Retiring From Walmart? Don't Roll Over Your 401(k) Until You Read This
I’m Michael Walstedt, a fee-only wealth advisor at Reliant Wealth Advisory, based in Hoboken, NJ. I work with executives on equity compensation and concentrated stock decisions. Click here to book a free strategy session.
There's a form in your retirement packet that takes about ten minutes to fill out. For a lot of longtime Walmart associates, it's also the most expensive ten minutes of their financial life.
It's the one that asks what you want to do with your 401(k). Almost everyone checks the same box: roll it over to an IRA. Your coworkers did it. The guy on YouTube said to do it. It's clean, it's simple, and the money stays tax-deferred.
If you're holding Walmart stock in that 401(k), it might be a mistake.
The shares you forgot you were buying
Walmart's 401(k) is one of the few big plans that still lets employees own company stock, and plenty of associates do. At the start of 2025, the plan held about $5.7 billion of it.
If you've been buying those shares for 20 or 30 years, a lot of them cost you a fraction of what they're worth today. The tax code has a name for that gap, net unrealized appreciation, and a special rule that treats it far more kindly than an IRA ever will.
Roll everything into an IRA, and every dollar that comes out later is taxed as ordinary income, at rates as high as 37%.
Take the Walmart shares out separately, into a regular brokerage account, and the math changes. You pay income tax only on what you originally paid for the shares. The growth gets taxed later at long-term capital gains rates, which max out at 20% and land at 15% for most retirees.
Meet Greg
Greg is 62 and wrapping up 28 years at Walmart. His 401(k) has $400,000 in Walmart stock that he bought for a total of $60,000 over the years. He's in the 24% bracket.
If he rolls it into an IRA, all $400,000 eventually gets taxed as income. That's roughly $96,000 to the IRS.
If he moves the shares out instead, he owes 24% on his $60,000 cost, about $14,400, this year. The other $340,000 is taxed at 15% whenever he sells, about $51,000. Call it $65,400 all in.
That's $30,000 Greg keeps by checking a different box. In the 32% bracket, it's closer to $58,000.
And no, he doesn't have to keep his retirement riding on Walmart. He can sell the shares the day they hit his brokerage account and still get the lower rate on the growth.
Where people trip up
The rules are strict, and the plan won't warn you if you're about to break one.
It has to happen after a qualifying event, usually leaving Walmart or turning 59½. The entire 401(k) has to be paid out within the same calendar year, with the stock going to a brokerage account and everything else free to roll into an IRA. And the shares have to move as shares. If the plan sells them and sends you cash, the benefit is gone.
Age matters too. Leave before the year you turn 55, and the tax on your cost basis may come with a 10% penalty.
When to skip it
NUA isn't automatic. If most of your shares were bought recently, there isn't much growth to save on. If you expect to be in a very low bracket in retirement, IRA withdrawals might be taxed less than capital gains anyway. And if paying a tax bill now feels like a dealbreaker, the IRA may still be the better fit.
One phone call first
Before you touch that form, call the plan and ask for the cost basis of your Walmart shares. That number tells you whether any of this is worth a closer look.
You only get one shot at this decision. If you'd like someone to run the numbers with you before you check the box, click here or below to book a free consultation:
About the Author
I'm Michael Walstedt, a fee-only wealth advisor at Reliant Wealth Advisory. I help employees at large companies make the most of their 401(k), company stock, and retirement decisions.
This article is for educational purposes only and is not tax, legal, or investment advice. NUA rules are complex and depend on your plan and personal situation. Consult a qualified tax professional before making any distribution or rollover.
