Walmart Deferred Compensation

If you’re eligible for Walmart’s Deferred Compensation Matching Plan (DCMP), you have another financial decision to make.

And it can feel more complicated than the Walmart 401(k).

How much should you defer? How does the DCMP match work? What payout option should you choose? How should you invest the money?

Those questions can lead some Walmart executives to put off learning about deferred compensation altogether.

That can be a missed opportunity.

The Walmart Deferred Compensation Matching Plan can be a powerful planning tool when it fits your situation. The key is understanding how the DCMP works alongside your executive compensation package and other Walmart employee benefits and your larger financial plan.

How Does the Walmart Deferred Compensation Match Work?

The Walmart DCMP offers eligible executives another opportunity to save on a pre-tax basis.

It can also provide an additional Walmart match.

According to Walmart's DCMP guide, Walmart matches eligible DCMP contributions dollar for dollar, up to 6% of eligible compensation above the applicable IRS compensation limit.

That makes the match an important part of the decision.

Some executives focus first on maxing out their Walmart 401(k). But you don't have to max out your 401(k) before participating in the DCMP if you're otherwise eligible.

That distinction matters.

Focusing exclusively on the 401(k) could cause an eligible executive to overlook the potential DCMP match.

At the same time, DCMP contributions reduce your 401(k)-eligible wages. Your Walmart 401(k) and deferred compensation decisions should therefore be evaluated together.

Use the Walmart DCMP Match Calculator

The Walmart DCMP Match Calculator can help you understand how the two benefits interact.

The calculator allows you to model different Walmart 401(k) and DCMP elections. You can then see how different deferral amounts may affect the company match.

It's a useful starting point.

The next question is whether those numbers make sense for your personal financial plan.

Consider Your Other Walmart Benefits and Assets

Deferred compensation affects your current cash flow.

If you defer more income, less may be available in your paycheck today. That's why it can be useful to look beyond your salary when evaluating a DCMP strategy.

Some Walmart executives may also have assets from Walmart restricted stock units (RSUs) or shares accumulated through Walmart's Associate Stock Purchase Plan (ASPP).

Those assets can be part of the larger planning conversation.

For example, an associate might evaluate whether existing assets could help support current cash-flow needs while more compensation is deferred into the DCMP.

That doesn't mean selling Walmart stock or using vested RSUs is right for everyone.

It means your Walmart deferred compensation strategy shouldn't be evaluated in isolation.

Your 401(k), vested restricted stock units, Associate Stock Purchase Plan shares, other investments, cash flow, taxes, and retirement goals may all affect the decision.

Walmart Deferred Compensation and Early Retirement

The DCMP may also deserve extra attention if you're considering retiring early.

Walmart's plan guide states that DCMP distributions don't carry an age-based early-distribution penalty. That's an important difference from the 401(k), where distributions before age 59½ may be subject to a 10% penalty.

That difference can create additional planning possibilities for someone expecting to leave Walmart before age 59½.

But the payout strategy matters.

The Walmart DCMP offers different distribution options, including lump-sum payments and annual installments. Those elections can affect how and when you receive your deferred compensation after leaving Walmart.

There isn't one payout strategy that's right for every associate. It is important to note as well that the funds are not available till after you leave employment with Walmart.

Your expected retirement date, career plans, cash-flow needs, taxes, investments, and other assets can all be relevant.

That's why the payout decision deserves attention well before retirement.

Don't Wait Until DCMP Enrollment to Start Planning

The biggest DCMP mistake may be simply not learning about it.

The plan requires more decisions than many associates are accustomed to making with their Walmart 401(k). But those additional decisions are also why planning ahead matters.

Start by understanding:

• How the Walmart DCMP match works
• How DCMP contributions interact with your Walmart 401(k)
• How much compensation you can comfortably defer
• How your RSUs, ASPP shares, and other assets fit into your financial picture
• When you expect to retire or leave Walmart
• How different DCMP payout options could fit into that timeline

The plan provider can help you understand the DCMP's features, rules, and available elections.

A financial planner can help you answer a different question:

Does Walmart deferred compensation make sense as part of my overall financial plan?

That's a conversation worth having before you're facing an enrollment deadline.

Important Considerations

Deferred compensation and other investments involve risk. Investment options can also have different liquidity characteristics. Understand the investment and liquidity risks associated with your available options before making an election.

This article is intended for educational purposes and should not be considered individualized financial, investment, or tax advice. Plan provisions, eligibility requirements, contribution limits, tax rules, and other details can change. Consult Walmart's current plan documents and appropriate financial and tax professionals before making an election.