Severance Negotiation Saves $112K Tax for VP on $480K Package

A 56-year-old VP negotiated her severance package of $480,000 to save approximately $112,000 in taxes. Instead of taking the full amount in 2026, she structured her payments to receive $240,000 in both 2026 and 2027. This strategy allowed her to remain in the 35% tax bracket in 2026 and avoid moving into the higher 37% bracket. By deferring part of her severance, she also prepared for early access to her 401(k) without penalty under the rule of 55. Thus, she maximized her financial strategy during corporate restructuring.