Where to Cash Amazon RSUs: A Complete Guide

What Are Amazon RSUs?

Amazon Restricted Stock Units (RSUs) are a popular form of compensation offered to employees as part of their benefits package. RSUs represent shares of Amazon stock that are granted to employees but are subject to a vesting schedule. Once vested, these shares are available for employees to sell, effectively turning them into cash. Understanding where and how to cash your Amazon RSUs is essential for maximizing their value.

In this article, we will explore the process of cashing out Amazon RSUs, the platforms to use, and key factors to consider when selling your shares.

How RSUs Work: Vesting and Cashing Out

Before diving into where you can cash your Amazon RSUs, it’s important to understand how they work:

• Vesting Schedule: RSUs typically vest over a period of time, meaning you gain full ownership of the shares gradually. For example, Amazon may offer a four-year vesting schedule, where you receive 25% of your RSUs each year.
• Taxes: Upon vesting, the value of the RSUs is considered taxable income. Amazon will often automatically sell a portion of the shares to cover taxes, leaving the remaining shares in your account for you to manage.

Once your RSUs have vested, you can either hold onto them or sell them for cash. Now, let’s explore where you can cash out these RSUs.

Platforms to Cash Amazon RSUs

1. Fidelity

Amazon uses Fidelity Investments to manage its employee stock plans. After your RSUs vest, you can access your shares directly through your Fidelity account. Fidelity allows you to easily sell vested Amazon shares and withdraw the cash proceeds.

How to Sell Amazon RSUs on Fidelity:

1. Log into Your Fidelity Account: Visit the Fidelity NetBenefits platform, which is used to manage Amazon employee stock plans.
2. Access Your Stock Plan: Navigate to the Stock Plan Services section of your account to view your vested shares.
3. Sell Your Shares: Choose the number of shares you wish to sell. Fidelity allows you to select either a market order (which sells shares at the current market price) or a limit order (which allows you to set a price at which the shares will sell).
4. Withdraw Funds: After the sale is processed, the funds will appear in your Fidelity account. You can then withdraw the funds to your bank account or use them for other investment purposes.

2. Brokerage Accounts (Transferring Shares)

After your Amazon RSUs vest, you also have the option to transfer your shares from Fidelity to another brokerage account. Many employees prefer this option if they have investment accounts with companies like Charles Schwab, E*TRADE, or Robinhood.

How to Transfer RSUs to a Different Brokerage:

1. Open a Brokerage Account: If you don’t already have one, open an account with the brokerage firm of your choice.
2. Request a Transfer: From your brokerage platform, request a stock transfer from Fidelity to your new account. You’ll need your Fidelity account details to complete the transfer.
3. Sell Shares: Once the shares are transferred to your new account, you can sell them just like any other stock. Most platforms offer both market and limit orders for selling stock.

3. Cash Out via Amazon’s Direct Transfer Program

Amazon allows employees to cash out their RSUs through their direct transfer and sale programs. Once your RSUs have vested, you can use this program to sell the shares immediately for cash.

How It Works:

1. Automatic Vesting Sales: Some employees choose to set up automatic sales of their shares upon vesting. This way, the shares are sold as soon as they become available, and the proceeds are transferred to your preferred account.
2. Manual Sale of Shares: Alternatively, you can choose to manually sell the shares through Fidelity after vesting. This gives you more control over when you sell, allowing you to aim for favorable market conditions.

4. Holding and Selling Later

If you don’t need immediate access to the cash, you can also hold onto your Amazon RSUs and sell them at a later date when the stock price increases. This strategy can potentially result in a higher return, but it also carries risks, as the stock price may fluctuate.

5. Cash Transfer to Your Bank Account

Once you’ve sold your vested RSUs on any of the above platforms (Fidelity or your brokerage account), you can transfer the cash to your bank account. Most platforms allow for quick electronic transfers that take a few business days to complete.

Factors to Consider When Cashing Out RSUs

1. Tax Implications

When your RSUs vest, their value is taxed as ordinary income, and additional taxes apply when you sell the shares. It’s essential to plan for the tax impact:

• Income Tax: Upon vesting, the fair market value of your RSUs is included in your taxable income. Amazon will typically withhold a portion of the shares to cover federal and state taxes.
• Capital Gains Tax: If you sell your RSUs after holding them for a period of time, you may owe capital gains tax. Shares held for more than one year are taxed at the lower long-term capital gains rate, while those sold within a year are taxed as short-term gains.

2. Market Timing

Selling your RSUs at the right time can make a significant difference in your proceeds. If Amazon’s stock price is on the rise, holding onto the shares a bit longer may result in a higher payout. However, stock prices can fluctuate, and there’s no guarantee that waiting will result in a better price.

3. Diversification

Some Amazon employees may find themselves heavily invested in Amazon stock due to RSUs. While Amazon is a strong company, it’s important to diversify your investments to reduce risk. Consider selling a portion of your shares and using the proceeds to invest in a more diversified portfolio of stocks, bonds, or other assets.

Conclusion: Best Ways to Cash Your Amazon RSUs

The most straightforward way to cash out your Amazon RSUs is by selling them through Fidelity, Amazon’s stock plan administrator. Alternatively, transferring your shares to another brokerage account provides flexibility for further investments. Regardless of the method you choose, be sure to consider the tax implications, market conditions, and the importance of diversification when deciding when and how to sell your RSUs.