Benefits Season Is Decision Season: What Executives Should Revisit Before Elections Close
Every fall, executives make some of the year's most important financial choices in a benefits portal, often late at night and often by clicking last year's options again.
The decisions look routine, but open enrollment, deferred compensation elections, and year-end equity decisions tend to land within the same few weeks. Together they shape your taxes, your cash flow, and how much of your future depends on one employer.
Ask What You'd Lose If You Left
A useful starting question: what would change if you left your company next year? For many executives, disability coverage, life insurance, health coverage, retirement plans, deferred compensation, and unvested stock are all tied to the job, and some depend on the company's own financial health.
Disability Coverage Is Often Smaller Than Assumed
Group disability plans usually replace a percentage of salary up to a monthly cap, and the cap is where higher earners get caught. Take a hypothetical plan paying 60% of salary up to $15,000 a month. For an executive earning $600,000 in salary and bonus, that's at most $180,000 a year, about 30% of actual earnings. If the employer paid the premiums, the benefit is generally taxable, so the after-tax figure is lower.
Group life insurance is usually a multiple of salary and generally ends, or must be converted, when you leave. Enrollment can be a good time to add supplemental coverage, or to ask whether some coverage should be owned personally.
Health Plans and Dependent Care
If you're eligible for a health savings account, consider investing the balance and saving it for medical costs in retirement rather than spending it each year. Parents should also revisit the dependent care FSA, whose limit rose this year from $5,000 to $7,500 per household.
Deferred Compensation: Decide Before You Earn It
Nonqualified deferred compensation lets you set aside pay beyond 401(k) limits, ideally to be taxed later in a lower bracket. To defer pay earned in 2027, you generally must elect by December 31, 2026, and a missed deadline can't be fixed.
The payout choice matters as much as the amount. Lump sum or installments, at retirement or on a fixed date: these elections are hard to change later, and they determine when the tax arrives.
There's also a risk rarely discussed at enrollment. Deferred compensation is an unsecured promise from your employer. If the company runs into serious trouble, you may be treated like any other creditor. For an executive who already holds a lot of company stock, deferring more salary adds to the same bet.
Equity Awards
Restricted stock units are taxed as ordinary income when they vest, and employers commonly withhold at a flat 22%, well below the top brackets. Higher earners should expect a balance due unless they adjust withholding or make an estimated payment.
Exercising and holding incentive stock options can trigger the alternative minimum tax, and starting this year the AMT exemption phases out at lower incomes and faster than before. Model any exercise before December.
If you're subject to trading windows, keep in mind that a pre-arranged trading plan has a cooling-off period. A plan set up this fall may not allow a sale until next year.
Two 401(k) Settings
If you're 50 or older and earned more than $150,000 from your employer last year, your catch-up contributions now must go in as Roth. And if you receive a large bonus, a percentage-based election can hit the annual limit early. If your plan matches each paycheck without a year-end true-up, you can lose part of the match.
Before the Deadlines
These elections happen on different websites and dates, and they're rarely viewed together. A few questions help:
What happens to my income, insurance, and unvested awards if I leave in the next two years?
How much of my net worth depends on this one employer?
Do this year's elections fit when I plan to retire?
Which of these should my CPA see before the deadline?
Bring them to your financial advisor and CPA while there's still time to change the answers.
Sources
Dependent care FSA limit raised from $5,000 to $7,500: IRS Publication 15-B (2026)
Deferral elections due by December 31 of the year before the pay is earned: 26 CFR § 1.409A-2
22% federal withholding rate on supplemental wages: IRS Publication 15 (2026)
Alternative minimum tax exemption phase-out for 2026: IRS, 2026 tax inflation adjustments
Roth catch-up wage threshold of $150,000: IRS, Catch-up contributions; IRS Notice 2025-67
The disability example (60% of salary up to $15,000 a month) is hypothetical and for illustration only.
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