How to maximize your executive benefits for 2026

As the year-end approaches, many executives will need to decide about benefits, salary deferral and plan contributions for 2026. These choices can have complex interactions and long-term effects on your cash flows and retirement plans.

A well thought out and flexible plan should take into account your circumstances and goals for the future. This is where your J.P. Morgan team can help create a wealth plan that works for you, and for the people you care about.

Here are the factors to consider as you make these important decisions.

Salary deferral election for nonqualified plans

Consider these questions:

• How much of next year’s salary should you defer, and for how long?
• How should those asset be invested?
• When, and in what payout structure, should you receive your deferred compensation?
• How much wealth should you keep in these accounts?
• Who is the beneficiary of your plan? 

A nonqualified deferred compensation plan¹ is not subject to IRS limits on contributions or compensation, which apply to a qualified retirement plan such as a 401(k). Among other things, this means you can contribute more income to the account.

However, the answers to these questions will depend on your tax situation, cash flow and your other investments. Deferring salary could reduce your tax liabilities and give you the opportunity to grow your wealth by investing those funds instead. Some companies will match salary deferrals. The extent of that match is an important consideration.

Timing is also a significant consideration, as many executives choose to defer some compensation until they leave their current positions or retire. However, some make time-based deferrals to free up funds for the stages of life when they expect to need them—a classic example being when a child goes to college.

401(k) contributions

Consider these questions:

• Does your employer offer to match 401(k) contributions?
• Does your plan allow you to contribute after-tax dollars? Does it make sense for you to contribute after-tax dollars, or do you have better options?  
• How would those contributions be invested?
• Will the contributions be made early in the year, or spread throughout the year? 
• Are contributions being made in coordination with nonqualified deferred compensation plan participation?  

While cash flow considerations also come into play when deciding on contributions to 401(k) plans, the most significant factors include company matching—in most contexts, it makes sense to max this out—and the fact that annual pre-tax contributions to 401(k) plans are usually limited.

Thus, before making contributions to nonqualified plans, it makes sense to contribute to a 401(k) plan up to the pre-tax limit of $24,500. Further, individuals between 50 and 59 should consider maximizing the annual “catch-up” contribution limit, an additional $7,500, and those between 60 and 63 should use the “enhanced catch-up” limit, an additional $2,500.

Incentive stock options

Incentive stock options (ISOs) are most often granted by private companies, and their tax statuses allow holders to exercise their options without triggering capital gains taxes. Those taxes become due only when the shares are sold.

However, there is an important wrinkle where ISOs are concerned: Gains on their sales are not recognized when calculating income tax, but they are recognized in determining liabilities under the alternative minimum tax (AMT).

For this reason, it’s wise to exercise and hold these options so that the standard threshold for capital gains is triggered, but taxes owed under the AMT are not. People who have paid the AMT in some years may also be able to use AMT credits in subsequent years.

Particularly since ISOs may be new terrain for executives joining private companies, we recommend crafting a multi-year plan to use them in a way that serves your goals.

Consider these questions:

• What are the tax implications of your stock options?
• Could your options trigger alternative minimum tax liability?

Life insurance plans

There are two significant issues that can come into play when electing life insurance coverage. The first concerns the coverage itself: Is it sufficient for you and your family, and is it worth the price? An executive in their 40s or early 50s who is in good health can often purchase better coverage on their own.

The second, which is more complex, and concerns asset location: Do you want to assign the life insurance plan to an irrevocable trust to save your heirs from an estate tax liability?

Consider these questions:

• Is your coverage sufficient and well priced?
• Who should the beneficiary be, and where should you place the coverage?

Disability plans

While many individuals receive substantial disability insurance through their employers, executives often have different compensation patterns: More of it tends to be in bonuses and stock options. Disability insurance won’t reflect these types of compensation.

If those are important, the policy won’t be income replacement for your survivors. Since mid-career executives often have sufficient wealth, many of our clients choose to save money by forgoing disability insurance.

Consider these questions:

• Does the coverage reflect your income?
• Is it worth the cost?

Personal excess liability coverage

Again, questions of coverage and cost-effectiveness are paramount here. Many of our clients choose to take out an umbrella policy that offers much more coverage than standard homeowners and auto insurance. But even when it makes sense to purchase this coverage, it’s wise to coordinate the coverage limits on your other policies with the personal excess liability plan.

Consider these questions:

• How good is the coverage?
• Is it cost-effective?
• Are the coverage limitations aligned?

Tax matters

Beyond the matters covered here, executives may need to consider a wide variety of tax issues. These can include, but are not limited to:

• Should the withholding on salary or bonus compensation be adjusted to account for potential refunds or taxes owed?
• What would the most effective tax-loss harvesting strategy be?
• How should you make charitable gifts, such as donating low-basis company stock to a donor-advised fund (DAF) or private foundation?

We can help

For more about benefit elections, and help in creating a wealth plan that is right for you and your family, contact your J.P. Morgan team.