Case Study: Early Retirement and the Walmart DCMP

This week let's explore a case study on how a Walmart Senior Director chose to incorporate the Walmart Deferred Compensation Matching Plan (DCMP) into their retirement planning.

Jeremy (43) is a Senior Director at Walmart and is married to Amanda (43) who left her position working for a Walmart supplier to spend more time with the couple's three daughters ages 14, 12 and 6.

Jeremy contributes the maximum amount to his Walmart 401(k), but he has never contributed to the Walmart DCMP. As a Sr. Director, he is eligible to contribute up to 80% of his Management Incentive Plan (MIP.)

Jeremy and Amanda want to know the following:

• Can we retire early at age 55?
• Will the Walmart DCMP increase the probability of being able to achieve early retirement?

Before we answer these questions directly, let's quickly review two qualifying questions to determine if contributing to the DCMP makes financial sense for the couple.

• Do we even have enough cash flow to contribute to the DCMP AND cover other expenses? The family is projected to have $103,000 leftover after covering living expenses ($150,000), taxes ($145,500) and saving in their 401(k) and investment accounts ($123,500).
• And what is our potential tax benefit from contributing to the DCMP? The family is expected to have $469,090 of taxable income which places them in the 32% marginal tax bracket. In 2025, taxable income above $394,600 is taxed at 32% or higher - taxable income below is taxed at 24% or less.

Scenario #1: No Contribution to the Walmart DCMP

Now, the key question for Jeremy and Family is what the best use of the Net Cash Flow ($103,500) is. Here are 3 options:

• Leave in Cash: If the family is low on cash or has some upcoming expenses, it may make sense to hold the funds in cash - in a high yield savings account, of course.
• Invest in Brokerage Account: Invest the funds in an after-tax stock and bond portfolio. These funds will earn a higher expected return than cash and will be available for withdrawal if the need arises.
• Contribute to Walmart DCMP: Jeremy is eligible to contribute up to 80% of his MIP, or $96,000, to the DCMP. He could contribute $75,000 which would reduce taxable income to the 24% marginal tax bracket. The downside is that the funds would likely not be available until after Jeremy leaves Walmart.

If Jeremy opts to contribute $75,000 to the Walmart DCMP, the 2025 tax bill is expected to decrease from $145,500 to $112,700 AND the family would still have $61,000 to save or use for upcoming expenses.

Scenario #2: Contribute $75,000 to the Walmart DCMP

Now, let's answer Jeremy and Amanda's two questions!

Can we retire early at age 55?

Likely. Let's do a quick projection using the scenario that Jeremy DOES NOT contribute to the DCMP and instead saves those funds in the Joint Brokerage account holding stocks and bonds.

The projection shows an estimated portfolio of $5M at age 55. This is a healthy amount! If we use a 3% withdrawal rate - which is preferrable to use for early retirees - the couple can withdrawal $150,000 per year.

Will the Walmart DCMP increase the probability of being able to retire early?

It could. By contributing to the DCMP, the couple is projected to have $5.6M at age 55 - $600K more than if they invested the after-tax cash flow into the brokerage account.

The reason the ending value is higher in the DCMP scenario is that the couple is able to save and invest an additional $35K per year due to the reduced tax bill from contributing to the DCMP.

Either way, the couple is in a strong position to retire around age 55 or shortly thereafter.

If Jeremy is confident that he will retire from Walmart, contributing to the DCMP is likely worth the risks. However, it's still quite possible to be able to retire at age 55 without contributing to the DCMP.

There is no single path to achieving retirement goals. In this case, the DCMP offered a faster route, but it came with added risks—risks that impact individuals differently based on their unique circumstances.

If you have questions on the Walmart DCMP or want to see if working with a financial planner makes sense for you, grab some time on my calendar below. I'm happy to help.

Schedule an Introduction

Walmart DCMP Webinar

Taurus Financial Planning is hosting a few webinars on the Walmart Deferred Compensation Matching Plan. If you are a Walmart or Sam's Club employee that wants to learn more about this benefit and how it might help you achieve your financial goals, this webinar is for you!

You may register for one of the time slots below:

November 22nd 10:00am - 10:45am CT

December 6th 8:00am - 8:45am CT

December 13th 10:00am - 10:45am

Thanks for reading,

Mark Chisenhall, CFA, MBA

Taurus Financial Planning

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.