Understanding the Walmart 401(k) Match: 3 Things to Know

One of the ways Walmart invests in its associates is through a generous 401(k) match program. The Company matches employee 401(k) contributions dollar for dollar up to 6% of eligible pay.

Here are three things to know about the Walmart 401(k) match to ensure you are making the most of your Walmart benefits:

1.) Who is eligible

2.) How to calculate your maximum match

3.) How DCMP contributions impact your 401(k) match

1.) Who is Eligible for the Walmart 401(k) Match

While you are eligible to contribute to the Walmart 401(k) "as soon as administratively feasible after your hire date", you must work a full year to qualify for the Walmart match. Eligibility begins on the first day of the calendar month following your first anniversary of employment.

If you are unsure, you can confirm how much you are contributing and the Walmart matching dollars you are receiving, by going to your Total Rewards and selecting the 401(k) Plan. You'll see a table that looks similar to the below:

This participant contributes 10% of eligible pay. Walmart matches on only 6% resulting in the Match being 60% of the employee's contribution. The Total 401(k) Balance includes contributions from previous years as well as earnings growth.

2.) Calculate Your Maximum 401(k) Match

Once you are eligible, Walmart will match each dollar you contribute to your 401(k) up to 6% of your eligible pay which includes hourly wages, salary and MIP. It does NOT include equity compensation.

For the year 2024, the maximum eligible pay used to calculate the match is capped at $345,000. Therefore, if your eligible pay exceeds this amount, the matching contributions are capped at 6% of $345,000, which is $20,700 - even if you contribute the maximum $23,000 to your 401(k).

3.) DCMP Contributions Can Lower your 401(k) Match

If you contribute to your Walmart DCMP, you may be decreasing your eligible matching dollars. Here is how it works.

Any contribution you make to your DCMP is deducted from the eligible pay to calculate your 401(k) match (see table below). For example, let's say you earn $250,000 of salary and $100,000 of MIP for a total of $350,000. Before any DCMP contributions, you are $5,000 above the Safe Harbor limit of $345,000, but you're still eligible for up to $20,700 of Walmart matching contributions ($345,000 * 6%).

Now, let's assume you contribute $50,000 of your MIP to the DCMP. Your eligible pay for the match is $300,000 ($350,000 - $50,000). This lowers your maximum Walmart matching contribution from $20,700 to $18,000 ($300,000 * 6%).

There are two things to consider on the DCMP:

1.) You receive a 6% match in the DCMP account for eligible pay which is any salary and MIP greater than $345,000 in 2024. In the case above, eligible pay is $5,000 ($350,000 - $345,000) for a maximum DCMP match of $300 ($5,000 * 6%).

2.) It is important to consider the potential tax savings of your DCMP contribution relative to the foregone 401(k) matching dollars. If you expect your retirement tax rate to be 10% less than your current rate, a $50,000 DCMP contribution may result in $5,000 ($50,000 * 10%) of tax savings vs the $2,700 of foregone 401(k) matching dollars.

There is a balance to strike between contributing to the DCMP and maximizing your 401(k) matching dollars. It is not clear cut, as the potential tax advantages from a tax efficient DCMP strategy can exceed the matching dollars, or not. If you have any questions or would like to explore if working with a financial planner makes sense for you, let's connect. I'm happy to help!

Thanks for reading,

Mark Chisenhall, CFA, MBA

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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.

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