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How to Optimize Your Walmart Retirement Plan with the 401(k) and DCMP Thumbnail

How to Optimize Your Walmart Retirement Plan with the 401(k) and DCMP

Retirement

Retirement planning is a cornerstone of financial security, especially for Walmart employees in higher income brackets. The Walmart 401(k) and Deferred Compensation Matching Plan (DCMP) provide essential tools to help you build wealth while minimizing taxes. By understanding these plans and using them together strategically, you can take meaningful steps toward achieving your long-term financial goals.Here’s what you need to know about leveraging these tools to strengthen your Walmart retirement plan.

Walmart’s 401(k) Plan

The 401(k) for Walmart employees is one of the most effective ways to save for retirement. It offers tax-deferred growth and matching contributions, helping your money grow faster over time and eventually creating your Walmart pension.

Eligibility

  • You can contribute to the 401(k) for Walmart employees immediately after hire.
  • Walmart begins matching your contributions after your first year if you work at least 1,000 hours.

Contribution Limits

  • In 2025, the IRS allows contributions up to $23,500 for employees under 50, and up to $31,000 for those 50 or older.

Investment Options

  • Walmart’s 401(k) offers multiple investment options, including:
    • Target-date funds
    • Equity and bond funds
    • Money market accounts
  • Walmart’s 401(k) offers a diverse range of investment choices, including target-date funds, equity funds, and more conservative options. You can tailor your portfolio to align with your retirement timeline and risk tolerance. Reviewing your investments regularly and rebalancing as needed ensures your portfolio stays on track.
  • Maximize your savings opportunities with the DCMP & Walmart 401(k) calculator.

Understanding the Deferred Compensation Matching Plan (DCMP)

For employees with higher income, Walmart’s DCMP is an additional opportunity to defer income and reduce your taxable income.

Eligibility

The DCMP is designed for highly compensated employees earning more than $350,000 in 2025. This plan allows deferral of a portion of your salary and bonuses above 401(k) contribution limits.

Matching Mechanics

  • Walmart matches contributions to the DCMP, but this match is shared with the 401(k).
  • For optimal results, contribute enough to the 401(k) to receive the full match before allocating funds to the DCMP.

Enrollment Timing

  • Enrollment occurs annually in December. Once elections are made, they are locked for the fiscal year.

Enrollment Timing

DCMP elections must be made during an annual enrollment window in December. These decisions are fixed for the fiscal year, so careful planning is essential.

How Deferred Compensation Affects 401(k) Matching

Deferring salary into the DCMP can reduce the amount eligible for 401(k) matching. This is because Walmart’s match is based on eligible earnings after DCMP deferrals.

Example:

  • If you defer a significant portion of your salary into the DCMP, your reported earnings for the 401(k) match decrease, potentially reducing the match.

Strategies:

  1. Contribute at least 6% of eligible pay to the 401(k) first to receive the full match.
  2. Allocate excess compensation to the DCMP for additional tax deferral benefits.

Strategies to Maximize Your Retirement Savings

  1. Max Out the 401(k) Match
    • Walmart matches 100% of the first 6% of eligible pay. Not meeting this threshold means missing out on free contributions.
  2. Take Advantage of Catch-Up Contributions
    • If you’re 50 or older, the $7,500 catch-up limit allows you to save more.
  3. Plan DCMP Contributions Strategically
    • Balance your contributions between the 401(k) and DCMP to maximize the 401(k) match and take advantage of additional tax deferral.

Walmart makes additional resources available to employees, and you can view the 2025 Associate Benefits Book here.

Common Mistakes to Avoid

  1. Underfunding the 401(k)
    • Contributing less than 6% means missing out on Walmart’s matching contribution.
  2. Exceeding IRS Limits
    • Ensure your contributions to the 401(k) remain compliant with the IRS. If you began your position at Walmart after the beginning of the year and previously funded a 401(k) at another employer, you will need to comply with annual limits between both accounts.
  3. Neglecting Portfolio Rebalancing
    • Annual rebalancing is essential to ensure your investments match your risk tolerance and retirement timeline.

Monitoring and Adjusting Your Plans

Retirement planning isn’t a one-time decision. Regular reviews help ensure your strategy adapts to changes in your income, family situation, and financial goals.

  • Review Beneficiaries Regularly: Confirm that your beneficiary designations reflect your current wishes.
  • Conduct Annual Financial Reviews: Evaluate your retirement strategy and consider any changes in Walmart’s retirement plan options.

Creating a Powerful Retirement Strategy

By combining the benefits of Walmart’s 401(k) and Deferred Compensation Matching Plan, you can create a powerful retirement strategy. These plans offer a path to achieving your financial goals, especially for high earners looking to optimize tax advantages and savings.

At Paradigm Advisors LLC, we specialize in helping Walmart employees like you navigate these options. Contact us today for personalized guidance tailored to your unique financial situation.

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