Executive Benefits Brief · October 2026 · National Retirement Security Month
Year-end tax planning for business owners has two deadlines this fall. December 31 closes the door on 2026 deductions and on deferral elections for 2027 pay. Then the 2027 limits arrive, and with them the chance to design benefits that keep your best people. Most One Big Beautiful Bill Act (OBBBA) provisions are now in force, so the rules are finally stable enough to plan around.
The short answer
Before December 31: lock 2027 NQDC deferral elections, accrue bonuses, place equipment in service, and time charitable gifts around the new floors. After year-end: a Cash Balance Plan can still be adopted for 2026 up to your tax-filing deadline, and a SERP, 401(k) mirror plan, phantom stock or split dollar arrangement can be in place for 2027.
Why October matters for owners and executives
October is National Retirement Security Month. For most employees that means checking their 401(k). For owners and key executives the problem is different: qualified plans cap what they can save, and the newest rules push more of it after-tax. Closing that gap is what executive benefits are for, and the fourth quarter is when the decisions get made.
The 2027 tax schedules at a glance
The IRS and the Social Security Administration publish official 2027 figures between mid-October and November. Until then, these are the leading projections.
| Tax schedules | 2026 | 2027 (projected) |
|---|---|---|
| 37% bracket begins (married filing jointly) | $768,700 | $793,650 |
| Standard deduction (joint) | $32,200 | $33,200 |
| §199A qualified business income threshold (joint) | $403,500 | $416,650 |
| §179 expensing limit | $2.56 million | $2.64 million |
| SALT deduction cap | $40,400 | $40,804 |
| Estate and gift tax exemption | $15.00 million | $15.48 million |
| Retirement and payroll limits | 2026 | 2027 (projected) |
|---|---|---|
| 401(k) employee deferral | $24,500 | $25,000–$25,500 |
| Catch-up, age 50+ / ages 60–63 | $8,000 / $11,250 | $8,000–$8,500 / $11,750 |
| Total defined contribution limit, §415(c) | $72,000 | $75,000 |
| Compensation cap, §401(a)(17) | $360,000 | $375,000 |
| Mandatory Roth catch-up wage test | $150,000 | $155,000 |
| Social Security wage base | $184,500 | $190,200 |
Projections: Wolters Kluwer and Bloomberg Tax (tax schedules), Milliman (retirement limits), Social Security Trustees (wage base). Official amounts may differ.
The number that matters most for executives is the §401(a)(17) compensation cap. Every dollar of pay above it earns no qualified-plan contribution, so the higher an executive’s salary, the smaller the share of income the 401(k) can replace.
What changed in deductibility
- 100% bonus depreciation is permanent, and §179 limits keep rising with inflation.
- Domestic research costs are expensed again instead of being amortized over five years.
- Charitable gifts have new floors. A corporation’s gifts count only above 1% of taxable income, and individuals who itemize lose the first 0.5% of AGI.
- Itemized deductions are worth at most 35 cents on the dollar for taxpayers in the 37% bracket.
- Roth catch-up is mandatory for employees whose prior-year FICA wages exceed the threshold, so the people you most want to keep lose pre-tax savings room.
- Public companies face a wider §162(m). The $1 million deduction cap now covers the whole controlled group, and from 2027 it adds the next five highest-paid employees.
Year-end tax planning checklist: before December 31
- Lock 2027 deferral elections. Under §409A, salary deferrals into a nonqualified plan generally must be elected before the year the pay is earned. See our 409A deferred compensation guide and the complete NQDC guide.
- Accrue year-end bonuses. Bonuses paid to non-owner employees by March 15 can generally be deducted in 2026. A Section 162 bonus plan can turn that bonus into a retention tool.
- Place equipment in service by December 31 to capture bonus depreciation and §179 this year.
- Time charitable gifts around the new floors. Bunching gifts or using a donor-advised fund can keep more of the deduction, and the $19,000 annual gift exclusion resets on January 1.
- Review key-person and COLI coverage, including the §101(j) notice-and-consent rules that must be met before a new policy is issued. Our COLI guide covers the details.
After year-end: programs to put in place for 2027
- Cash Balance Plan. A qualified plan can still be adopted and funded for 2026 up to the business’s tax-filing deadline, including extensions. Start with The How To Guide for Cash Balance Plans.
- SERP or 401(k) mirror plan. Restore what the compensation cap and the Roth catch-up rule take from top earners, with an employee-funded 401(k) mirror plan or an employer-funded version.
- Phantom stock or SARs. Give key people a stake in the growth they create without giving up equity. See Phantom Stock: Creating an Ownership Feel.
- Split dollar or REBA. Tax-efficient retirement income and protection for the executives you most want to keep. Our seven retention strategies compare the options.
- Fund the succession plan. Coordinate the buy-sell agreement, key-person coverage and the exit timeline with the exit planning checklist.
- Update payroll and plan documents as soon as the IRS and SSA publish the official 2027 limits.
Get the one-page October brief
The 2027 tables, the deductibility changes and both checklists on a single printable page, plus each month’s Executive Benefits Brief by email.
Frequently asked questions
When will the official 2027 tax brackets be released?
The IRS usually publishes its inflation adjustments in late October or early November. Retirement plan limits come in a separate IRS notice, and the Social Security wage base is announced by the SSA in mid-October.
What is the deadline to make 2027 deferral elections?
For salary, a nonqualified deferred compensation election generally must be made by December 31 of the year before the pay is earned. Performance-based bonuses and newly eligible participants follow different timing rules under §409A.
Can I still set up a Cash Balance Plan for 2026 after December 31?
Yes. A qualified plan adopted after year-end but before the business’s tax-filing deadline, including extensions, can be treated as adopted for the prior year, so 2026 contributions and deductions are still possible.
Why do highly paid executives need more than a 401(k)?
Qualified plans only count pay up to the §401(a)(17) cap, and the mandatory Roth catch-up rule moves part of their savings after-tax. A SERP, 401(k) mirror plan or split dollar arrangement fills the gap without the qualified-plan limits.
Start your year-end Perfect Plan® review
The Perfect Plan® starts with the goal and reverse-engineers the structure. In 30 minutes we can map your 2026 deadlines and the 2027 benefit design that fits your business. Book a meeting, call (610) 292-9330, or contact us. Past issues are in the Executive Benefits Brief archive.
Securities offered through Ridgeback Securities, Ltd, Member FINRA/SIPC. Schiff Executive Benefits is not affiliated with Ridgeback Securities, Ltd. This article is for general information only and is not tax, legal or investment advice. Consult your own tax and legal advisors. 2027 amounts are projections and may differ from official IRS and SSA figures.