diff --git a/psalm-baseline.xml b/psalm-baseline.xml
index c40a8896c..511fbe21a 100644
--- a/psalm-baseline.xml
+++ b/psalm-baseline.xml
@@ -160,9 +160,6 @@
       <code><![CDATA[toPayload]]></code>
       <code><![CDATA[toPayload]]></code>
     </ImpureMethodCall>
-    <PossiblyNullReference>
-      <code><![CDATA[mergeWith]]></code>
-    </PossiblyNullReference>
     <UnnecessaryVarAnnotation>
       <code><![CDATA[SearchAttributeKey]]></code>
     </UnnecessaryVarAnnotation>
diff --git a/src/Activity/ActivityOptions.php b/src/Activity/ActivityOptions.php
index 3274ae2af..906174d3f 100644
--- a/src/Activity/ActivityOptions.php
+++ b/src/Activity/ActivityOptions.php
@@ -153,8 +153,8 @@ public function mergeWith(?MethodRetry $retry = null): self
     {
         $self = clone $this;
 
-        if ($retry !== null && $this->diff->isPresent($self, 'retryOptions')) {
-            $self->retryOptions = $this->retryOptions?->mergeWith($retry);
+        if ($retry !== null) {
+            $self->retryOptions = ($self->retryOptions ?? RetryOptions::new())->mergeWith($retry);
         }
 
         return $self;
diff --git a/src/Activity/LocalActivityOptions.php b/src/Activity/LocalActivityOptions.php
index dd722db39..dd609f998 100644
--- a/src/Activity/LocalActivityOptions.php
+++ b/src/Activity/LocalActivityOptions.php
@@ -93,8 +93,8 @@ public function mergeWith(?MethodRetry $retry = null): self
     {
         $self = clone $this;
 
-        if ($retry !== null && $this->diff->isPresent($self, 'retryOptions')) {
-            $self->retryOptions = $this->retryOptions?->mergeWith($retry);
+        if ($retry !== null) {
+            $self->retryOptions = ($self->retryOptions ?? RetryOptions::new())->mergeWith($retry);
         }
 
         return $self;
diff --git a/src/Client/WorkflowOptions.php b/src/Client/WorkflowOptions.php
index 027f2c522..efad3a864 100644
--- a/src/Client/WorkflowOptions.php
+++ b/src/Client/WorkflowOptions.php
@@ -215,8 +215,8 @@ public function mergeWith(?MethodRetry $retry = null, ?CronSchedule $cron = null
     {
         $self = clone $this;
 
-        if ($retry !== null && $self->diff->isPresent($self, 'retryOptions')) {
-            $self->retryOptions = $self->retryOptions->mergeWith($retry);
+        if ($retry !== null) {
+            $self->retryOptions = ($self->retryOptions ?? RetryOptions::new())->mergeWith($retry);
         }
 
         if ($cron !== null && $self->diff->isPresent($self, 'cronSchedule')) {
diff --git a/src/Workflow/ChildWorkflowOptions.php b/src/Workflow/ChildWorkflowOptions.php
index d30c21d0b..3e7c0c099 100644
--- a/src/Workflow/ChildWorkflowOptions.php
+++ b/src/Workflow/ChildWorkflowOptions.php
@@ -210,8 +210,8 @@ public function mergeWith(?MethodRetry $retry = null, ?CronSchedule $cron = null
     {
         $self = clone $this;
 
-        if ($retry !== null && $self->diff->isPresent($self, 'retryOptions')) {
-            $self->retryOptions = $self->retryOptions?->mergeWith($retry);
+        if ($retry !== null) {
+            $self->retryOptions = ($self->retryOptions ?? RetryOptions::new())->mergeWith($retry);
         }
 
         if ($cron !== null && $self->diff->isPresent($self, 'cronSchedule')) {
diff --git a/tests/Unit/DTO/ActivityOptionsTestCase.php b/tests/Unit/DTO/ActivityOptionsTestCase.php
index 5bd3bbf15..c38b3125b 100644
--- a/tests/Unit/DTO/ActivityOptionsTestCase.php
+++ b/tests/Unit/DTO/ActivityOptionsTestCase.php
@@ -14,6 +14,7 @@
 use Carbon\CarbonInterval;
 use Temporal\Activity\ActivityCancellationType;
 use Temporal\Activity\ActivityOptions;
+use Temporal\Common\MethodRetry;
 use Temporal\Common\RetryOptions;
 use Temporal\Common\Uuid;
 
@@ -124,4 +125,47 @@ public function testRetryOptionsChangesNotMutateState(): void
             RetryOptions::new()
         ));
     }
+
+    public function testMergeWithMethodRetryFillsDefaultRetryOptions(): void
+    {
+        $dto = ActivityOptions::new()
+            ->withRetryOptions(RetryOptions::new())
+            ->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryCreatesRetryOptionsWhenNull(): void
+    {
+        $dto = ActivityOptions::new()->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertNotNull($dto->retryOptions);
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryKeepsUserDefinedFields(): void
+    {
+        $methodRetry = new MethodRetry(maximumAttempts: 5, maximumInterval: 30);
+        $dto = ActivityOptions::new()
+            ->withRetryOptions(RetryOptions::new()->withMaximumAttempts(1))
+            ->mergeWith($methodRetry);
+
+        $this->assertSame(1, $dto->retryOptions->maximumAttempts);
+        $this->assertSame($methodRetry->maximumInterval, $dto->retryOptions->maximumInterval);
+    }
+
+    public function testMergeWithNullRetryDoesNotChangeRetryOptions(): void
+    {
+        $retry = RetryOptions::new()->withMaximumAttempts(7);
+        $dto = ActivityOptions::new()->withRetryOptions($retry)->mergeWith(null);
+
+        $this->assertSame(7, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithDoesNotMutateState(): void
+    {
+        $dto = new ActivityOptions();
+
+        $this->assertNotSame($dto, $dto->mergeWith(new MethodRetry(maximumAttempts: 5)));
+    }
 }
diff --git a/tests/Unit/DTO/ChildWorkflowOptionsTestCase.php b/tests/Unit/DTO/ChildWorkflowOptionsTestCase.php
index f22d1315b..37a709fd6 100644
--- a/tests/Unit/DTO/ChildWorkflowOptionsTestCase.php
+++ b/tests/Unit/DTO/ChildWorkflowOptionsTestCase.php
@@ -12,6 +12,8 @@
 namespace Temporal\Tests\Unit\DTO;
 
 use Temporal\Common\IdReusePolicy;
+use Temporal\Common\MethodRetry;
+use Temporal\Common\RetryOptions;
 use Temporal\Workflow\ChildWorkflowCancellationType;
 use Temporal\Workflow\ChildWorkflowOptions;
 use Temporal\Workflow\ParentClosePolicy;
@@ -107,4 +109,32 @@ public function testChildWorkflowCancellationTypeChangesNotMutateStateUsingEnum(
         ));
         $this->assertSame(ChildWorkflowCancellationType::TryCancel->value, $dto->cancellationType);
     }
+
+    public function testMergeWithMethodRetryFillsDefaultRetryOptions(): void
+    {
+        $dto = ChildWorkflowOptions::new()
+            ->withRetryOptions(RetryOptions::new())
+            ->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryCreatesRetryOptionsWhenNull(): void
+    {
+        $dto = ChildWorkflowOptions::new()->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertNotNull($dto->retryOptions);
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryKeepsUserDefinedFields(): void
+    {
+        $methodRetry = new MethodRetry(maximumAttempts: 5, maximumInterval: 30);
+        $dto = ChildWorkflowOptions::new()
+            ->withRetryOptions(RetryOptions::new()->withMaximumAttempts(1))
+            ->mergeWith($methodRetry);
+
+        $this->assertSame(1, $dto->retryOptions->maximumAttempts);
+        $this->assertSame($methodRetry->maximumInterval, $dto->retryOptions->maximumInterval);
+    }
 }
diff --git a/tests/Unit/DTO/LocalActivityOptionsTestCase.php b/tests/Unit/DTO/LocalActivityOptionsTestCase.php
new file mode 100644
index 000000000..26f80a19c
--- /dev/null
+++ b/tests/Unit/DTO/LocalActivityOptionsTestCase.php
@@ -0,0 +1,55 @@
+<?php
+
+/**
+ * This file is part of Temporal package.
+ *
+ * For the full copyright and license information, please view the LICENSE
+ * file that was distributed with this source code.
+ */
+
+declare(strict_types=1);
+
+namespace Temporal\Tests\Unit\DTO;
+
+use Temporal\Activity\LocalActivityOptions;
+use Temporal\Common\MethodRetry;
+use Temporal\Common\RetryOptions;
+
+class LocalActivityOptionsTestCase extends AbstractDTOMarshalling
+{
+    public function testMergeWithMethodRetryFillsDefaultRetryOptions(): void
+    {
+        $dto = LocalActivityOptions::new()
+            ->withRetryOptions(RetryOptions::new())
+            ->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryCreatesRetryOptionsWhenNull(): void
+    {
+        $dto = LocalActivityOptions::new()->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertNotNull($dto->retryOptions);
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryKeepsUserDefinedFields(): void
+    {
+        $methodRetry = new MethodRetry(maximumAttempts: 5, maximumInterval: 30);
+        $dto = LocalActivityOptions::new()
+            ->withRetryOptions(RetryOptions::new()->withMaximumAttempts(1))
+            ->mergeWith($methodRetry);
+
+        $this->assertSame(1, $dto->retryOptions->maximumAttempts);
+        $this->assertSame($methodRetry->maximumInterval, $dto->retryOptions->maximumInterval);
+    }
+
+    public function testMergeWithNullRetryDoesNotChangeRetryOptions(): void
+    {
+        $retry = RetryOptions::new()->withMaximumAttempts(7);
+        $dto = LocalActivityOptions::new()->withRetryOptions($retry)->mergeWith(null);
+
+        $this->assertSame(7, $dto->retryOptions->maximumAttempts);
+    }
+}
diff --git a/tests/Unit/DTO/WorkflowOptionsTestCase.php b/tests/Unit/DTO/WorkflowOptionsTestCase.php
index 2d6bde9b2..86057164e 100644
--- a/tests/Unit/DTO/WorkflowOptionsTestCase.php
+++ b/tests/Unit/DTO/WorkflowOptionsTestCase.php
@@ -15,6 +15,7 @@
 use Temporal\Api\Common\V1\SearchAttributes;
 use Temporal\Client\WorkflowOptions;
 use Temporal\Common\IdReusePolicy;
+use Temporal\Common\MethodRetry;
 use Temporal\Common\RetryOptions;
 use Temporal\Common\TypedSearchAttributes;
 use Temporal\Common\Uuid;
@@ -242,4 +243,32 @@ public function testSetTypedSearchAttributesCasting(): void
         $this->assertInstanceOf(SearchAttributes::class, $result);
         $this->assertCount(1, $result->getIndexedFields());
     }
+
+    public function testMergeWithMethodRetryFillsDefaultRetryOptions(): void
+    {
+        $dto = WorkflowOptions::new()
+            ->withRetryOptions(RetryOptions::new())
+            ->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryCreatesRetryOptionsWhenNull(): void
+    {
+        $dto = WorkflowOptions::new()->mergeWith(new MethodRetry(maximumAttempts: 5));
+
+        $this->assertNotNull($dto->retryOptions);
+        $this->assertSame(5, $dto->retryOptions->maximumAttempts);
+    }
+
+    public function testMergeWithMethodRetryKeepsUserDefinedFields(): void
+    {
+        $methodRetry = new MethodRetry(maximumAttempts: 5, maximumInterval: 30);
+        $dto = WorkflowOptions::new()
+            ->withRetryOptions(RetryOptions::new()->withMaximumAttempts(1))
+            ->mergeWith($methodRetry);
+
+        $this->assertSame(1, $dto->retryOptions->maximumAttempts);
+        $this->assertSame($methodRetry->maximumInterval, $dto->retryOptions->maximumInterval);
+    }
 }