Walmart ESPP 101: Everything You Need to Know

Walmart's Employee Stock Purchase Plan (ESPP) allows employees to buy company stock at a discounted price.

The plan is administered by the company's Board of Directors, who set the terms and conditions of the ESPP.

You can participate in the ESPP if you're a Walmart employee with at least six months of service, and you're eligible to purchase shares at a 15% discount.

The ESPP is a tax-advantaged way to buy Walmart stock, which can be a great long-term investment opportunity.

What is ESPP?

ESPP stands for Employee Stock Purchase Plan, and in Walmart's case, it's also known as ASPP. This plan allows Walmart associates to purchase Walmart shares through convenient payroll deductions and direct payments to Computershare.

The plan is operated by Computershare, a third-party company, which handles the money deducted from your paycheck and designates it for the purchase of Walmart shares. You can volunteer to have a specific amount deducted from each biweekly paycheck, and the money will be sent to your Computershare account.

You can purchase Walmart stock with as little as $2, and the maximum amount you can contribute each pay period is $1000. The more money you accumulate in your Computershare account, the more Walmart stock you will own.

For every dollar you contribute, Walmart will match $0.15 of that dollar, increasing your overall contribution by 15% at no charge to you. This is a great incentive to participate in the plan, and it's especially beneficial since there are no fees to purchase shares of Walmart stock through your ASPP.

Here are some important things to know about your ASPP:

Walmart associates don't receive discounted rates on stock purchases, but there's a catch - the company will match $0.15 for every $1 invested through payroll deductions, up to $1,800 per year.

This means that if you contribute $1,800 to a stock investment plan, Walmart will add an extra $270 to your investment. You can keep your account open without payroll deductions and make voluntary cash purchases, but there's an annual maintenance fee of $35.

Here are some key details to keep in mind:

As a Walmart employee, you're eligible to purchase stocks through the company's Associate Stock Purchase Plan (ASPP). To get started, simply enroll in the ASPP by completing an online benefits enrollment session on One.Walmart.com/ASPP.

You can have anywhere from $2 to $1,000 deducted from your bi-weekly paycheck to invest in Walmart stocks. If you opt to have $70 deducted, you'll guarantee access to the maximum amount of contribution from Walmart, which is $270 for the year.

To manage your Computershare account, visit www.computershare.com/walmart.

Walmart associates don't get discounted rates on stock purchases, but they do have a stock purchase matching program.

For every $1 invested in Walmart stock through payroll deductions, Walmart matches $0.15, up to $1,800 per year.

You can keep your account open without payroll deductions and still benefit from the company match, as long as you contribute at least $1,800 per year.

If you leave the company, wait until you receive your final paycheck before closing your account to avoid paying a sales transaction fee twice.

You can close your account and transfer your shares to another brokerage, or sell some or all of the shares in your account.

Here are some key facts about Walmart's employee stock purchase plan:

Walmart's ESPP offers a 15 percent discount on stock purchases, which can be a significant savings.

You can get a significant discount on your ESPP stock, ranging from 5 to 15 percent, which can give you a profit from day one. This means you can buy shares for a lower price than they're trading for on the open market.

For example, if a stock is trading for $50, a 15 percent discount would bring the price down to $42.50. That's a savings of $7.50 per share.

It's essential to do your research before participating in your company's ESPP, just as you would with any stock purchase. This includes assessing the financial health and future prospects of the firm with an unbiased eye.

A 15 percent discount can make a big difference in your investment, but it's not a guarantee that the stock price won't go down after you purchase the shares.

You won't pay taxes when you buy company stock through Walmart's ESPP, but you will owe taxes when you sell the stock. You'll pay either ordinary income or capital gains tax on the gain, and ordinary income tax on the discount.

Ordinary income taxes apply if you sell the stock immediately after buying it, and the tax rate depends on your federal income tax bracket. For example, if you're in the 24% tax bracket, you'll pay 24% taxes on your profit.

If you hold the stock for at least one year, you'll pay the lower long-term capital gains rate, which is 15% for most Americans. However, you need to sell the stock at least two years after the ESPP offering period began to get this favorable tax treatment.

Here's a breakdown of the taxes you might owe:

Keep in mind that you won't owe Social Security and Medicare taxes on ESPP plans.

You'll need to report the income from your Walmart ESPP on your tax return, as your employer doesn't withhold taxes related to your ESPP stock plan sales.

You can sell your ESPP plan stock anytime, but be aware that you'll have to pay capital gains taxes on the profit if you sell for more than you paid.

The tax implications will depend on how long you held the shares and your level of household income, so it's a good idea to talk with your financial advisor or accountant.

You'll need to report the profit, not the discount, on your tax return unless you've sold the ESPP plan stock.

It's essential to diversify your holdings, but if your employer offers an ESPP, it's worth considering, especially since you're already dedicated to the company's success.

You can contribute 1% to 15% of your salary to the Walmart ESPP, up to the $25,000 IRS limit per calendar year. The more disposable income you have, the more you can afford to put in.

If your paycheck is $4,000, and you elect to contribute 10% of your pay, $40 will be deducted from your paycheck each pay period. This means you can always sell your ESPP plan stock without any penalties after the six-month holding period.

Consider your risk tolerance before investing in the Walmart ESPP, as it's a highly volatile investment. Ask yourself how you'll react if the stock goes down by 20% – will you panic and sell, or remain steadfast?

It's essential to avoid putting too much of your money in any one stock, as it can be risky. Keeping your investment in the company you work for to no more than 4-5 percent of your overall stock portfolio is a good rule of thumb.

Examining your portfolio at least a couple of times a year is crucial to ensure it's balanced. You should look at not only your company stock in your ESPP but also other stocks and mutual funds you own.

If you find that your portfolio is overweight in your company stock, you can sell those shares and rebalance into other areas. This will help you avoid over-exposure to any one stock.

You can lose money on your ESPP plan if the stock price goes down. For instance, if you purchased the stock at a 10% discount and the stock price declined by 15%, then you would have lost money.

Stock prices can fluctuate wildly, especially for tech company stocks. This means you need to be prepared for the possibility of losses.

If you don't sell the company stock immediately and the price goes down, you'll be left with a loss. This can be a significant setback, especially if you were counting on the stock to perform well.

To put this into perspective, if you purchased 100 shares of stock at a 10% discount and the stock price declined by 15%, you'd lose $170 per share. That's a total loss of $17,000.

Here's a breakdown of the potential losses:

Keep in mind that these losses can be substantial, and it's essential to be aware of the risks involved in ESPP plans.

You can contribute 1% to 15% of your salary to an employee stock purchase plan (ESPP), up to the $25,000 IRS limit per calendar year. This means you can invest a significant amount of money in your company's stock, but be sure to consider your disposable income and risk tolerance.

As you set up your payroll deductions, you'll want to think about how much you can afford to contribute each pay period. For example, if your paycheck is $4,000, and you elect to contribute 10% of your pay to your ESPP, $40 will be deducted from your paycheck each pay period.

To give you a better idea of how much you can contribute, here's a rough breakdown of the IRS limits:

Remember, the more you contribute, the more you'll be investing in your company's stock. However, it's essential to consider your risk tolerance and whether you're comfortable with the potential fluctuations in the stock market.

You can contribute 1% to 15% of your salary to the Walmart ESPP, up to the $25,000 IRS limit per calendar year.

The more disposable income you have, the more you can afford to put in the plan.

Contributions are made through payroll deductions, so you can set aside a fixed amount from each paycheck, such as 10% of a $4,000 paycheck, which would be $40 per pay period.

You can sell your ESPP plan stock without any penalties, making it a relatively liquid investment.

Since companies often purchase the stock for you every six months, your contribution is liquid after that time period.

It's essential to consider your risk tolerance when investing in the ESPP, as individual stocks can be highly volatile.

If you tend to panic and sell your stock holdings during market downturns, you may want to contribute less to the plan.