I hope everyone enjoyed a wonderful Thanksgiving and took a moment to express gratitude. I'm grateful for everyone in my support network. Raising kids, building a business and keeping (most of) my sanity would not be possible without each and every one of them.

With the Walmart DCMP election window now open, let's address 3 common questions that I receive from participants.

1. Take-Home Pay: How will contributing to the DCMP change my bi-weekly take-home pay?

2. 401(k) Match: Does contributing to the DCMP lower my 401(k) match? By how much?

3. The 5+1 Rule: Can I change elections after the election window closes?

1.) How Much Will Contributing to the DCMP Lower My Take-Home Pay?

Take-home pay is the money deposited into your bank account every 2 weeks net of tax withholding and deductions such as 401(k), insurance premiums and any DCMP contributions.

For Sr. Directors the impact is straightforward: No change as Sr. Directors cannot contribute salary to the DCMP. If you elect to defer a portion of your MIP, then that annual payout would be less.

For Officers that are contributing a portion of base salary - up to 80% - it is important to understand the impact to their bi-weekly take-home pay. The main question I help clients with is: How much base salary can I defer and still have enough take-home pay to cover living expenses.

When calculating your take-home pay it's important to account for:

1. FICA Tax: DCMP contributions are temporarily exempt from income tax, but you still owe Social Security and Medicare tax (aka FICA) on those DCMP contributions.

2. 401(k) Contribution: It's definitely important to max out your 401(k) contribution. Selecting a rate that results in similar contribution amounts throughout the year makes planning simpler.

3. Income Tax Withholding: The portion of base salary not contributed to the DCMP still has federal and state income tax withholding.

4. Insurance: Payroll deducted insurance premiums also lower your take-home pay.

   
   

Taurus Financial Planning can help you calculate your monthly take-home pay to make sure you're striking the right balance between deferring taxable income and having enough cash flow to cover your expenses.

2.) Will Contributing to the DCMP Lower my 401(k) Match?

The answer is: Probably, but the tax benefits usually exceed the lost match.

In 2025 you're eligible to receive a Walmart employer match of up to 6% of your eligible compensation which includes your Base Salary and MIP, but not your equity. However, the IRS limits eligible compensation for the 401(k) at $350,000. This means the maximum Walmart 401(k) matching contribution is 6% of $350,000 which equals $21,000.

But here is the catch for DCMP participants...

When you contribute to the DCMP, your eligible compensation decreases by the amount you contribute. For example, if your salary and MIP combined is $400,000 and you defer $100,000 to the DCMP, your maximum 401(k) match is now 6% of $300,000 ($18,000.)

However, you will still receive a 6% match for the amount above $350,000 in your DCMP. It is important to weigh the tax benefits against the lost 401(k) match. For officers, it is common for the tax benefit to outweigh the lost match by several multiples.

3.) Can I Change My Walmart DCMP Elections After the Window Closes?

In some cases you can, but for the most part your decisions are final. Let's address the 3 important decisions DCMP participants make and how much flexibility they have to make changes for each.

Changing your Contribution Amount: Not really. While there are exceptions for hardships, once the window closes the amounts you elected to contribute are mostly final.

Changing your Investment Allocation: Yes. Your investment mix of stocks, bonds and cash can be adjusted throughout the year.

Changing your DCMP Distribution Schedule: Yes, but with restrictions. During the open window, you will elect when you want to receive your DCMP distributions - e.g. lump sum, 5 annual payments, 10 annual payments. You are allowed to adjust these distribution schedules after the window closes but you must follow the "5+1 Rule".

The "5+1 Rule" requires any distribution change to delay payment by an additional 5 years AND you must make the change election at least 1 year before your leave the Company.

Wrap-Up

If you have any questions on the DCMP or want to see if working with a financial advisor makes sense for you, schedule a quick introduction. It'd be great to connect. Thanks for reading!

Thanks for reading,

Mark Chisenhall, CFA, MBA

Taurus Financial Planning

Mark@taurusfinancialplanning.com

www.taurusfinancialplanning.com

Taurus Financial Planning is a Fee-Only Wealth Management firm based in Bentonville, AR. The firm offers comprehensive financial planning, tax planning and investment management to corporate executives across the country.

Taurus Financial Planning is a Registered Investment Advisor with the State of Arkansas. This information is provided as a guide to assist you in your financial planning. The specific examples are provided for illustration purposes only and are not representative of specific investments or guarantees of future returns. Please consult with a professional for specific questions regarding your particular situation. If there is any error or inconsistency between this document and the official company plan documents, your company plan documents will govern.

This publication is for informational purposes only and is not intended as tax, accounting or legal advice or as an offer or solicitation of an offer to buy or sell or as an endorsement of any company security fund or other securities or non securities offering. This publication should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made by the Author, in the future, will be profitable or equal the performance noted in this publication.