Macy’s Save Actively Plus: What Leaders Should Know Before 2027 Enrollment

If you’re a leader at Macy’s, annual enrollment for the Save Actively Plus Deferred Compensation Plan is open now for 2027. The elections you make this month decide how much of next year’s pay you defer, when you’ll receive it and how it’s taxed. Most can’t be changed later.

How It Works With Your 401(k)

The 401(k) is limited by the IRS, both in how much you can contribute and how much of your pay counts toward the match. Save Actively Plus picks up where the 401(k) leaves off. It’s for leaders whose base salary plus target incentive is above the IRS compensation limit, which is $360,000 for this enrollment and expected to rise to $375,000 in 2027.

You can defer up to 50% of your 2027 base salary and up to 90% of the incentive you earn in 2027, which is paid in April 2028. There are no IRS limits on how much you can defer.

The Company Match

Macy’s matches 3.5% of your pay when you put in a combined 6% through the 401(k) and, if needed, Save Actively Plus. You need one year of service, and you must max out your match in the 401(k) first. The match is deposited once a year, generally in March of the following year.

The 401(k) can hold at most $13,125 of match for 2027 (3.5% of $375,000). Anything above that flows automatically into Save Actively Plus, so you may have a balance even if you never defer a dollar.

Do You Need to Defer to Get the Full Match?

Only if 6% of your pay is more than you can contribute to the 401(k). Based on the projected 2027 limits, including catch-up contributions, the guide says you’ll need to defer if your pay is:

• More than $425,000 if you’re under 50
• $566,666 or more if you’re 50 to 59, or 64 and older
• $620,833 or more if you’re 60 to 63

For example, a 56-year-old earning $575,000 needs to put in $34,500. The 401(k) limit at that age is $34,000, so they’d defer 1% of base salary to Save Actively Plus, since deferrals are in whole percentages. Their full $20,125 match splits into $13,125 in the 401(k) and $7,000 in Save Actively Plus.

Retirement vs. In-Service Accounts

A retirement account pays out after you leave Macy’s, as a lump sum when you leave or the March after, or as 2 to 15 annual payments starting the March after you leave.

An in-service account pays out in a year you choose while you’re still working, for goals like college or a wedding. You can have up to three for each type of pay, and each must pay out at least five plan years after your last deferral into it. Deferring 2027 salary means the earliest payout is 2033. If you leave before then, it pays out the March after you leave.

Your Elections Are Hard to Change

Under Section 409A, the tax rule for deferred compensation, you have to make your elections before you earn the pay. Once 2027 begins, your salary deferral is locked for the year, and your incentive deferral is irrevocable unless you’ve left the company by the time it’s paid.

You can change how you’ll be paid only if you do it at least 12 months before you leave, and your payments are then pushed back five years. In the guide’s example, someone who switches from a lump sum to five annual payments and retires in September 2028 would start receiving them in March 2034 instead of March 2029.

If you don’t make an election, the default is a lump sum the March after you leave. Your match account also needs an election in your first enrollment, even if you never defer.

How It’s Invested

Your balance tracks the performance of the funds you pick from five Vanguard options: a money market fund, a short-term bond index fund, a large-company stock index fund, a mid- and small-company stock index fund and an international stock index fund. You can change your choices at any time. If you don’t pick, it defaults to the money market fund, so check your elections, especially on any match that flowed in automatically.

How It’s Taxed

Deferrals aren’t subject to federal income tax until they’re paid to you, and the match and growth are taxed then too. State and local treatment can vary. Payouts can’t be rolled over into an IRA or 401(k).

Social Security and Medicare taxes are due in the year the pay is earned, whether or not you defer it, and on the match when it’s credited. If you defer most of your incentive, you may have to pay those taxes to the company directly.

The Risk to Understand

Save Actively Plus is an unsecured general obligation of Macy’s. Unlike your 401(k), the money isn’t protected. If the company became insolvent, you would be a general unsecured creditor. The amount you defer should reflect how much of your wealth you’re comfortable tying to Macy’s, on top of your salary, bonus and any company stock.

How Much Should You Defer?

At a minimum, get the full match. Beyond that, deferring more makes the most sense when:

• You expect to be in a lower tax bracket when it’s paid out, such as early retirement before Social Security and required minimum distributions begin.
• You don’t need the cash. Keep enough outside the plan for emergencies and near-term goals.
• You’re comfortable with the credit risk of your employer owing you more.
• Your payout schedule fits your plan. Spreading payments over several years can keep you in lower brackets.

These elections lock in quickly and are hard to undo. If you’re a Macy’s leader working through annual enrollment and want help deciding how much to defer and how to set up your payouts, let’s talk.

Michael Walstedt is a fee-only financial advisor and founder of Reliant Wealth Advisory, based in Hoboken, NJ. This article is for general informational purposes and may not apply to every individual situation. If this is a question you’re actively considering, a personalized conversation can often bring clarity.