Open Enrollment Checklist for Executives: The Scotia Wealth Management Walkthrough

When does next year's deferral election become final?

Vernon assumes he can adjust his deferral and payout schedule in January. That assumption costs him. Salary deferral elections must generally be made before the calendar year the pay is earned. Your plan's enrollment packet lists this cutoff—it is often in late November or early December, not mid-January. Mark it on your calendar now; missing it means no deferral for a full 12 months.

Bonus deferrals follow a different rule under Section 409A. If your bonus is performance-based and the performance period lasts at least 12 months, you can usually elect it up to six months before that period ends. Ask HR whether your plan uses this later cutoff, because some executives with annual bonuses can defer after the salary deferral deadline has passed.

The medical plan election is locked for the year unless you have a qualifying life event, such as a marriage, a birth, a change in spousal coverage or a significant change in plan cost. The deferred comp election is stricter. Once the year starts, Section 409A generally makes it irrevocable, and a life event does not reopen it. The HSA contribution amount is the one election you can usually adjust during the year through payroll, so it is the one that forgives a mistake. Get the other two right the first time.

If you retire within two or three years of this election

Vernon leaves in two years, so the salary he defers this fall pays out during retirement. Treat this fall's enrollment form as your first decision about retirement withdrawals. Pull last year's confirmation to see what carried forward, find the plan's cutoff date in your packet, and check which birthday falls in the next 12 months. Vernon turns 60. That raises his 401(k) catch-up from $8,000 to $11,250 for 2026, or $3,250 more he can put away tax-deferred next year.

Vernon's deferral form and the lump-sum default it carried

Vernon's enrollment packet arrives pre-filled with last year's choices: 20 percent of his $500,000 salary and 40 percent of his $300,000 bonus, both paid as a lump sum at separation (hypothetical, round numbers). That is $100,000 plus $120,000, or $220,000 deferred. Because he retires in two years, the whole $220,000 would land in one tax year after he leaves. A single-year deposit of $220,000 on top of gains from selling his concentrated stock position would likely push him far above his usual tax bracket, costing tens of thousands in unnecessary tax.

Switching this year's class to five annual installments changes the picture. $220,000 ÷ 5 = $44,000 annually, or about $3,667 monthly, before investment growth. Vernon and Judy plan to spend $18,000 monthly in retirement. The installments cover about a fifth of that; planned sales of his low-basis shares cover most of the rest, and their HSA pays medical bills tax-free.

Most executives in Vernon's spot miss this. Because he serves as an officer of a listed company, he is likely a specified employee under Section 409A. Payments a specified employee receives because of separation are delayed six months. His first installment would arrive about half a year after his last paycheck. The roadmap has to cover that gap, and selling too much stock in that first year defeats the purpose.

Look at which deferral amount matters most. As the deferral grows from $100,000 to $400,000, the share of monthly spending it covers climbs from 9 percent to 37 percent. The payout election carries far more weight at $400,000 than at $100,000. Scotia Wealth Management leaves Vernon's 20 percent salary deferral alone, because that part works. It changes only the lump-sum default on this year's $220,000 class, and it can do that only because his plan allows a separate payout election for each class year.

An open enrollment checklist for executives, in the order Vernon worked it

• Choose your medical plan first, because HSA eligibility depends on picking a high-deductible plan. Judy is covered under yours.
• Set your HSA for 2026: the family limit is $8,750, plus $1,000 if you're 55 or older. Subtract your employer's deposit. If the company deposits $1,500, your payroll deferral is $8,750 plus $1,000 minus $1,500, or $8,250.
• Set your 401(k) deferral. Vernon turns 60 this year, so his limit climbs to $24,500 plus an $11,250 catch-up, or $35,750 total. Check your payroll slip: if it still shows the old $8,000 catch-up, correct it to $11,250.
• Watch the Roth catch-up rule. Your prior-year FICA wages were above $150,000, so your entire catch-up must go into a Roth 401(k), not pre-tax. Verify that payroll isn't defaulting to the old pre-tax catch-up.
• Elect your deferral amount for deferred comp and choose the payout schedule for this year's deferral class. Don't accept the default lump sum if you retire within five years.
• Check beneficiaries on your deferred comp, HSA and group life insurance. These forms live with the plan, not your custodian. If you haven't reviewed them in years, ask HR to send you a copy and compare it to your current will and estate plan.

When HR's HSA worksheet leaves out the employer deposit

HR's enrollment worksheet often lists the $8,750 family maximum as the employee's amount and never mentions that the company's $1,500 deposit counts toward that limit. If you elect the full $8,750 plus your $1,000 catch-up, you are $1,500 over. The excess becomes taxable income, and it carries a 6 percent excise tax, $90 each year it stays in the account. Over 20 years, that small miss becomes $1,800 in tax plus lost growth. Catch it by adding every employer contribution line on your benefits confirmation to your proposed payroll amount before you submit.

When you're single, deferring less or retiring later, what shifts?

The HSA limit follows your coverage, not your filing status. Self-only coverage caps you at $4,400 for 2026, plus $1,000 at 55+. If both spouses are 55 or older, each $1,000 catch-up belongs in that spouse's own HSA, so Judy needs her own account to add hers.

The 401(k) catch-up starts at 50, and the HSA catch-up starts at 55. The higher $11,250 401(k) catch-up applies only from 60 through 63. HSA contributions end once Medicare Part A begins, and Part A coverage can be backdated as much as six months. If you will enroll after 65, stop HSA deposits roughly six months ahead.

A $100,000 deferral paid in five installments covers about 9 percent of $18,000 monthly spending. At that size the payout choice matters less, but a lump sum still adds the full $100,000 to a single year's income. If you are 10 or more years from retiring, many plans let you pick installments on a fixed date that is not tied to separation, so you know the timing in advance. Each extra dollar you defer saves tax now, up to the 37 percent top rate. It also becomes an unsecured promise from the same employer whose stock may already make up much of what you own. Once one company dominates your balance sheet, we would lean toward deferring less. Concentrated stock planning is covered on its own page.

Sending the packet to Scotia Wealth Management before the cutoff

Send your enrollment packet and last year's election confirmation through the request form two to three weeks before your plan's cutoff. Scotia Wealth Management checks each election against your roadmap and marks only the ones it would change. The firm doesn't rewrite what works; it fixes what is broken.