere near a marginal $100k a year to give me office space and manage benefits. I mean, at that premium, I could hire myself a fulltime secretary and have him or her do a ton of other things for me. Don't get lured into thinking that Amazon or IBM or whomever won't lay you off the second it works better for their shareholders. At least as a consultant I have a contract.
er.. how is it a really chincy form of compensation, considering how well amazon's stock has performed?
But I'm not a tax professional so there may be other concerns I'm not aware of.
The day a block of stock becomes vested the value as of that date is ordinary income to you. If you sell immediately you will have no capital gains and therefore pay no capital gains tax. If you hold on to the stock for six months before selling and the stock went up, you will pay short term capital gains tax on the difference between the value on the day the stock vested and the day you sold it. However, because short term capital gains taxes are less (much less) than 100% you will still come out ahead versus having sold the stock on the day they vested.
The problem isn't short term capital gains taxes, it's the risk that the stock will go down. If that happens you will have both lost money on the stock, and have to pay ordinary income tax on the value of the stock before it went down.
I'd say the biggest problem with stock as a form of compensation has nothing to do with taxes, it has to do with the fact that it isn't paid out every two weeks, it's basically a promise to pay a bonus in two or three years if you are still with the company and in an uncertain amount. It's certainly better than nothing, but I'd discount it pretty heavily as compared to salary.
That's the point. If you sell immediately, it's roughly the same as getting cash. If you sit on the stock, you need to worry about capital gains/losses and the tax implications.
> If you hold on to the stock for six months before selling and the stock went up ... you will still come out ahead versus having sold the stock on the day they vested.
Sure, you can play the market-timing game. I don't think that holding stock for less than a year is generally a good idea, due partly to the tax difference but largely because I'm not trying to time the market.
> The problem isn't short term capital gains taxes
Short-term capital gains are a pretty big deal. The gap between short-term and long-term capital gains taxes is up to 20%.
> If that happens you will have both lost money on the stock, and have to pay ordinary income tax on the value of the stock before it went down.
You can deduct the capital loss, up to 3000. You can offset more than 3000 if you have capital gains from other investments.
No, you only need to worry about having a capital loss. A capital gain and the associated taxes are always going to put you ahead of the game.
> Short-term capital gains are a pretty big deal. The gap between short-term and long-term capital gains taxes is up to 20%.
Be that as it may, 60.4% of something is better than 100% of nothing.
> Sure, you can play the market-timing game. I don't think that holding stock for less than a year is generally a good idea, due partly to the tax difference but largely because I'm not trying to time the market.
I'd say it has less to do with timing the market per se, and more to do with already being overexposed to your employer as a source of financial risk. But I agree with your underlying point that for most people it makes the most sense to sell imminently.
I commented to clear up some things about the tax code. Although it is a mess, rarely is it the case that it reverses incentives altogether. And it certainly doesn't here. Having a short term capital gain is a good thing, not a bad thing.
You can say this same thing about any stock you hold at any time for any length of time. Which means it's not particularly relevant to the specific case of an employer issuing a stock grant.
If you get a stock grant, you need to decide if you want to hold the stock or not. If you do, then plan on keeping it for a year or more. If you don't want to hold the stock, you should sell immediately. There are few scenarios where it makes sense to sit on the stock for 6 months. You'd do much better to move the money to a long-term investment immediately. Maybe if you really believe that the stock is going to continue rising (i.e. you would ordinarily hold), but you need the cash in 6 months for a home purchase. Normal volatility in the market could easily turn that 6-month hold into a significant loss, though.
> Be that as it may, 60.4% of something is better than 100% of nothing.
This statement has no utility. Sure, 60.4% of something is better than 100% of nothing. 80% of something is better still. And 100% of the initial value in cash is better than a loss of 50% if the stock crashes.
> Having a short term capital gain is a good thing, not a bad thing.
Sure, but having a long-term capital gain is a much better thing, whether that's in the original stock or a different investment.
Amazon has what they call a 'total compensation philosophy'. Basically, if the stock has done really well in the past year, your salary increase and stock bonus in your next annual review will be adjusted accordingly. If you've done really well and they'd strongly regret you leaving, you can negotiate on this, but only if you've got leverage. After my first full year there they offered me a 2.3% salary increase, zero additional stock[0], and when I pushed back said 'look how well the stock has done! you're going to make way more this year than you had expected'.
I politely informed them that they seemed to be trying to feed me a pile of bullshit, that bullshit wasn't part of my approved diet, and that if they continued trying to do so, this would be my last week with Amazon. My next meeting (a few days later) included a considerably better compensation adjustment.
[0]: This was in part due to confusion on who qualified for equity. I'd started January 3rd of the preceding year. They believed only people employed prior to Jan 1st qualified. I had brought my offer letter to the meeting, after having been warned to be prepared for these sorts of shenanigans, which clearly said that because I'd started prior to Jan 15th, I was absolutely eligible. That would be the end of the story, except they then tried the line "Well, not everyone receives an equity refresh every year". I had exceeded expectations and hit the top leadership bucket. If that didn't qualify for equity, I wasn't really interested in continuing with Amazon.
The irony: the equity grant I eventually received didn't start vesting until ~18 months after that meeting. I quit ~13 months later.
It's my compensation for my employment with you, it shouldn't be a game of D&D with a belligerent DM.
I got <1% increase after my first year.
after my second review, and a "exceeds" rating, I got around 3.5% and a few new shares 2 years out.
That seems a bit anecdotal to me. I'm not sure I would infer poor project management practices solely based on the fact that they wouldn't let you work remote.
> You will pay a premium for the illusion of stability that working for a megacorp provides. Don't get lured into thinking that Amazon or IBM or whomever won't lay you off the second it works better for their shareholders. At least as a consultant I have a contract.
I suppose that would depend on how iron-clad of a contract you were able to have them sign? But I wouldn't hesitate for a moments notice to think that mega-corp couldn't easily find a way around an individual consultant's contract if necessary. Consultants are much more easily expendable than FTEs.
I agree that willingness for remote work is a good sign for a company, but the lack thereof isn't a red flag. Plenty of the big tech companies who are substantially better employers than Amazon also forbid remote work.
This means that if you start before about half-way through the year, you will have worked more than 1000 hours that year, then the next year, and will have reached 1000 hours approximately halfway through your third calendar year there.
The end result is that practically speaking, a full-time employee will be 100% vested after no more than about 2.5 years, and possibly as soon as 2 years.
Source: Am an Amazon employee and I've got 401k contribution confirmations wherein my "vested employee match" went from 0% to 100% after working there just over 2 years, having started in mid 2012.
Maybe my original post was misleading, if you can tell me what you misunderstood then I can edit it to clarify. Regardless, I assure you that I was 100% vested in mid 2014, after roughly 2 full years of employment spanning 3 calendar years.
edit: This is correct under very specific circumstances, which as I call out in my response below strike me as a bunch of horseshit.
Either this is incorrect, has changed, or I got screwed when I left[0].
I worked at Amazon as a full-time software engineer (SDE2 then 3) for a bit over two years, starting January 3rd 2011 and leaving in mid-February 2013. When I left my entire 401k match was revoked.
[0]: I left on good terms as regretted attrition; my manager, sr. manager, director, and VP all asked to be the first person I emailed when I decided to come back (which I doubt I'll ever do, as my new gig is better for me by basically every metric, but it was a nice gesture).
I didn't really care much as Amazon's match didn't amount to very much money (particularly compared to my current immediately vesting 50% match up to 100% of salary or the 18k limit). Regardless, it still feels like a good way to protect their downside losses by conditioning expected compensation payouts against probability of someone actually sticking around that long.
edit: Oh, I see, if you join exactly mid year you might be able to accomplish this. Wow, what a pile of horseshit.
Considering they promise 3 years, I fail to see any problems with being able to do it in 2.
Consider this: if you started June 3rd and I started January 3rd, your 2nd anniversary with Amazon would come with full vesting of your 401k while mine would wait another six months. We'd both have worked the same number of days, and overall the policy would be simpler to understand if vesting was pinned only to start date or hours reported on your paystub.
On the flip side: I was eligible for more stock in my first annual review[0]; if I'd started two weeks later I would not have been eligible for full additional year. This despite the fact that review conversations typically happen in March/April.
If I'm being uncharitable (and after having had conversations with managers about Amazon's total compensation philosophy in which raises are scaled back if the stock did well but not scaled up proportionally if the stock underperformed, I am perfectly willing to be uncharitable here), I would believe that large chunks of their compensation system are structured around an average employee tenure of roughly 18-30 months. If you assume that, it almost looks like the company has gone out of its way to minimize the amount it will actually have to pay to people while maximizing the amount it looks like they're offering.
It's not that there's anything wrong with it, it's just that it feels sleazy, particularly in retrospect.
[0]: Not that I actually saw any of it, because unlike my current gig where refreshes begin vesting immediately Amazon's refreshes don't start vesting until ~18 months after they're granted.
So, yes, mid-July is the worst possible time to start from a 401k point of view.
In that case I suppose you could argue Amazon is just trying for the most liberal interpretation of the law; bully for them. Except of course that the other option was to ditch the cliff entirely and give people their 401k match from the get go.
One other option I've seen is incremental vesting of 20% year over year. You only have to vest in three years if you do it all at once; otherwise you can take up to five years.
I'm well aware of their shady compensation practices. I've gotten only sub-1% annual raises, in large part due to the very well performing company stock being counted as part of my total annual compensation.
Fair enough; I expect people who value being treated equitably who started in January (or worse, July) might take a different view as to whether it's problematic :).
> I'm well aware of their shady compensation practices. I've gotten only sub-1% annual raises, in large part due to the very well performing company stock being counted as part of my total annual compensation.
For what it's worth, your annual review is negotiable. See my other comment here: https://news.ycombinator.com/item?id=10111816
Absolutely.
I'm kinda on the fence about the stock price increase being used to avoid giving raises.
On one hand, yes the amount of money I can get in a year went up.
On the other, the company already allocated those RSUs. They aren't giving me anything new. They are also forcing my hand into selling them immediately if I actually want a raise in my take home pay. Plus, you quit after 2 years or so they gave out only about 20% of the total, so you leave all that money on the table. That's after they didn't give you any sort of real raise for 2 years because your were already hitting the target.
I'd be interested to hear some people from other companies talk about their employers philosophy.
Wow, and I thought IBM was stingy. They at least matched 100% up to 6% (of course, you forfeit all that if you aren't employed on December 15th of that year).
That seems like a really shortsighted policy. I expect that would seriously encourage people to leave in January. Having big blocks of people leave all at once seems far worse than having turnover spread more evenly.
I am surprised that post Enron that any match in company stock is allowed.
[1]: (Non-Americans, substitute something like "Premier League" and "whatever league the Premier League relegates to")
But as with most of Amazon, I guess a lot of it has to do with the team that you're in.
I think you are seriously overestimating the quality difference between the people at these places.
I develop software for within the Amazon fulfillment centers (FCs). I get a lot of opportunities to fly around to various FCs, meet people, improve tools, reduce complexity. I try to make life a bit easier for the folks putting in four 10-hour shifts per week doing actual hard jobs. It's a really interesting environment, and it's the kind of place where 1% improvements are worth millions.
That kind of stuff motivates me.
They've also treated me really well. I started in Seattle, but really wanted to be in Toronto where my then-girlfriend (now wife) was living. A few months later, I'd transferred to a team in the Toronto office. I rarely work more than 45 hours/week, sometimes 50 if it's really bad. Hours are flexible. Good opportunities to learn and grow as well.
It's not a perfect company, but I'm enjoying being here.
- Must be an employee for 1 calendar year before you can enroll. Only two open enrollment periods so potentially up to 18 months from hire before you can contribute. - 50% match on first 2% - Match is not distributed until end of Q2 the following calendar year. So this year's match will not hit my account until Jul/Aug 2016. This also has the nice secondary effect of making every September hell because nobody quits between January and August. - 100% vesting after 3 years, no vesting prior - Surprisingly, a nice selection of low-fee funds including Vanguard
If the pay here wasn't 30% above market for the area the 401(k) alone would have forced me to decline the offer.
Amazon managers abusing the workers in the warehouse is a feature not a bug.
Women not being promoted within Amazon is a feature not a bug.
For Jeff Bezos to claim he didn't know about this is a feature not a bug.
At this point, anyone who thinks that this behavior was all a big mistake really is in denial, or intentionally ignorant (looking at you, Jeff)
Update: Ah, the hate downvotes: I wonder exactly why people wish to downvote?
* Is it because they don't want to believe that Amazon is behaving badly?
* Is it because they think that I am some sort of Amazon hater and they want to punish me?
* Am I inaccurate in some way?
Full disclosure: I am buying Amazon stock, because any company that is this tight with the dollar is figuring out how to extract blood from a turnip. I also use Amazon AWS all the time.
But if you downvote: do the favor and add a comment, and attack me. Personally if you like. Get a little ad hominem rage venting. I don't mind. Just own the downvote.
For example, an average software engineer making $150,000, contributing 10% to her 401k will reduce her taxable income to $135,000. At a 28% marginal tax rate, she will save $4,200 on taxes.
2) Free money
If the employer matches 50% of the contributions, the employee will end up with an additional $7,500 on her 401k account.
3) Very few constraints
It depends on the employer but she could be free to invest the 401k money as she wants. She doesn't have to put it in a specific set of funds.
In a nutshell, she would get $11,700 more than if she hadn't used her 401k and is free to invest as she pleases.
I don't care for that argument generally (as I personally value my free time well beyond what anyone is willing to compensate me for it -- call it personal utility if you like), but even so, the argument only works if it's actually true. In my experience it is not; Amazon's compensation lags other "Big 5" companies considerably, but some of that lag is hidden in things like their 401k match policy and the delayed stock vesting.