What Is Open Enrollment?
Open enrollment is the annual window, typically in the fall for employer-sponsored benefits, during which employees can make changes to their health insurance, retirement contributions, and other workplace benefits for the upcoming year. Most changes cannot be made outside this window unless you experience a qualifying life event such as marriage, divorce, or the birth of a child.
It’s tempting to treat open enrollment as a healthcare-only task. But it’s also one of the best opportunities of the year to align your full financial picture, retirement savings, tax-advantaged accounts, beneficiary designations, and estate planning, with where you are today.
1. Review and Maximize Your Retirement Contributions
Does your employer offer a match?
The first question to answer is whether your employer matches contributions to your 401(k) or 403(b), and if so, how much. An employer match is essentially free money toward your retirement. If you’re not currently contributing enough to capture the full match, increasing your contribution to that threshold should be a top priority.
What are the contribution limits for 2025 and 2026?
The IRS raises contribution limits most years to keep pace with inflation. The current 2025 limit for employee 401(k) and 403(b) contributions is $23,500. According to the IRS, that limit increases to $24,500 for 2026, making now a good time to plan ahead and adjust your contribution rate accordingly.
Workers age 50 and older are eligible for catch-up contributions of $7,500 in 2025, rising to $8,000 in 2026. Thanks to the SECURE 2.0 Act, employees aged 60–63 qualify for an enhanced “super catch-up” of $11,250, a limit that holds for both 2025 and 2026, bringing their total potential contribution up to $35,750 in 2026.
Other retirement considerations
Open enrollment is also a natural checkpoint for reviewing the diversification and performance of your portfolio. A financial advisor can help you assess whether your current allocation still reflects your risk tolerance and timeline. If your other investments have performed well recently, this may also be a good time to consider increasing contributions to your tax-deferred accounts.
Take time to review all investment options your plan offers. It’s easy to overlook choices when you first enroll, and your circumstances may have changed since then.
2. Evaluate Your Healthcare Plan and Consider an HSA
Choosing the right health plan
Open enrollment is the time to honestly assess your and your family’s anticipated healthcare needs for the coming year. Consider factors such as expected medical procedures, prescription costs, whether your preferred doctors are in-network, and how much you’re likely to spend on out-of-pocket costs.
What is an HSA, and should you open one?
A Health Savings Account (HSA) is a tax-advantaged account that lets you set aside money for qualified medical expenses. If you’re generally in good health and your employer offers a qualifying High-Deductible Health Plan (HDHP), an HSA deserves serious consideration.
HSAs offer a rare triple tax advantage:
- Contributions are made pre-tax (or tax-deductible)
- The money grows tax-free
- Withdrawals for qualified medical expenses are tax-free
Any unused funds roll over year to year. There’s no “use it or lose it” rule. And once you reach age 65, you can withdraw HSA funds for any reason (non-medical withdrawals are subject to ordinary income tax, similar to a traditional IRA).
2025 and 2026 HSA contribution limits
The current 2025 HSA limits are $4,300 for self-only coverage and $8,550 for family coverage. According to IRS Publication 969, those limits rise to $4,400 and $8,750 respectively for 2026. Individuals age 55 and older can contribute an additional $1,000 as a catch-up contribution in either year.
Now in effect for 2026: Per the IRS, Bronze and Catastrophic health plans now qualify for HSA pairing, an expansion that opens HSA eligibility to more employees than before.
One important caveat
HSA-eligible plans come with higher deductibles. If you’re anticipating a significant medical expense or surgery in the near future, a lower-deductible plan may be more cost-effective despite the loss of HSA benefits.
3. Update Your Beneficiaries
Why beneficiary designations matter
When did you last update your beneficiaries? For most people, the answer is: when they first enrolled. Life changes, marriages, divorces, births, deaths, can make those designations outdated in ways that have serious financial consequences.
Open enrollment is a reliable annual prompt to review who is listed as the beneficiary on your 401(k), life insurance, and any other employer-sponsored accounts.
Beneficiaries supersede your will
This is one of the most commonly misunderstood aspects of estate planning: your listed beneficiaries take legal precedence over your will. If your will says one thing and your beneficiary designation says another, the beneficiary designation wins. Make sure both documents are aligned and reflect your current intentions.
Review your broader estate plan
Even without a major life change, open enrollment is a good time to look at your overall estate plan. If your children or heirs are in different income tax brackets, for example, dividing assets evenly may result in a disproportionate tax burden for higher-earning beneficiaries. An advisor can help you think through strategies to distribute assets more efficiently.
Frequently Asked Questions About Open Enrollment
Can I change my benefits outside of open enrollment? Generally, no, unless you experience a qualifying life event such as marriage, divorce, the birth or adoption of a child, or loss of other coverage.
What happens if I don’t do anything during open enrollment? Most employers will auto-renew your existing elections, but your coverage may not reflect recent changes in contribution limits, plan offerings, or your personal circumstances.
Should I contribute to a Roth or traditional 401(k)? The answer depends on your current versus anticipated future tax rate. A financial advisor can help you evaluate which option aligns better with your retirement strategy.
What’s the difference between an HSA and an FSA? Both are tax-advantaged accounts for medical expenses, but HSAs roll over indefinitely, are tied to HDHPs, and are portable. Flexible Spending Accounts (FSAs) are generally “use it or lose it” within the plan year and are not tied to a specific plan type.
The Bottom Line
Your annual open enrollment period is an opportunity to calibrate your entire financial picture. Think of it as your yearly financial checkup: a moment to review retirement contributions against updated IRS limits, make sure your health coverage matches your family’s needs, confirm your beneficiary designations are current, and ensure your benefits are working together toward your long-term goals.
A financial advisor at Barnum Financial can help you make the most of your open enrollment window and ensure your benefits elections are aligned with your financial and retirement goals.
