Tech Industry
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I haven’t done shit today!
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🚨More META layoffs!?!
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Avoid teams with only Chinese or Indians especially with a Chinese/Indian manager
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Worried that our top performer is an attrition risk. How do managers handle this?
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Heard congress distributing wealth
Have seen couple of posts where folks have complained about not being able to contribute to the max 401k limit (and were later refunded) due to Amazon's plan failing the ADP or ACP test in certain year.. Is this for real?? Say your base is 180k and you would like to contribute max ($19000 for 2019). Would you still get hit by the HCE rule (and thus not able to contribute to the max?)
Yes
Yes it's because we employ 400,000 or so warehouse workers who mostly don't contribute to their 401k. It's a stupid IRS rule.
It maybe a stupid IRS rule but employers can help in this situation by either 1) offering safe harbor 401k which is not subject to this rule OR 2) provide a generous match to offset the difference between max irs limit and actual contribution.. What’s amazon’s excuse to not providing generous match?
The hourly paid employees would rather have a higher wage than a higher 401k match. You want them to have the match so that you can get a tax break, but that's not what they want.
On another note - does amazon plan allow after-tax 401k contributions ?
Can't, because of the issue in post 1.
I might be wrong but isn’t HCE rule subject only to pretax 401k ?
What a bummer. At Google I max out my 401k + match in January using annual bonus.
This is a pretty serious issue and should be brought up during interviews and when negotiating comp. Losing out on years of tax deferred growth is not trivial.
It's really a US tax law issue, there's basically nothing Amazon can do about it. If you're in the 12% tax bracket (which most warehouse workers are) you really have zero reason to invest in a 401k and will always prefer more cash on your paycheck over any tax benefit. Those workers were MUCH better off getting a raise to $15/hr versus getting a 401k match that has a minescule tax benefit and locks up cash they actually need now. Plus at that level of income social security is a decent retirement plan. So until IRS rescinds this rule no company with a large number of hourly paid workers can solve this.
I wonder if Amazon made their warehouse/logistics division a wholly owned subsidiary or something if that would work. Either way, the law was clearly not made thinking of a 1-million-ish employee company that was basically several different businesses.
If the DOJ antitrust actions are successful, and amazon gets split up into retail amazon.com and AWS, then folks who end up with AWS may get a better 401k. Don’t see that happening on the retail side though due to the large number of distribution center workers. Ofcourse, once those jobs are robotized your 401k will improve :)
What's HCE rule?
Yes it’s real. Last year limit was 15k so you got a refund if you contributed the max
Wow that's shit. With 3 yr vesting, miserable 2% match and now HCE limits. I love MSFT.
@twitch - Thanks! So if I understood correctly, this limit varies year to year and there is no way to know before hand ?