Impact of Amazon 401K test failure for folks who left in 2018

Amazon / Product
The90sKid

Amazon Product

PRE
Microsoft
The90sKidmore
Mar 26 8 Comments

Cross posting to larger audience.

Context: was employed at Amazon for a part of 2018. I had maxed out my 401K contribution in the first 2 months (18.5K). After I left Amazon, I rolled over my Amazon 401K to a ROTH IRA that’s managed outside of Vanguard. I worked for less than 3 service years so I have zero 401K match. Maxed out backdoor ROTH IRA as well (5.5K).

I got an email saying the test failed and they would kick back some part of my share of the contribution for 2018. Vanguard is not able to tell me how much that amount is and since my 401K account has no money in it anymore, no one is sure where they will kick that money back from.

How are other folks who left in 2018 handling this issue? If you left your Amazon 401K untouched, did you already get a disbursement check from Vanguard and for how much? I’ve talked to Vanguard, my financial advisor and a CPA and no one has a clear answer.

Thank you in advance! 🙂 Oh, and TC 300K.

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TOP 8 Comments
  • SAP / Eng YeaNahYea
    What do you mean by test failed?
    Mar 26 4
    • Amazon / Product
      The90sKid

      Amazon Product

      PRE
      Microsoft
      The90sKidmore
      OP
      Mar 26
    • SAP / Eng YeaNahYea
      Ah ok thanks
      Mar 26
    • New / Eng
      errfileno

      New Eng

      PRE
      Microsoft
      BIO
      Senior Software Engineer. 15yoe. Seattle. $305k TC
      errfilenomore
      In order to be eligible for the tax-deferred benefits of the provisions of 401k, the plan needs to be administered fairly, in such a way that highly-compensated employees don't benefit significantly more than non-highly-compensated employees (relative to their respective salaries). To this end, the plan undergoes a test, and if it fails, can be rectified in one of two ways: (a) refunding contributions of highly-compensated employees (subjecting said funds to immediate taxation), or (b) donating funds on behalf of non-highly-compensated employees.
      Mar 26
    • SAP / Eng YeaNahYea
      Got it. Thanks
      Mar 27
  • eBay / IT
    manorama

    eBay IT

    BIO
    Coder
    manoramamore
    When you say refund , do they take back amazon contribution to your 401k? Is it for all employees or just for you ? Also once contribution is taken back , what does employer do with that money ?
    Mar 27 0
  • New / Mgmt VSwf01
    This is not just an Amazon thing. I had the same crap happen at my company. Even tho I'm still there, i got a check for $1k back
    Mar 27 0
  • Microsoft
    qGFA13

    Microsoft

    PRE
    Microsoft
    qGFA13more
    You’re a PM and make 300k? Level 6 I’m guessing?
    Mar 26 0