Being a corporate executive means your financial planning goes beyond a quick quarterly review. With complex compensation packages, sophisticated investment portfolios, and growing demands both at work and home, you need a financial strategy that’s custom-built for you.
At Hancock Whitney, we understand that you're not just growing your wealth - you’re managing it with intention. Whether you’re preparing for retirement, navigating a liquidity event, or planning to pass wealth to the next generation, we’ve outlined nine key factors to help you create a financial plan that fits your unique circumstances.
Turning Company Stock into Long-Term Capital Gains: The Power of Net Unrealized Appreciation (NUA)
If you’re an executive with a lot of company stock in your 401(k), there’s a smart but lesser-known strategy called Net Unrealized Appreciation (NUA) that could save you a lot of money. Instead of selling the stock in your retirement plan, you can take it out as is. You’ll only pay regular income tax on what you originally paid for the shares (the cost basis), not its current full market value. Then, any growth in the stock’s value after that gets taxed at the lower long-term capital gains rate when you sell
For those approaching retirement or thinking about passing wealth to the next generation, understanding how and when to use NUA can dramatically cut your tax bill and boost what you keep after taxes.
Making the Most of Deferred Compensation Plans (NQDC)
Non-qualified deferred compensation (NQDC) plans are a great way to delay income and save on taxes, but they’re not without their quirks. You’ve got to decide when to defer your income, when you will get paid out, plus keep an eye on your company’s financial health, as that could affect your plan. It’s important to sync these choices with your overall tax and retirement strategy.
Also, these plans might affect other things like Roth conversions or your Medicare costs, making them an important part of your financial plan that deserves some extra attention.
For more information on how a (NQDC) works, read this post from The Hartford Business Owner’s Playbook.
Maximizing Equity Compensation: Restricted Stock & Stock Options
Equity compensation can be the biggest—and most complex—part of an executive’s pay. You’ve got to keep an eye on vesting schedules, deal with market ups and downs, and figure out the tax implications of competing strategies. For restricted stock, making an 83(b) election lets you pay taxes when the stock is granted, not when it vests, which could save you money if the stock’s value goes up. For incentive stock options, you need a smart plan for when to exercise and sell, tying it to your overall
income to avoid unexpected tax bills or issues with the Alternative Minimum Tax (AMT).
Going Beyond the 401(k): Additional Tax-Deferred Savings Options
Executives often max out their traditional retirement accounts like 401(k)s pretty quickly. But there are other strategies to keep saving with tax perks, like backdoor Roth IRAs, after-tax contributions that you can convert to Roth within your plan, or setting up a cash balance plan. These advanced strategies need careful planning but can really boost your tax-deferred savings potential when done correctly.
Smart Distribution Strategies: Making the Most of Retirement Income
Retirement isn’t the finish line for financial planning—it’s a new chapter. Many executives enter retirement with large tax-deferred accounts, which can lead to a required minimum distribution (RMD) problem later, potentially bumping you into higher tax brackets. By making smart moves in your early retirement years when your taxes might be lower, like taking qualified distributions, doing Roth conversions, or using Qualified Charitable Distributions (QCDs), you can keep your taxes more manageable over time and make your savings last longer.
• Qualified Charitable Distributions (QCDs): Once you reach age 70½, QCDs allow you to send money straight from your IRA to charity. This counts toward your RMDs and lowers your taxable income.
• Roth Conversions: In years when your income is low, you can move money from a traditional IRA to a Roth IRA. You’ll pay taxes now, but it cuts future RMDs and gives you tax-free income down the road. Learn more in our Insights blog, Is a Roth IRA Conversion Right for You?
• Qualified Distributions Before RMDs Begin: Strategically taking some money out before RMDs start (currently age 73–75) can reduce future RMD amounts and make room for Roth conversions.
Planning for Longevity with Qualified Longevity Annuity Contracts (QLACs)
A Qualified Longevity Annuity Contract (QLAC) is a smart option for executives worried about outliving their retirement savings. It provides income that kicks in later in life, giving you peace of mind. By setting aside part of your IRA or 401(k) into a QLAC, you can lower your RMDs and spread out your taxable income. This helps stretch your assets further, whether for your long-term needs or to pass on to the next generation.
Protecting Equity Compensation in the Event of Disability
What happens to your unvested equity compensation if you become disabled? For many executives, stock grants are a big part of future wealth, but they could be at risk without proper protection. It’s important to look at disability insurance with your stock compensation in mind. Tailored policies and employment agreements can help safeguard these assets, keeping you and your family secure.
Managing Stock Ownership Risk: Guidelines and Exit Strategies
If you’re an executive with a lot of your wealth tied up in company stock, you may be facing considerable market volatility. To protect your money, it’s smart to plan carefully, follow stock ownership rules, and diversify your investments. For those at public companies, a 10b5-1 plan is a great tool—it lets you set up automatic stock sales at specific times, so you can cash out smoothly without breaking insider trading rules or getting caught up in market emotions.
Protecting Your Legacy: Income Replacement and Family Security
As an executive, you’re not just focused on building wealth—you also want to make sure your family is covered if something unexpected happens. Permanent life insurance can be a great fit for high earners, especially when paired with an Irrevocable Life Insurance Trust (ILIT). Together, they can provide tax-free payouts to your loved ones, cover estate taxes, and help pass on wealth to future generations, all while keeping the insurance proceeds out of your taxable estate.
Partnering with a Financial Institution That Understands Complexity
At Hancock Whitney, we’re not just a bank—we’re a partner in your financial journey. We understand that executives like you face a unique set of challenges. Our wealth management professionals are here to craft personalized plans, all backed by the reliability of a trusted name. Whether you want to make the most of your compensation, plan for retirement, or create a lasting legacy for your family, we’re here
to guide you every step of the way.
If you're an existing Hancock Whitney client but haven't yet explored our wealth services yet, let’s change that. Let’s sit down and talk about how we can make your financial future clearer and more confident.
Please consult your tax professional.
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presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.
This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.
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