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Qmax

Maximizing the qualified funding of exclusive deferred compensation

Nonqualified deferred compensation plans have become enormously popular over the last decade - fueled primarily by restrictions on the amount that can be deferred under qualified plans. But these programs are not as attractive to either the Executive or the Company as tax-qualified funding. Our innovative Qmax™ program builds on the best aspects of both of these programs - but goes further by transforming nonqualified deferrals into qualified deferrals.This provides significant advantages for both the Executive and the Company.

From the Executive's perspective, qualified funding provides:

• Complete protection from company or personal bankruptcy
• Favorable tax treatment on distribution, including IRA rollover availability
• Reduced FICA taxes and, in some states, no State tax upon distribution

From the Company's perspective, qualified funding provides:

• Immediate tax deductions
• Tax-free earnings accumulations
• Improved income statement and balance sheet reporting

In a typical Qmax™ program, the Executive continues to make salary deferral elections under the existing deferred compensation plan. The deferrals are placed into a special arrangement that includes both a qualified and nonqualified element. Each year, based on a number of factors, it is determined what portion of the Executive's past and present deferrals can be apportioned to the special qualified part of the plan.