By David C. D’Albero, Co-Founder, Strata Capital
Each fall, thousands of corporate professionals breeze through their open enrollment packets with all the enthusiasm of someone renewing a software license. Click, confirm, move on.
This is understandable. The process can feel like a bureaucratic blur of HR-speak, fine print, and boxes to check. Still, within that window lies an extraordinary opportunity to shape your financial future. For corporate professionals with complex compensation structures and high incomes, open enrollment is not just administrative. It is strategic.
To walk through this step by step, watch the full video here
Once that window closes, your decisions are locked in for the year. So it is worth slowing down, asking the right questions, and aligning each choice with a bigger picture.
At Strata Capital, we help corporate professionals navigate the nuanced world of company benefits every day. Here is a closer look at how to make open enrollment work harder for you.
Rethinking Your Health Insurance Strategy
For most people, health insurance is the first decision on the list. Not all plans are created equal, and the best choice often comes down to more than just monthly premiums.
PPOs, or Preferred Provider Organizations, tend to be the most flexible, allowing access to specialists without referrals and out-of-network coverage. They are often best for families who frequently access healthcare and want options without roadblocks, although that flexibility comes at a higher premium.
HMOs, or Health Maintenance Organizations, generally offer the lowest monthly costs, but with tighter rules around provider networks and referrals. They can work well for individuals who prefer a streamlined system and do not need broad access.
High Deductible Health Plans are growing in popularity, especially for those with strong cash flow and minimal expected medical needs. The main draw is access to a Health Savings Account, which allows for triple tax advantages: deductible contributions, tax-deferred growth, and tax-free withdrawals for medical expenses.
For those focused on long-term planning, the HSA can quietly become a stealth retirement asset. After age 65, withdrawals can be used for any purpose and taxed like a traditional IRA.
EPOs and POS plans offer hybrid models with varying levels of flexibility and coverage. These deserve a closer look if neither the PPO nor HMO options feel like the right fit.
The Underappreciated Power of the HSA
HSAs often get overlooked, which is unfortunate considering how versatile they are. In addition to the triple tax benefits, HSAs are portable, rollover annually, and do not expire. For high earners already maxing out retirement accounts, an HSA provides another avenue for tax-advantaged growth.
This strategy tends to work best for those who are relatively healthy, have a financial buffer to cover the higher deductible, and are comfortable viewing the HSA not just as a spending account but as a long-term investment vehicle.
Going Beyond the Basic 401(k)
Most corporate executives are familiar with the traditional pre-tax 401(k) and Roth 401(k) options. The former offers a tax deduction today with taxable withdrawals in retirement. The latter provides no upfront tax break, but future withdrawals come out tax-free.
The third option, often hidden in plain sight, is the after-tax contribution bucket. While it does not reduce current taxable income, it unlocks one of the most valuable wealth-building strategies available to high earners: the Mega Backdoor Roth.
If your plan allows for after-tax contributions and in-service conversions, this approach lets you contribute significantly more than the standard limit and roll those funds into a Roth account. This creates a sizable pool of tax-free income in the future. It requires careful implementation and coordination with your employer’s plan rules, but for those who qualify, it is a strategy worth exploring.
Be Intentional About How Your 401(k) is Invested
Too many executives default into a target-date fund and never revisit the allocation again. While these funds are simple and hands-off, they are built for the average investor. High-income professionals with equity compensation and large brokerage accounts may need a more tailored approach.
In early career stages, heavier stock allocations may be appropriate, provided the volatility is something you can manage. More importantly, executives need to be mindful of how much exposure they already have to their company’s performance. Between salary, bonuses, RSUs, and options, it is easy to become over-concentrated.
When evaluating investment options, look closely at underlying fees. Many plans offer low-cost index funds right alongside more expensive actively managed ones. While both types of funds can serve different purposes, the difference in fees over time can quietly erode performance.
Deferred Compensation: Misunderstood and Incredibly Valuable
If your company offers a non-qualified deferred compensation plan, it is worth understanding how it works. These plans allow you to defer a portion of your salary or bonus into future years. This reduces current taxable income and allows you to time distributions in lower-income years, such as retirement.
Deferred compensation is not without risk. These funds remain tied to your employer’s balance sheet, and payouts are subject to the company’s financial health. You will also need to be strategic about how and when you take distributions, and how those payments coordinate with your other retirement income streams.
Done well, deferred compensation plans can help smooth your income and tax liability over time. They should be integrated into your broader tax, investment, and estate plan to maximize the benefit.
Stock Compensation: Payout Elections Carry Weight
Restricted Stock Units are a central part of many executive packages. When RSUs vest, the value becomes taxable as ordinary income. This happens whether the shares are sold or not, which can create surprise tax liabilities for the unprepared.
Companies usually give several payout options: take the shares, take cash, or opt for a blend. The right choice depends on your goals, liquidity needs, and existing exposure to company stock.
Too often, RSU elections are set and forgotten, only to create problems when someone retires and discovers their company’s plan does not allow share payouts post-employment. Aligning these elections with your broader financial plan can help avoid costly mistakes.
Life Insurance: Coverage Gaps Are Common
Most executives carry group life insurance through their employer, but that coverage often caps out at a multiple of salary. For high earners with families to support, mortgages to cover, or legacy goals, this may not be sufficient.
Supplemental private coverage, such as a term life policy, is usually affordable and portable. Rather than relying solely on employer coverage, consider building a plan that aligns with your full financial picture and is not reliant on your employment at your company.
Disability Insurance: The Overlooked Weak Spot
Disability insurance often gets less attention than life insurance, yet the risk of becoming unable to work due to illness or injury is greater than many realize. Group plans typically cover 40 to 60 percent of income, often excluding bonuses or equity compensation. Worse, benefits are taxable when the employer pays the premium.
Some companies offer supplemental disability coverage where the employee pays the premium with after-tax dollars. In this case, benefits received would be tax-free. This small change can significantly increase the value of the protection.
High-income professionals should also be aware of policy caps. A disability plan that replaces 40 percent of income may sound acceptable until it stops at a fifteen thousand dollar monthly benefit while income exceeds seven hundred fifty thousand annually. Make sure to check your plan’s cap. Addressing this gap early can make all the difference.
Supplemental Benefits: A Little Cushion Can Go a Long Way
Optional benefits like critical illness and hospital indemnity coverage may seem unnecessary at first glance. For the right individual, though, they can offer added financial protection during difficult moments.
Critical illness policies pay a lump sum upon diagnosis of a covered condition, which can help with deductibles, out-of-network care, or everyday expenses. Hospital indemnity policies provide cash for each day of hospital admission. These are not a substitute for health insurance, but they can soften the financial blow during a major event.
Some employers also offer legal services plans that cover basic estate planning. For those who have not updated their will or need a healthcare proxy, this benefit is worth revisiting.
Do Not Forget the Final Steps
Before wrapping up enrollment, take a few minutes to review beneficiary designations across retirement plans, insurance policies, and deferred compensation. Changes in marital status, children aging out of coverage, or the passing of a loved one are all reasons to review your elections.
Missing the open enrollment deadline locks in your choices for another year unless a qualifying life event occurs. That means whatever decisions are made now will echo through your finances for the next twelve months and potentially longer.
Open Enrollment Deserves More Than a Quick Click
For busy executives, it is easy to treat open enrollment as another checkbox. That approach may come with significant cost through missed tax opportunities, underutilized investment strategies, or unnecessary risk.
This is one of the few windows each year to realign your benefits with your broader financial goals. A thoughtful review now can save taxes later, create flexibility in retirement, and reduce stress for your family in the future.
At Strata Capital, we help high-income professionals turn complex compensation structures into coordinated strategies. Our goal is to create a higher standard of financial service so executives like you can stop guessing and start optimizing.
Disclosures & Compliance Notes
This content is provided for educational purposes only and should not be construed as investment, tax, or legal advice. All investments carry risk, and past performance is not indicative of future results. The examples provided are hypothetical and do not guarantee any specific outcome. Before making any financial decision, please consult with a licensed professional who understands your unique financial situation.