US Salary Investment Plan Summary Plan Description

Transcription

1 Reed Elsevier Inc. US Salary Investment Plan Summary Plan Description Effective January 1, 2011 This booklet has been written to help you understand the key provisions of the Reed Elsevier US Salary Investment Plan. It does not contain all the details of the Plan, but these can be found in the official Plan document. In case of conflict between the contents of this booklet and the official Plan document, the latter governs the Plan and will always prevail. The Company reserves the right to amend, modify or terminate the Plan at any time. This booklet does not create a contract of employment between Reed Elsevier Inc. (or its participating affiliate companies) and any employee.

2 TABLE OF CONTENTS Page INTRODUCTION... 1 THE RE 401(K) WEBSITE.. 2 THE PLAN AT A GLANCE. 3 PARTICIPATION.. 6 ENROLLMENT.. 7 CONTRIBUTIONS TO RE 401(K). 8 CHANGING YOUR CONTRIBUTIONS. 12 VESTING 13 RE 401(K) INVESTMENT OPTIONS. 14 ING ADVISOR SERVICE 17 ERISA COMPLIANCE. 18 CHANGING YOUR INVESTMENTS. 20 TRADING RESTRICTIONS LOANS 21 IN-SERVICE WITHDRAWALS PAYMENTS FROM RE 401(K).. 26 SPECIAL TAX RULES 28 MANAGING YOUR RE 401(K) ACCOUNT. 31 YOU AND YOUR BENEFITS. 34 ADMINISTRATIVE INFORMATION.. 35 YOUR RIGHTS UNDER ERISA. 38

3 INTRODUCTION Reed Elsevier Inc. ( the Company ) has established the Reed Elsevier US Salary Investment Plan (called the RE 401(k) or the Plan ) to help you build a financially secure future. The RE 401(k) offers an easy way for employees to take charge of their future retirement savings. Its valuable features include: Eligibility is immediate (prior to January 1, 2011, participation commenced after three months of service) Convenient savings through payroll deductions A choice of before-tax, traditional after-tax or Roth 401(k) after-tax contributions or a combination of the three options Valuable tax advantages Company matching contributions A wide range of investment options Access to your account 24 hours a day - 7 days a week - - through the RE 401(k) website: and the RE 401(k) Information Line: This booklet is called a Summary Plan Description. It explains the provisions of the RE 401(k) and how the Plan can help you achieve your financial goals for retirement. 1

4 THE RE 401(k) WEBSITE You can open and manage your RE 401(k) Account through the RE 401(k) website at The website provides detailed information on topics such as: Joining the Plan Changing your PIN/Online PIN Reset Contributing to the Plan Accessing your Account Vesting Information Company Matching Contributions Changing Plan Options Investment Options Loans Requesting Forms Payment Options When Leaving the Company Withdrawals Keeping Track of Your Account Fees Statements on-demand All Plan Highlights IMPORTANT TELEPHONE NUMBERS The RE 401(k) Information Line: The RE 401(k) Information Line offers valuable telephone services. You may: enroll in the RE 401(k); change your investments; get up-to-date account balances; change your PIN; initiate a loan or withdrawal; request a final distribution; and/or speak to a Customer Service Representative. The RE 401(k) Information Line provides: Automated telephone service - available 24 hours a day, 7 days a week. Customer Service Representatives - available 8:00 am to 6:00 p.m. Eastern Time Monday-Friday (except stock market holidays). Hearing impaired service phone number Your PIN is required to access the website or the Information Line. If you lose your PIN, please call Self-Managed Account (SMA) State Street Global Markets: Website: Licensed Registered Representatives are available to execute securities trades 8:30 a.m. to 5:00 p.m. Eastern Time, Monday-Friday (except stock market holidays). You will receive a separate Brokerage User ID and PIN which you will need for all SMA transactions. 2

5 THE PLAN AT A GLANCE Participation PLAN FEATURE How Much You Can Save How Much the Company Contributes (depends upon whether you are eligible for active pension plan participation) HIGHLIGHTS Enrollment in the Plan is not automatic. Eligible employees may join the Plan immediately after hire by calling the RE 401(k) Information Line at or by logging on to the RE 401(k) website and electing to contribute to the Plan. You can save from 1% to 75% of your pay through convenient payroll deductions, subject to certain IRS limits. (See page 10 for more information.) Those Eligible for Pension Plan Pay Credits. The Company matches $.50 for every dollar you contribute up to the first 6% of your pay (results in a 3% match if you contribute 6% or more of your pay) Those Hired On Or After August 1, 2009 or Not Eligible for Pension Plan Pay Credits. The Company matches: $1.00 for every dollar you contribute up to the first 5% of your pay if you have less than three years of service (results in a 5% match if you contribute 5% or more of your pay); $1.00 for every dollar you contribute up to the first 5% of your pay and $2.00 for any additional dollars you contribute up to an additional 1% of your pay, if you have 3 to 6 years of service (results in a 7% match if you contribute 6% or more of your pay); $1.00 for every dollar you contribute up to the first 5% of your pay and $2.00 for any additional dollars you contribute up to an additional 2% of your pay, if you have 7 or more years of service (results in a 9% match if you contribute 7% or more of your pay) 3

6 THE PLAN AT A GLANCE How to Manage Your Account Call the RE 401(k) Information Line at: or log on to the website at: The Information Line and the website can be accessed 24 hours a day 7 days a week. You can transact Plan changes, request forms, check your account balances and ask questions relating to the RE 401(k). A quarterly statement is also available to RE 401(k) participants reporting current Plan elections and account balances. On-demand statements are available on the RE 401(k) website at any time. Valuable Tax Advantages Before-tax savings reduce your taxable income. Also, you pay no taxes on Company matching contributions or gains from investments while the money remains in the Plan. Traditional after-tax contributions are taxed at the time of contribution, and then any earnings on those contributions are taxed at the time of distribution. Roth 401(k) after-tax contributions offer tax benefits on the back-end with qualified withdrawals that are tax-free. The RE 401(k) offers a wide range of How Your Contributions and the Company investment options including: Matching Contributions are Invested 12 Core Funds 10 Target Retirement Funds A Self-Managed Account (SMA) that allows you to invest a portion of your RE 401(k) account in stocks, bonds and mutual funds. The ING Advisor Service which provides access to personalized investment advice and recommendations across all the core funds in the Plan. You may borrow money from your Plan Loans account while you are employed, unless you already have two or more loans outstanding. There are two types of loans: a Standard Loan and a Primary Residence Loan. You pay back the loan and the interest on the loan to your 401(k) Plan account through payroll deductions. You may withdraw certain funds from the Plan Withdrawals While You are still Employed while actively employed. There are two types of withdrawals: Non-Hardship Withdrawals and Hardship Withdrawals. 4

7 THE PLAN AT A GLANCE How Vesting Works Payments When You Leave the Company Vesting refers to your right to all or part of the value of your Plan account. You are always 100% vested in the value of your own 401(k) Plan contributions (including rollover contributions) and any earnings on those contributions. If you are hired on or after January 1, 2004, you will be 100% vested in the Company matching contributions and any earnings on those contributions after completing three years of vesting service. * *Employees hired prior to January 1, 2004 will be 100% vested in the Company matching contributions after completing one year of vesting service. If you leave the Company due to normal retirement (i.e., age 65), death or disability, the full value of your 401(k) Plan account will be available to you, your beneficiary or estate. If you terminate employment, the vested portion of your account will be available to you. The unvested portion of your account will be forfeited. 5

8 PARTICIPATION ELIGIBILITY Employees (both full-time and part-time) of Reed Elsevier Inc. or an affiliated company participating in the RE 401(k) are eligible to join the Plan immediately following hire by electing to contribute to the Plan. You are not eligible to participate in this plan if you are: A leased or contract employee Covered by a collective bargaining agreement between the Company and a union (unless the agreement specifically provides for your participation in the 401(k) Plan) A nonresident alien who receives no earned income from the Company An at-home employee of Reed Technology and Information Services, Inc. An employee who is paid on a per diem basis or is paid on an hourly project basis, or is hired for a period of fixed duration not exceeding nine months If you are a leased or contract employee and you are retroactively reclassified as a regular employee of a participating Reed Elsevier company, you will not be eligible to participate in the Plan for the retroactive period. Transferred Employees If you are transferred to work with a group of employees of Reed Elsevier Inc. (or one of its affiliates) that is not covered by the RE 401(k), your Plan account balances at the time of your transfer will continue to be held in the Plan, and you will continue to have all the rights of a Participant. However, you cannot make contributions to the Plan during this time. If you are making loan payments to the Plan, those payments will continue to be made through payroll deductions and will be credited to your Plan account. If you later transfer to a group of employees that is covered by the RE 401(k), you may again begin making contributions to Plan. Rehired Employees If you terminate employment after you become eligible to participate in the RE 401(k) and are later rehired as a eligible employee, you may resume Plan participation by electing to contribute to the Plan. Your eligibility for Company matching contributions will be determined in accordance with the criteria outlined on page 9. Rehired employees with an original hire date prior to January 1, 2004 are 100% vested after one year of service. Note: You are not considered to have terminated employment if you are transferred to a company that is owned or controlled by, or under common control with, Reed Elsevier Inc. 6

9 ENROLLMENT Eligible employees will no longer be automatically enrolled under the Plan on or after January 1, However, if you were previously automatically enrolled, you will remain enrolled in the Plan at a 2% contribution level unless and until you elect otherwise. You may enroll in the Plan and commence making before-tax, traditional after-tax, or Roth 401(k) after-tax contributions (or a combination of the three options) by calling the RE 401(k) Information Line at: or logging on to the website at: You can enroll at the level that best suits your savings and investment objectives (in 1% increments to a maximum of 75% of pay). The Company will participate by matching your contributions. See the Company Matching Contribution section below for more details. Upon enrollment, you will also have the opportunity to elect how your contributions (and corresponding Company matching contributions) are invested. If you fail to make an investment election your contributions and the Company matching contributions will be invested in the appropriate Target Retirement Fund based on your year of birth and assuming retirement at age 65*. At any time after initial enrollment in the RE 401(k) you may choose to change your contributions to the Plan and/or change your fund allocation(s) by calling the RE 401(k) Information Line or by logging on to the RE 401(k) website. Refer to the Information Kit, PIN and a welcome letter you received upon hire. The Kit includes important information about the Plan, including the enrollment process. Once you are participating in the RE 401(k), you can change or stop your contributions and change your investment options at any time by calling the RE 401(k) Information Line or logging on to the RE 401(k) website. Please see the Changing Your Contributions and Changing Your Investments sections in this booklet. Note: Highly compensated employees (generally, for 2011, someone who made over $110,000) may be limited in the amount of contributions they may make. For instance, for 2011, highly compensated employees may not contribute more than 10% of compensation as a traditional after-tax contribution. The limit may change as to type of contribution and/or amount from year to year. Call the RE 401(k) Information Line or log on to the RE 401(k) website Inc for updated information.. When You Make Changes You can use the website or the RE 401(k) Information Line to choose: How much of your eligible compensation you want to contribute (your payroll deductions); Whether you want to contribute on a before-tax, traditional after-tax and/or Roth 401(k) after-tax basis; Where to invest your contributions; and How much of your eligible pay (in 1% increments) you want to invest in each of your investment options. Your contributions are deducted from your paycheck each pay period and invested in the options you choose. You may change your investment options and contribution levels by logging in to the website or calling the RE 401(k) Information Line. If you fail to make an investment choice, your contributions will automatically be invested in the appropriate Target Retirement Fund based on your year of birth and assuming retirement at age 65.* *Since investment return and principal value of this fund will likely fluctuate, there is the possibility of incurring losses as well as gains. Each RE 401(k) participant is responsible for any investment gains or losses in his/her account. You should periodically carefully review all your Plan choices and tailor them to your personal savings goals. 7

10 CONTRIBUTIONS TO THE RE 401(k) The RE 401(k) offers participants the opportunity to save between 1% and 75%* of their pay, in 1% increments, on a before-tax basis, traditional after-tax or Roth 401(k) after-tax basis, or a combination of all three. BEFORE-TAX CONTRIBUTIONS If you save on a before-tax basis, your contributions are deducted from your gross pay each pay period before any federal and, in most instances, state or local taxes are withheld. Before-tax contributions reduce your current income taxes because they lower your taxable income. In addition, you will not have to pay income tax on these contributions until you receive a distribution from the RE 401(k). Your before-tax contributions are subject to Social Security (FICA) taxes. TRADITIONAL AFTER-TAX CONTRIBUTIONS After-tax contributions are deducted from your pay after all taxes have been withheld. Although after-tax contributions do not reduce your taxable income, they are more readily available for withdrawal during your active employment. These contributions also share fully on a taxdeferred basis in any gains from your investment fund choices. After-tax contributions are not taxed again when they are withdrawn from the Plan only the earnings on these contributions will be taxed at that time. ROTH 401(K) AFTER-TAX CONTRIBUTIONS Roth 401(k) after-tax contributions are designed to give participants increased tax-planning flexibility by combining some features of Roth IRAs and 401(k) Plans. Roth contributions are made on an after-tax basis and are included in current taxable income. Unlike before-tax and after-tax contributions, earnings are tax free if they are part of a qualified distribution. A qualified distribution is one that is taken at least 5 tax years from the year of your first Roth 401(k) after-tax contribution and after you have attained age 59 ½, become disabled or die. You may contribute to both the traditional pre-tax and Roth option as long as you do not exceed the total IRS contribution limit for that year. In 2011, the combined IRS contribution limit for both Roth and traditional pre-tax contributions is $16,500. OR A COMBINATION You may elect to make your Plan contributions in a combination of all three options - before-tax, traditional after-tax or Roth 401(k) after-tax. The total of your contributions cannot be more than 75%* of your pay. In any case, investment growth on either before-tax, traditional after-tax or Roth 401(k) after-tax savings accumulates tax-free until the funds are paid out of your RE 401(k) Account. *IRS rules may further limit the total annual contributions certain highly compensated employees may be eligible to have credited to the RE 401(k) Plan and, under certain circumstances, a highly compensated employee may have his or her individual contribution and/or matching contribution limited for a given year. You will be notified if these limitations apply to you. 8

11 COMPANY MATCHING CONTRIBUTIONS To encourage you to save and help you accumulate additional funds for retirement, the Company contributes to your Plan account as determined below. Legacy Match - If you are an active participant in the Reed Elsevier US Retirement Plan. Enhanced Match - If you fall under any one of the following categories: you were hired on or after August 1, 2009; you were rehired on or after August 1, 2010*; you opted out of continued eligibility for the Reed Elsevier US Retirement Plan under the Choice Program; or you are otherwise not eligible for active participation in the Reed Elsevier US Retirement Plan. *Not applicable to disabled participants who upon rehire are eligible to recommence Reed Elsevier US Retirement Plan participation. The Company matches $.50 for every dollar you contribute up to the first 6% of your pay (results in a 3% match if you contribute 6% or more of your pay) For example, if you earn $2, biweekly and contribute 6% to the Plan ($120.00) each pay period, the Company will add $60.00 to your RE 401(k) Account each pay period whether your contributions are on a before-tax, traditional after-tax or Roth 401(k) after-tax basis. The Company matches: $1.00 for every dollar you contribute up to the first 5% of your pay if you have less than three years of matching contribution service (results in a 5% match if you contribute 5% or more of your pay); $1.00 for every dollar you contribute up to the first 5% of your pay and $2.00 for any additional dollars you contribute up to an additional 1% of your pay, if you have 3 to 6 years of matching contribution service (results in a 7% match if you contribute 6% or more of your pay); or $1.00 for every dollar you contribute up to the first 5% of your pay and $2.00 for additional dollars you contribute up to an additional 2% of your pay, if have 7 or more years of matching contribution service (results in a 9% match if you contribute 7% or more of your pay). For example, if you earn $2, biweekly, have 4 years of matching contribution service, and contribute 6% to the Plan ($120.00) each pay period, the Company will add $ to your RE 401(k) Account each pay period whether your contributions are on a before-tax, traditional after-tax or Roth 401(k) after-tax basis. Important notes: Calculation of the annual Company matching contribution may not include compensation in excess of the IRS annual compensation limit for the year ($245,000 for 2011). This limitation is subject to adjustment in future years to reflect cost of living increases. 9

12 COMPANY MATCHING CONTRIBUTION TRUE-UP The True-up feature is an adjustment made to your RE 401(k) account to ensure that you receive the full Company match attributable to your total Plan contributions for the year. Since Company matching contributions for a pay period do not apply to employee contributions that exceed the maximum contribution percentage taken into account under the formula applicable to you, there are circumstances when you may not receive the maximum Company matching contribution for the year. This may occur if: You contribute at a rate above your formula s maximum contribution percentage and reach the IRS annual contribution limit ($16,500 for 2011); or You contribute at a rate below your formula s maximum contribution percentage for part of the year and above that percentage for part of the year; or You begin participating in the Plan other than at the beginning of the year. To qualify for the true-up, You must be an active employee of a Reed Elsevier company on the last day of the year; and Did not receive the maximum match under the formula applicable to you based upon your contributions for the year. If you otherwise qualify for a year end true-up, Reed Elsevier will compare the Company Matching Contributions you were credited for the year to the maximum contributions available to you for the year based upon your total contributions for the year and credit your plan account with any shortfall. Any additional contribution for a plan year resulting from this true-up process will be made to your account in the following year. HOW MUCH YOU CAN CONTRIBUTE The IRS sets limits on the amount of before tax and Roth 401(k) after-tax contributions that can be made in a calendar year. For 2011, the maximum combined before-tax and Roth 401(k) aftertax contributions was $16,500. Employees who participate in more than one 401(k) Plan in the same calendar year must not contribute more than $16,500 in before-tax and/or Roth 401(k) after-tax contributions to the Plan(s), combined. This limitation is subject to adjustment for inflation in future years $15, $16, $16, $16, (and after, indexed for inflation) CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 AND OVER Employees who will be at least age 50 by the last day of a calendar year may make additional contributions to the Plan if they have already contributed the maximum allowed. Catch-up contributions can be made on either a before-tax or Roth 401(k) after-tax basis. The amount of additional savings allowed for 2011 is $5,500. This limitation will be adjusted for inflation in future years. 10

13 BEFORE-TAX VERSUS AFTER-TAX CONTRIBUTIONS The following example shows the advantages of saving with before-tax dollars versus after-tax dollars. Let s assume your annual compensation is $35,000 and you elect to save 6% or $2,100/year. Before-tax Savings After-tax Savings Annual Compensation $35,000 $35,000 Before-tax Savings 2,100 0 Taxable Income 32,900 35,000 Estimated Federal Income Tax 3,231 3,546 Balance 29,669 31,454 After-tax Savings 0 2,100 Take Home Pay $29,669 $29,354 This example assumes a single employee earning $35,000 with no itemized deductions and is based on the 2010 tax tables. State and local taxes are not included. Note that there may be special considerations for contributing on a traditional after-tax basis of a Roth 401(k) after-tax basis, and you should review with your tax advisor whether either of these options is appropriate for you. TAX SAVER S CREDIT Additional tax incentives are available to individuals in certain income tax brackets. In addition to the taxes you save with each paycheck, there is an additional tax credit in the form of a retirement savings contribution credit (see Internal Revenue Service Form 8880 for more details regarding this credit) available at the time you file your tax return and is based on your adjusted gross income. This additional incentive only applies to the first $2,000 of before-tax savings you make in a tax year and is as follows: ADJUSTED GROSS INCOME Credit Single Filers Head of Household Joint Filers 50% of Contribution 0 $15,500 0 $23, $31,000 20% of Contribution $15,500 $17,000 $23,250 $25,500 $31,000 - $34,000 10% of Contribution $17,000 $26,000 $25,500 $39,000 $34,000 - $52,000 Credit not available More than $26,000 More than $39,000 more than $52,000 The credit is reduced by certain distributions received from 401(k) plans, Individual Retirement Accounts and certain other plans during the tax year and may include any similar distributions to your spouse. 11

14 ABOUT COMPENSATION Under the RE 401(k), you elect to contribute a certain percent of your pay. For the purposes of this Plan, Pay is defined as the amount paid to you under the payroll system before deductions to the RE 401(k), to a Section 125 plan (also known as a cafeteria plan) or a qualified transportation fringe benefit plan are withheld. However, it does not include: tuition reimbursement, moving expenses, car allowances, commutation allowances, severance payments made in a lump sum or periodically, Yes and other cash awards, flex cash amounts, signing and completion/termination bonuses, expense allowances or reimbursements, executive non-qualified deferred compensation, and Long-term Incentive Plan payments. Otherwise includable pay must be paid as part of, or prior to, the payroll that includes your severance from employment date to be considered eligible pay. The IRS limits the maximum compensation that may be recognized by the Plan. The limit for 2011 is $245,000, which is subject to adjustment in future years to reflect cost of living adjustments. Any compensation earned above this limit is ineligible for all contributions to an IRS-qualified 401(k) plan, like the RE 401(k). Once your RE 401(k) eligible pay for the year has reached the IRS compensation limit, all contributions to the RE 401(k) will stop even if you have not contributed the maximum before-tax or catch-up contributions permitted for the year. ROLLOVERS INTO RE 401(K) You may roll over the qualified taxable lump sum distribution you receive from another IRS 401(k) or certain other tax-qualified plans into your RE 401(k) account, provided you are considered to be a RE 401(k) eligible employee. If you elect to roll over your distribution into the RE 401(k), you may use the website or call the RE 401(k) Information Line to determine if the rollover can be accepted by the Plan and, if so, to request a Rollover Contribution Form and instructions about completing the rollover transaction. Only checks will be accepted. Shares of stock cannot be accepted nor can rollovers be accepted from any non-qualified plan. Please consult your personal tax advisor to make sure you understand the consequences of making a rollover contribution to the RE 401(k). CHANGING YOUR CONTRIBUTIONS You may change your payroll contribution percentages at any time by logging on to the RE 401(k) website or calling the RE 401(k) Information Line. The change will be reflected in your paycheck as soon as administratively practical. For example, if you log on or call on January 14th, the change would normally be effective in your January 31st paycheck. Participating After You Have Stopped Your Contributions If you have stopped contributing to the RE 401(k) and want to begin contributing again, you may do so by logging on to the website or calling the RE 401(k) Information Line. Your contributions (payroll deductions) will begin again as soon as administratively possible. Contribution Rate Escalator Through the RE 401(k) website, the Contribution Rate Escalator allows you to automatically increase your contributions on a specific date in the future. You elect a target contribution percentage, select the frequency of each increase and choose the start date. You can discontinue this feature at any time. 12

15 VESTING Vesting means your right to the money in your RE 401(k) Account. You are always 100% vested in the value of your own contributions and your rollover contributions (if any) to the RE 401(k). You become 100% vested in the value of the Company matching contributions after completing three years of vesting service*. You also become 100% vested in the value of the Company matching contributions if you attain age 65, become permanently disabled or die while in active service with the Company. *Employees hired prior to January 1, 2004 become 100% vested in the Company matching contributions after the completion of one year of vesting service. SERVICE Service is important because it is used to determine whether you are vested (vesting service) in Company matching contributions as well as the level of matching contributions (matching contribution service) under the enhanced matching contribution formula. In general, service refers to your period of employment as an employee of Reed Elsevier Inc. or one of the Reed Elsevier Inc. affiliated companies. A year of vesting service and matching contribution service is based upon each 12-month period of employment between your date of hire and your Separation from Service date. Your Separation from Service date is the earlier of the date you quit, retire, are discharged or die, or the first anniversary of the first day you were absent from the Company for any other reason, such as sickness, layoff or leave of absence. Matching contribution service, however, does not include periods during which you are not eligible for Plan participation (such as periods following termination of employment). Service is also important in determining Plan eligibility for part-time employees. If you are or have been a part-time employee, a year of eligibility service with respect to periods prior to January 1, 2004 is the 12-month period beginning with your date of hire if you complete at least 1,000 hours of service during that period. If you have fewer than 1,000 hours of service during this first 12- month period, you will need at least 1,000 hours of service in a calendar year to be credited with a year of eligibility service. An hour of service is each hour you are paid (or entitled to be paid) by the Company for: your work; vacation, holidays, illness, incapacity, disability, layoff, jury duty, military duty and approved leaves of absence, but only for up to 501 hours for any period in which you are not working; and back pay that is awarded to you or agreed to by the Company. If you became an employee of Reed Elsevier Inc. or one of its affiliated companies as a result of a merger or acquisition, the applicable acquisition agreement or action by the Reed Elsevier Inc. Board of Directors, if any, will govern the crediting of your service. Years of matching contribution service for purposes determine credits for legacy ChoicePoint employees includes only service since the later of September 19, 2008 (the date ChoicePoint was acquired by Reed Elsevier), or date of hire. ADMINSTRATIVE FEES Administrative fees cover the cost of operating the Plan, including recordkeeping and trustee expenses, the Plan website and Information Line, participant communications and outside legal advice, among other operational functions. Plan administrative fees are charged against participant accounts on a monthly basis in the amount of $4.00 each month. 13

16 RE 401(k) INVESTMENT OPTIONS The RE 401(k) Plan offers you four different ways to invest your retirement savings depending on your level of investment experience and how hands-on you want to be in managing your money. Here s a look at your four investment tiers, listed in order from most hands-off to most hands-on: TIER ONE - Target Retirement Date Funds The ten target retirement date funds are managed by BlackRock, one of the world s preeminent investment managers. Each target retirement date fund is a broadly diversified mix of passively managed funds across multiple asset classes that seeks to maximize total return with a risk level that is considered appropriate for the specific time horizon indicated by the target year in the fund s name. Every year, the fund s asset mix is adjusted to gradually get more conservative generally by a reduction in stocks and a corresponding increase in bonds as the target year approaches. You can choose from ten target retirement date funds: BlackRock LifePath Index Retirement Fund - For participants who are close to or already retired. BlackRock LifePath Index 2015 Fund - For participants who expect to retire between 2013 and BlackRock LifePath Index 2020 Fund - For participants who expect to retire between 2018 and BlackRock LifePath Index 2025 Fund - For participants who expect to retire between 2023 and BlackRock LifePath Index 2030 Fund - For participants who expect to retire between 2028 and BlackRock LifePath Index 2035 Fund - For participants who expect to retire between 2033 and BlackRock LifePath Index 2040 Fund - For participants who expect to retire between 2038 and BlackRock LifePath Index 2045 Fund - For participants who expect to retire between 2043 and BlackRock LifePath Index 2050 Fund - For participants who expect to retire between 2048 and BlackRock LifePath Index 2055 Fund - For participants who expect to retire between 2053 and TIER TWO - Low-cost index funds Index funds are designed to simply mirror, as closely as possible, the performance of broad market indexes and offer broad diversification within an asset class. Together, these four funds provide you a simple, low-cost and efficient way to build a diversified portfolio across the major stock and bond asset classes. You can choose from four low-cost index funds: BlackRock US Debt Bonds Index Fund - Seeks to match the performance of the Barclays Capital Aggregate Bond Index by investing in a diversified sample of the bonds that make up the index. BlackRock Russell 1000 Index Fund - Seeks to match the performance of the Russell 1000 Index by investing in stocks that make up the index. BlackRock Russell 2000 Index Fund - Seeks to match the performance of the Russell 2000 Index by investing in a diversified sample of the stocks that make up the index. 14

17 BlackRock MSCI ACWI ex-us Index Fund - Seeks to match the performance of the MSCI ACWI ex-us Index by investing in stocks that make up the index. TIER THREE - Actively-managed funds The portfolio managers of actively-managed funds attempt to outperform market indexes by actively researching and then buying and selling individual securities. These funds may or may not outperform their respective market indexes. You can choose from eight actively-managed funds, listed below in order from lowest to highest risk: BlackRock Money Market Fund - Seeks to provide interest income and stability by investing in high quality, short-term debt issues known as money market instruments, including those issued by the US government and its agencies, corporations and banks, among others. PIMCO Global Bond Fund - Seeks maximum total return consistent with preservation of capital and prudent investment management. Invests in both US and non-us high quality intermediate-term bonds. Domini Social Equity Fund - Seeks long-term total return by investing in mid-cap and large cap US companies that meet Domini Social Investments social and environmental standards. Wellington Opportunistic Core Fund - Seeks to provide long-term total return in excess of the Russell 1000 Index the by investing in high-quality, established companies of all sizes with good balance sheets, strong management teams, and market leadership in their industry. DFA US Small Cap Portfolio - Seeks long-term capital appreciation by investing in a broad cross-section of US small companies with market capitalizations within the smallest 10% of the total US market universe. American Funds New Perspective Fund - Seeks long-term growth of capital. Future income is a secondary objective. The fund invests in blue chip companies in the United States and abroad, emphasizing multinational or global companies and focusing on opportunities generated by changes in global trade patterns and economic and political relationships. Thornburg International Equity Fund - Seeks long-term capital appreciation by investing in non-us equities of all types. The portfolio is diversified to include basic value stocks, stocks of companies with consistent earnings characteristics and stocks of emerging franchises. Templeton International Smaller Companies Fund - Seeks long-term growth of capital. The fund normally invests at least 80% of net assets in equity securities of smaller companies located outside the US, including emerging markets. It invests in companies that have a market capitalization of $2 billion or less at the time of initial purchase. TIER FOUR - Self-Managed Account (SMA) If you are an experienced investor who is comfortable researching and selecting your own investments, the Self-Managed Account (SMA) gives you access to bonds, ETFs, and publicly-traded stocks on major U.S. exchanges along with thousands of mutual funds. The SMA works just like a discount brokerage account. It is being offered by State Street Global Markets, a wholly owned subsidiary of State Street Bank and Trust Company (SSB). The SMA allows you to invest a portion of your RE 401(k) Account in individual stocks, bonds and mutual funds. It is more of a "hands-on" option because you must select individual securities, make trading decisions and "manage" your own account. 15

18 Risks of the Self-Managed Account All investments in the Self-Managed Account are made upon your direction and at your own risk. State Street Bank, State Street Global Markets, Reed Elsevier Inc. and its affiliates cannot give you financial or investment advice concerning your selections. The Self-Managed Account requires knowledge of the securities markets and a willingness to take more direct responsibility for your investments, including any risk of negative results. Securities purchased through the Self-Managed Account, including mutual funds, are not bank deposits and are not insured by the FDIC, State Street Bank, or SSBSI. Funds and other investments can fluctuate in value and the price at which you redeem or sell the investment may be more or less than the price that you paid. Opening a Self-Managed Account To open a Self-Managed Account please log on to the website or call the RE 401(k) Information Line for an application form. An initial minimum transfer of $1,750 into the SMA is required. You can transfer up to a maximum of 95% of your vested RE 401(k) account value, excluding the value of your Roth 401(k) after-tax contributions. Transferring Money into the Self-Managed Account You may transfer money only from your RE 401(k) Core Investment Funds into your SMA. You may not transfer more than 95% of your RE 401(K) Core Investment Funds, excluding the value of your Roth 401(k) after-tax. After the initial transfer, the minimum transfer amount is $500. You have the option of specifying those Core Investment Funds from which you want to transfer money. In order to transfer funds from your Core Investment Funds to your SMA, you must first call the RE 401(k) Information Line at Placing Transactions within Your SMA After your SMA has been opened and your transferred money has been invested in the SSgA Money Market Fund, you may place stock or mutual fund trades by: logging on to calling State Street Global Markets directly at calling the RE 401(k) Information Line at and selecting the SMA option. You will receive a separate Brokerage User ID and PIN which you will need for all SMA transactions. SMA - Commissions and Fees When you purchase and sell stocks, bonds and mutual funds within your SMA, you will incur a commission charge or a service fee (unless you are purchasing no-load, no-transaction-fee funds). These fees are either added to or subtracted from the funds that you are investing in within the SMA and will be shown on your trade confirmation. For more detailed information about SMA commissions and fees, please refer to the SMA brochure or call the RE 401(k) Information Line. The Self-Managed Account is not for everyone because of the risk factors involved with investing on your own. Please make sure you carefully review the material and understand the many provisions of the SMA. All of your questions should be resolved before you open a Self-Managed Account. 16

19 For the current fund line-up, or if you have any questions about the investment funds in the Plan, please review the Fund Fact Sheets, Fund Matrix and the prospectus(es) or call the RE 401(k) Information Line. There are certain investment management fees associated with the above investment options. The fees vary by fund and change from time to time. A current fee schedule can be obtained at the website or through the Information Line. ING ADVISOR SERVICE The ING Advisor Service offers you access to account management and personalized objective investment advice that can assist you in making investment decisions, determining savings goals, or simply starting a savings strategy. Through the ING Advisor Service, powered by Financial Engines, you ll receive: Expert, professional retirement planning advice Personalized reports Ongoing support Optional account management There are two ways to access the ING Advisor Service: The Personal Online Advisor provides 24/7 access to the Financial Engines retirement planning software. After connecting to the Online Advisor through the RE 401(k) website, you can follow the simple instructions at your own pace. You will be prompted to enter information such as retirement age and savings, including investments outside the plan. The advisor software will display your retirement forecast and provide investment and savings recommendations that can help you meet your financial goals. Use interactive tools to see how changes to risk, contributions or retirement age can affect your financial outlook. When you find a strategy you like, access the Advice Action Kit for instructions to make changes to your plan account. If you have questions about the advice you receive, you can call an Investment Advisor at Personal Online Advisor Fee There is no fee for this tool. The Professional Account Manager offers access to ING Financial Advisors who will provide a comprehensive retirement plan and ongoing management for your RE 401(k) account. Your Advisor will help you set retirement goals, assess your progress toward those goals, and suggest changes designed to improve the chances of meeting those goals. Your Advisor can manage your contributions, rebalance your account, keep your portfolio allocation updated and make risk adjustments over time as your retirement age nears. The Professional Account Manager will provide you with these additional features: Progress Reports a quarterly report will be mailed to you that keeps you informed about your Forecast. Automatic Reoptimization your allocations will be continually monitored and your investments will change to stay in line with what is happening in the market. Personal Proposals provides you with a summary of your discussion with your ING Financial Advisor, and includes recommendations on improving your retirement strategy. Periodic Reviews schedule a meeting anytime by phone to review your account with your ING Financial Advisor by calling the RE 401(k) Information Line at ING Financial Advisors ING s Investment Advisor Representatives are licensed and trained. Their qualifications include Series 6 (Registered Representative), Series 63 (State Securities Representative), and Series 65 (Investment Advisor Representative) registration examinations; College for Financial Planning Chartered Mutual Fund CounselorSM and Retirement Planning 17

20 CounselorSM professional designations. Professional Account Manager Fee Your initial advice consultation is free. If you decide to enroll in the Professional Account Manager program, you will be charged an additional annual fee of 0.35% of your entire RE 401(k) account balance ($35 per year for every $10,000 of account value up to $50,000, with a tiered structure as balances increase). This fee will be charged in monthly installments of % per month (equal to $2.92 per month for every $10,000 of account value), deducted from your account balance and listed on your account statement. Tier Balance Monthly Fee Annualized Fee First $50, % 0.35% Next $50, % 0.30% Next $50, % 0.25% Over $150, % 0.15% This fee is in addition to the normal expense ratio assessed to each fund you are invested in. Please refer to the fund s prospectus for each fund s expense ratio. Remember, there is no obligation to join the Professional Account Manager program when you call. You can decide whether to use the advice you receive, and can start or stop the service at any time. To learn more about the ING Advisor Service, call the RE 401(k) Information Line at , Monday to Friday, 8:00 a.m. to 6:00 p.m., EST (except stock market holidays) and ask to speak with a ING Financial Advisor or review the ING Advisor Service fact sheet available on the RE 401(k) website. ERISA SECTION 404(c) COMPLIANCE The Plan is a self-directed account plan intended to comply with section 404(c) of ERISA. Although the Plan s fiduciaries are responsible for selecting the investment funds and other investments which will be offered to you as investment options under the Plan, only you will be responsible for deciding how to invest your account among these investment options and for the investment results of your choices. Neither Reed Elsevier Inc. nor its affiliates, the Plan Administrator or the Trustee has an obligation to provide you with investment advice or to reimburse you for any investment loss which may occur as a result of your investment decisions. Accordingly, you should review carefully all investment information before making an investment decision. There is no guarantee that all investment categories available under the Plan will either retain your account s original values or appreciate in value. Upon request, you are entitled to receive the following information: a description of the annual operating expenses of each designated investment option (e.g., investment management fees, administrative fees and transaction costs) that reduce the rate of return to you, and the aggregate amount of such expenses expressed as a percentage of average net assets of the designated investment option; copies of prospectuses, financial statements and reports, and any other materials relating to the investment options available under the Plan, to the extent such information is provided to the Plan; a list of the assets comprising the portfolio of each designated investment option and the value of each such asset (or the proportion of the option that it comprises); 18

21 information concerning the value of shares or units in the designated investment options available to you under the Plan, as well as the past and current investment performance of such options, determined, net of expenses, on a reasonable and consistent basis; and information concerning the value of shares or units in the designated investment options held in your Plan Account. To receive any of the information listed above, call the RE 401(k) Information Line at

22 CHANGING YOUR INVESTMENTS Once you choose your initial investment options, you may change your Fund elections within the RE 401(k) Core Investment Funds as often as you wish without having to pay any "pertransaction" fee. You may: Change the investment of your future contributions, or Transfer your existing investments account balances to other investments*, or Do both. Changes to the investment of future contributions are made effective as of the first payroll contribution date that is administratively feasible. When you move all or a portion of your current account balances out of your current option(s) and invest them in one or more of the other options, you are making an exchange. Your exchanges from one investment option to another can be in dollar amounts or percentages. Exchanges will be processed on the same day if made before 4:00 pm Eastern Time any business day. Any requests received after that time will receive the next business day's closing price. These transactions can be made on the website or by calling the RE 401(k) Information Line. *Certain funds are subject to Trading Restrictions. TRADING RESTRICTIONS Trading restrictions are designed to discourage market timing ( short-term trading ), which can hurt a fund s long-term investors by increasing transaction costs and interfering with the manager s investment strategy, thereby lowering returns. These restrictions are set by individual fund managers, not the plan. The American Funds New Perspective Fund has trading restrictions. Trading restrictions reject your transactions if you transfer money out of the fund and then try to transfer money back into the fund before satisfying the waiting period required by the fund manager. The chart below outlines the details: Effective Fund name Restricted transfer Waiting Applies to the following date out/in amount period transactions American Funds New Perspective Fund* $5, days Transfers, automatic rebalancing and reallocations With this restriction, if you sell fund shares that exceed $5,000, you cannot buy back into that same fund with a share purchase of greater than $5,000 for a period of 30 calendar days. 20

23 LOANS From time to time, you may need part of your RE 401(k) Account. One way to access your funds is through the Plan s Loan provision. Loans are repaid through payroll deduction and go directly back to your RE 401(k) Account. LOAN INFORMATION MAJOR FEATURES Maximum Number of Outstanding Loans 2* (including any loans in default) Loan Application Fee $50 Maximum Repayment Period: Standard Loan 60 months Primary Residence Loan 120 months Minimum Loan Amount $1,000 50% of your vested account balance that is invested in the Core and/or Target Retirement Date Funds Maximum amount is $50,000 reduced by the highest outstanding loan balance Maximum Loan Amount during the past 12 months. Loans are not permitted from your Roth 401(k) after-tax contributions account, but they do count for purposes of determining the maximum loan you are permitted to take from the plan. TYPES OF LOANS The following types of loans are available through the RE 401(k): Standard Loan - A standard loan may be issued to you for any reason. It must be repaid over a period of 12, 24, 36, 48 or 60 months. Primary Residence Loan - This type of loan may be repaid over 12-month periods ranging from 72 months to 120 months. An application for a loan to purchase a primary residence loan must be accompanied by supporting documentation. You may fully repay any loan after it has been in effect for at least 3 months. Partial repayments are not permitted. If, through disability or other authorized leave of absence, you cease to receive regular payroll checks while you have one or more loans outstanding, you must continue periodic payments by submitting a check each month to cover the monthly payment. INTEREST CHARGES The interest charge and the principal repayment will be deducted from your regular salary each pay period. The interest rate applicable to a loan is the prime rate as printed in the Wall Street Journal on the last business day of the month prior to the month in which the loan is approved. The interest rate will be fixed as of the first of each month. It will apply to all loans that are approved during the month. The interest rate in effect at the beginning of a loan will remain in effect until the loan is completely paid off. Interest on your loan is not deductible on your federal income tax return, and the amount you borrow is not taxable income to you as long as you pay it back on time. *Prior to January 1, 2011, the maximum number of loans permitted under the Plan was three. Effective January 1, 2011, you may not take a loan from the Plan if you have two or more loans outstanding under the Plan. 21

24 REQUESTING A LOAN You can model a loan, request loan information and/or a residential loan application by logging on to the website or by calling the Information Line at Standard loans are issued without application forms and do not require documentation. For a residential loan application, you also can go directly to the Plan Forms section on the website. Log on to the website or call the RE 401(k) Information Line to initiate a loan. You can reach a Customer Service Representative who will inform you of the various loan opportunities and assist you with the application by calling the RE 401(k) Information Line. Your loan check will be mailed to you within five business days of your request (or upon approval, if for a primary residence loan). HOW LOAN MONEY COMES OUT OF YOUR ACCOUNT When you take a loan, the money you borrow comes from your RE 401(k) Accounts in this order: 1. Your Company matching account; 2. Your before-tax contributions account; 3. Your Rollover contributions account; and 4. Your traditional after-tax contributions account. Please note: Loans are not permitted from Roth 401(k) after-tax contributions, but Roth 401(k) after-tax contributions do count towards the amount available for loans. Your loan money is taken proportionately from all of your investment options in the above accounts. Taking money out of your accounts in this order leaves as much money in your RE 401(k) accounts as possible that you can access through an In-service Withdrawal. Loans may not be taken against funds from your Self-Managed Account (SMA). If you wish to include your SMA balance as part of your loan availability amount you must first liquidate these holdings and then transfer the funds into your RE 401(k) Core Investment Funds. A $50.00 loan transaction fee will be deducted from your account for each loan you take out. HOW YOUR LOAN PAYMENTS ARE INVESTED As you pay back your loan, your payments are deposited in the RE 401(k) accounts from which you borrowed the money, in the following order: 1. Your traditional after-tax contributions account; 2. Your Rollover contributions account; 3. Your before-tax contributions account; and 4. Your Company matching account. This is the exact opposite of how your loan money came out of your accounts. Repaying the loan in reverse order means your accounts are replenished to first restore funds that are available for withdrawal while you are employed. Your loan payments are automatically invested in the same investment options as the account to which your payroll contributions are made. If you are not currently contributing to the RE 401(k), your loan payments are invested based on the most recent investment elections on file. If you change your investment options for your future contributions while you are paying back a loan, your future loan payments will be invested according to your new investment options. 22

25 INTERNAL REVENUE SERVICE RULES Because the IRS allows tax-qualified plans like RE 401(k) to help you prepare for retirement, there are some restrictions on access to your account. As long as you are employed by any of the Reed Elsevier affiliates (whether or not the affiliate participates in the RE 401(k)), and on a US payroll, you can continue to pay off your outstanding loan balance(s) through payroll deductions. You must repay any loan other than a Primary Residence loan within 60 months. If you do not, additional interest will be due and the outstanding balance will be treated as a distribution. The distribution will be subject to income taxation (and a 10% penalty tax if you are less than age 59½). Additional interest will be due on any missed or delinquent payments. If you do not pay off your loan on a timely basis, your loan will be defaulted and additional interest will accrue on the defaulted amount. You will be considered to have received a distribution from the Plan in the amount of the unpaid balance of your loan (the additional interest in arrears will not be taxable). An IRS Form 1099-R will be issued to you and this distribution will be subject to income taxation (and a 10% penalty tax if you are less than age 59½). In addition, the amount of any balance on a defaulted loan will continue to be treated as an outstanding loan and will reduce the maximum loan available to you. PAYING BACK A LOAN UPON TERMINATION If your employment with Reed Elsevier Inc. and all of its affiliates terminates, and you have an outstanding loan balance, you have the option to either: Pay off your loan(s) in full; or Repay your loan(s) via monthly loan repayments (this option is only available if your account balance is greater than $5,000). Your loan(s) will be re-amortized to reflect monthly payments for the term of the loan(s) and you will receive a confirmation statement from ING outlining your new repayment schedule. If you do not initiate a payment of your outstanding loan balance by the month end following sixty days from the date shown on your Termination Notice from ING, it will be discharged and treated as a distribution from the plan. A 1099R for the taxable amount will be mailed to your address on file. Information about paying off an outstanding loan balance can be obtained by calling the RE 401(k) Information Line at

26 IN-SERVICE WITHRAWALS There are two types of withdrawals; Non-Hardship Withdrawals and Hardship Withdrawals. Both types of withdrawals are subject to certain restrictions and are limited by IRS rules. NON-HARDSHIP WITHDRAWALS You may make non-hardship withdrawals on the following: If you are age 59 ½ or older the entire vested value of your RE 401(k) account. If you are under age 59 ½ - Traditional after-tax contributions and Rollover contributions, as well as any gains on those contributions. You can request a non-hardship withdrawal by going to the website or using the RE 401(k) Information Line. You will be mailed a check from your RE 401(k) account within several days of the time you apply for the withdrawal through the website or the RE 401(k) Information Line. Please see the Special Tax Rules section for important tax information about non-hardship withdrawals. HARDSHIP WITHDRAWALS Hardship withdrawals are available only for the following immediate and necessary financial needs: Tax deductible (catastrophic) medical expenses incurred by you, your spouse, or your dependents; Post-secondary school tuition, related education fees and room and board expenses payments for the next 12 months for you and your dependents; The purchase of your primary residence excluding mortgage payments; The prevention of foreclosure on or eviction from your primary residence; Payments for burial or funeral expenses for your parent, spouse, children or other dependents; Deductible expenses for the repair of damage to your principal residence; and To pay taxes on the hardship distribution. Listed below are the IRS rules that govern the issuance of hardship withdrawals. A hardship withdrawal may only be made if you have exhausted the loan request provisions of the RE 401(k) and have received all non-hardship withdrawals from the Plan, and the amount necessary to satisfy the hardship is not reasonably available from other financial resources. The hardship withdrawal may only be made from your before-tax contributions. Matching contributions and earnings on before-tax contributions are not eligible for a hardship withdrawal. Once the hardship withdrawal is made, your before-tax and after-tax contributions to the RE 401(k) and all other deferred compensation plans (other than contributions to any health or welfare benefit plan, including a health and welfare plan that is part of a cafeteria plan within the meaning of Section 125 of the Internal Revenue Code) or stock option or stock purchase plan or similar plans maintained by Reed Elsevier Inc. will be suspended for 6 months. Roth 401(k) after-tax contributions are available for Hardships and age 59 ½ withdrawals and must be requested separately from non Roth In-Service Withdrawals. If you make a Roth 401(k) after-tax withdrawal from your account after you have attained age 59 ½ and your Roth 401(k) after-tax contributions were invested for at least a 5 taxable-year period, your withdrawal will be considered qualified and your earnings will be tax free. Roth 401(k) after-tax withdrawals made before age 59 ½ and prior to maintaining the account for at least 5 years are subject to a 10% penalty plus regular income taxes on the earnings portion of the withdrawal. 24

27 You can determine what portion of your RE 401(k) account would be available for a hardship withdrawal and request an application form by logging on to the website or calling the RE 401(k) Information Line. Please see the Special Tax Rules section for important tax information on hardship withdrawals. In-service Withdrawals can only be deducted from your RE 401(K) Core Investment Funds. Funds are distributed pro-rata based on the balance in each Fund. If you wish to withdraw money from your Self- Managed Account, you must first liquidate all or a portion of your holdings in the SMA and reinvest them in the Core Investment Funds. 25

28 PAYMENTS FROM RE 401(k) Your entire vested account balance is available to you as a final distribution: if you leave Reed Elsevier Inc. and its affiliates; retire; become totally disabled and qualify for Company Long-Term Disability benefits; or upon your death. PAYMENTS AT TERMINATION Final distributions must be made from the RE 401(k) Core and Target Retirement Date Investments. They may not be made directly from the Self-Managed Account. If you wish to take a final distribution, you must liquidate 100% of your SMA and then transfer the funds into the RE 401(k) Core Investment Funds. Account Balances > $5,000 If your vested account balance is more than $5,000, you have several choices regarding the money in your account. You may: Defer the balance to be paid out later (but no later than April 1 following the calendar year you reach age 70 ½ or date of termination, if later); Roll over the balance to another qualified plan or an IRA; If you are a participant in the Reed Elsevier US Retirement Plan (the Pension Plan) and will commence distribution of your benefit in the Pension Plan, you can roll over the vested balance (excluding any after-tax or Roth contributions) into the Pension Plan to add to your Pension Plan annuity. Take all or a portion of your account in cash (called a Lump Sum Distribution of a Partial Lump Sum Distribution). In certain instances, a 10% penalty tax is payable in addition to ordinary income taxes. Please see Special Tax Rules section. If you don t make an election, your vested account balance will automatically be deferred. Account Balances < $5,000 If your vested account balance is $5,000 or less when you leave the Company you can request a direct rollover to an IRA or another qualified plan or take a Lump Sum Distribution subject to the same tax penalties as above. Automatic IRA Rollover If your total account balance exceeds $1,000, but is not more than $5,000, and you do not elect a form of payment within 60 days after termination from the Company, your account balance will automatically be rolled over to an IRA with Citibank. The Citibank IRA will be invested in an Insured Money Market Account (or IMMA), which is FDIC-insured. Currently, there are no rollover fees or annual maintenance fees charged by Citibank. Account balances of $1,000 or less will automatically be paid out as lump-sum distributions with the appropriate required tax withholding. For more information about the Citibank Rollover IRA, you may contact

29 PAYMENTS UPON DEATH Your account balance will be distributed to your beneficiary or estate no later than December 31 of the year following the calendar year of your death. If you are married at the time of your death, your beneficiary is automatically your spouse unless your spouse consented in writing, as witnessed by a Notary Public, to your election of another beneficiary or your estate. If you are not married and are not survived by a beneficiary you have designated, your Plan benefits will be paid to your estate. HOW FINAL DISTRIBUTIONS ARE PROCESSED Final distributions are valued and processed as soon as administratively practicable, but no less often as once monthly. To initiate a final distribution you may log on to the website or call the RE 401(k) Information Line. 27

30 SPECIAL TAX RULES The Plan is designed to be a qualified profit-sharing plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the Code ), and the Trust established under the Plan is intended to be exempt under Section 501(a) of the Code. The Plan incorporates a qualified "cash or deferred" arrangement, which is intended to satisfy additional qualification requirements under Section 401(k) of the Code and which permits employees to elect either to have their employer contribute, as before-tax contributions, a portion of their salaries to the Plan on their behalf through the salary deferral feature of the Plan, to have their employer contribute a portion of their salaries to the Plan as after-tax contributions or to have their salaries paid to them directly in cash without any such deduction. Under the salary deferral feature of the Plan, an employee's current compensation is reduced by the amount of the contributions the employer makes to the Plan on behalf of the employee on a salary deferral basis. Reed Elsevier has obtained from the Internal Revenue Service (the "IRS") a favorable determination that the Plan and the Trust, as adopted, meet the requirements of the Code. The principal Federal income tax consequences, under present laws and regulations, of participation in such a qualified plan are as follows: Contributions and Investment Earnings Before-tax Contributions A participant's before-tax contributions made by the Company to the Plan at the direction of the participant pursuant to the salary deferral feature of the Plan are considered employer contributions for Federal income tax purposes. The maximum aggregate before-tax contributions permitted to be made by a participant during 2011 is $16,500, subject to reduction with respect to highly-compensated employees, as described above, and is subject to adjustment each year by law. In addition, a participant who will have attained age 50 by the end of a year will be permitted to contribute a special catch-up contribution for the year if the participant has otherwise contributed the maximum before-tax contribution permitted for the year. In 2011, an additional catch-up contribution of $5,500 is permitted. After 2011, the amount of before-tax and catch-up contributions will be indexed for inflation. A participant will not be subject to Federal income tax on before-tax contributions until they are distributed from the Plan. The Company is entitled to a corporate tax deduction for before-tax contributions to the Plan. After-tax Contributions After-tax contributions are contributed by the participant, who has already paid tax on the amount contributed. Any withdrawal from the after-tax contributions account made after 1986 will be treated for Federal income tax purposes as a partial return of contributions and a partial distribution of earnings, if any. Any amounts distributed as earnings on after-tax contributions will be subject to tax (including an additional 10% early withdrawal tax, if applicable). Roth 401(k) After-tax Contributions Roth 401(k) after-tax contributions are contributed by the participant on an after-tax basis. Roth contributions are subject to the IRS before-tax contribution limits, so the maximum amount for Roth contributions and/or before-tax contributions combined is $16,500 for 2011 (with an additional $5,500 in catch-up contributions for those ages 50 and older). The investment earnings on Roth contributions grow tax-free, and qualified withdrawals (ones that are made when you are age 59 ½ or older and have remained invested for at least a 5- taxable-year period) are completely tax-free. Withdrawals made before age 59 ½ are subject to a 10% penalty, plus regular income taxes on the earnings portion of the withdrawal. Company Matching Contributions Company matching contributions to the Plan are not subject to Federal income tax until distributed to the participant or his or her beneficiary. The Company is entitled to a corporate tax deduction for Company matching contributions to the Plan. 28

31 Plan Earnings Income earned by the Trust under the Plan will not be taxable to the Trust. Trust earnings with respect to a participant's account will not be taxable to the participant until they are distributed from the Plan, except that earnings on Roth 401(k) after-tax contributions are not taxable if they meet the requirements for a qualified withdrawal as described above. Plan Withdrawals and Distributions In general - The taxable portion of a distribution (before-tax contributions, Company matching contributions, rollover contributions and all investment earnings on those contributions and any investment earnings on traditional after-tax contributions) will, in general, be subject to ordinary income taxes. In addition, any taxable amount you receive before age 59½ that is not due to your death, disability, payment of tax-deductible medical expenses, or separation from service after you have attained age 55 will be subject to a 10% penalty tax. Plan Withdrawals and Distributions (The 10% penalty does not apply to distributions made to comply with Qualified Domestic Relations Orders QDROs.) These same rules apply to distributions based on financial hardship. Federal income tax rules also require that Federal income tax be withheld at a rate of 20% on all cash distributions and withdrawals eligible for rollover to an Individual Retirement Account (an "IRA") or a subsequent employer's tax-qualified plan, unless the distribution is payable to an IRA or a subsequent employer's tax-qualified plan (see "Rollovers" below). If you were age 50 or older on January 1, 1986, special ten-year averaging rules may be available with respect to the taxable portion of your RE 401(k) distribution. The rules with respect to this special ten-year averaging are complex and it is recommended that you see your tax advisor for an explanation of the rules if you believe that these provisions might be applicable to the taxation of your RE 401(k) distribution. Rollovers - Individuals who receive certain distributions from the Plan may roll over all or a portion of the distribution into an IRA, a Roth IRA or a tax-qualified plan of a subsequent employer (if permitted by the subsequent employer's plan), in order to avoid current taxation on the distribution from the Plan. After-tax distributions from the Plan (and the earnings thereon) are also eligible for rollover into an IRA, a Roth IRA or a tax qualified plan of a subsequent employer (if permitted by the subsequent employer s plan). Neither the rollover nor income earned on the amounts rolled over, in general, will be taxed until they are distributed from the rollover account (to the extent they represent before-tax funds). If the rollover is to an IRA, before-tax amounts distributed from the IRA are taxed as ordinary income and will not qualify for the special ten-year averaging treatment described above. Roth 401(k) after-tax contributions are eligible to be rolled over into a Roth IRA or into a 401(k) plan that accepts Roth 401(k) after-tax rollover contributions. A tax-free rollover from the Plan may be made if the distribution is an "eligible distribution." An eligible distribution (i) is not part of a series of substantially equal periodic payments over the life expectancy of the participant, the joint life expectancy of the participant and the participant's designated beneficiary or a specified period of at least 10 years, (ii) is not a minimum distribution required after the participant has attained age 70 ½, (iii) does not represent amounts returned to the participant because they were in excess of those permitted to be contributed to the Plan and (iv) does not represent before-tax contributions taken as a hardship withdrawal. A participant who chooses to have a distribution from the Plan made directly to the participant's IRA or subsequent employer's tax-qualified plan that accepts rollovers (i) will not be taxed on the distribution in the current year and no income tax will be withheld from the amount distributed, and (ii) will be taxed later as amounts are distributed from the IRA or the other employer's plan. If the participant chooses to have the Plan pay the distribution or withdrawal to the participant, the participant will receive only 80% of the taxable portion of the distribution, because the Plan administrator is required to withhold 20% of the taxable portion of the distribution and send it to the IRS as income tax withholding to be credited against the participant's income taxes in the year in which such taxes are withheld. The participant can roll over the remaining 80% of the 29

32 payment by paying it to the participant's IRA or to another employer's tax-qualified plan that accepts rollovers. This payment must be made within 60 days of receiving the distribution. The amount rolled over will not be taxed until it is distributed from the IRA or other employer's plan. The participant will be taxed on the 20% portion of the distribution that was withheld and not rolled over and may also be subject to the 10% early withdrawal tax described above on such amounts withheld. If the participant wants to roll over 100% of the taxable portion of a distribution to an IRA or subsequent employer's tax-qualified plan, the participant must find other money to replace the 20% that was withheld. In this case, the 20% withheld will be eligible for refund after filing of the participant's tax return and none of the amount rolled over will be taxed until distributed from the IRA or subsequent employer's plan. In general, the rules summarized above that apply to payments to a participant also apply to payments to the surviving spouse of a participant and to the former spouse who is an alternate payee under a Qualified Domestic Relations Order. More specific information on the tax treatment of payments from qualified plans is covered in IRS Publication 575 (Pension and Annuity Income) and IRS Publication 590 (Individual Retirement Arrangements). These publications are available from local IRS offices or by calling TAX- FORMS. If a participant does not transfer an entire Plan taxable portion of a distribution to an IRA or subsequent employer's tax-qualified plan, the portion of the distribution retained by the participant will not be eligible for the special ten-year averaging treatment described above. In addition, the transfer to the IRA or another employer's tax-qualified plan of an amount equal to any portion of the proceeds from the sale of property received in the distribution will be treated as a transfer of the property itself and the participant will pay no current Federal income tax on the gain which may result from the sale of such property to the extent the sales proceeds are transferred to the IRA or another employer's tax-qualified plan in the manner and within the time required. Tax Law Changes - Amendments to the Code, as well as changing IRS regulations and interpretations, have made the rules regarding taxation of distributions complex. The Company suggests that participants consult with their tax advisors regarding particular questions relating to the taxation of any distribution from the Plan, as well as advice about applicable state and local taxes and any estate and inheritance taxes. 30

33 MANAGING YOUR RE 401(k) ACCOUNT RE 401(K) WEBSITE AND RE 401(K) INFORMATION LINE One of the benefits of the RE 401(k) is the chance to control your own retirement savings strategy through daily account processing. You can get current information on your RE 401(k) account and process most of your transactions by logging on to the website at or using the RE 401(K) Information Line at Both the website and the Information Line allow you to manage your RE 401(k) account 24 hours a day. If you need additional information, please use the Information Line and ask for a Customer Service Representative. Representatives are available Monday through Friday, between 8 am and 6 pm Eastern Time on most business days. All account transactions you request before 4 pm Eastern Time (Monday - Friday) will be processed on the same day except for stock market holidays. Any requests received after that time will receive the next business day's closing price. A written confirmation will be mailed to you within two business days. Available Account Information In addition to daily account balances, the website and the RE 401(k) Information Line provide information on: How your investment options are performing; How much of your RE 401(k) account is allocated to each investment option; What percentage of your salary you are contributing; How much you owe on any loans against your RE 401(k) account; and How much of your RE 401(k) account is available for withdrawal. Handling Account Transactions through the Website and the RE 401(k) Information Line The website and the RE 401(k) Information Line are also convenient ways to handle many RE 401(k) account transactions. Such automated transactions include: Transferring money between investment options; Choosing new investment options for future contributions; Changing your payroll contribution percentages; Changing your PIN; and Getting information on and/or taking out RE 401(k) loans. 31

34 Each time you make a change in your RE 401(k) account, a written confirmation will be mailed to you within two business days after you request the transaction. You will also receive an account statement each quarter that summarizes activity in your account and reports on the performance of your investments. Other Information and Forms You Can Request You can also use the website or the RE 401(k) Information Line to request the following information and forms: Fund Fact Sheets and Investment Fund prospectuses (for applicable funds); Beneficiary Designation Forms; Rollover Contribution Forms (for lump-sum distributions from the qualified plans of prior employers); Hardship Withdrawal applications; Residential Loan applications; SMA application; ACH Direct Deposit Authorization Form; Termination Package; and Change of Address Form for non-active Participants. RE 401(k) QUARTERLY STATEMENTS (PAPER OR ELECTRONIC) As a RE 401(k) participant, you will receive a statement each quarter that helps track your progress in the Plan. The statement reports: Current balances in the investment funds that you have selected; Contribution rates and the amount of your contributions and Company matching contributions for the quarter and year-to-date; Vesting status in the Plan; Loan and withdrawal summaries; Total account values; and Asset allocation and balance by fund. Statements are usually mailed about 20 days after the close of the quarter. If there is any information on your statement that you believe is incorrect, please call the RE 401(k) Information Line and talk to a Customer Service Representative. Alternately, you can discontinue receiving quarterly statements and elect electronic copies (which you can print if you choose) by simply going to the RE 401(k) website ( You can switch back to quarterly paper statements at any time. ON-DEMAND RE 401(K) STATEMENTS Whether or not you elect on-line statements, you can generate an on-demand statement through the RE 401(k) website at any time. With this feature you can view your historical account activity for the time period of your choice (up to 24 months of prior activity can be displayed). 32

35 YOUR RE 401(K) ACCOUNT The RE 401(k) Trustee maintains an account of your share of the trust assets. The Recordkeeper updates the activity of your account. The balance in your account at any time reflects the value of your before-tax, traditional after-tax and/or Roth 401(k) after-tax contributions, matching contributions, rollover contributions, if any, and any earnings or losses on the contributions. Your Accounts Are Balanced Every Business Day Every business day, the Trustee determines the value of your total account balance and your balance in each of your investment options. You can log on to the website or call the RE 401(k) Information Line for up-to-date account balances. If you are also participating in the Self-Managed Account option, your SMA balance is updated daily. You can log on to the website or call the RE 401(k) Information Line at to inquire about your SMA balance. 33

36 YOU AND YOUR BENEFITS BENEFICIARY If you are married, federal law requires that you name your spouse as beneficiary under the Plan unless your spouse consents otherwise in writing, as witnessed by a Notary Public. If you are single, your beneficiary may be anyone you name. You make your initial beneficiary designation when you first become a RE 401(K) participant directly through the RE 401(K) website (after you log in, click on the Personal Information tab on top, then in the menu on the left choose Add/Edit Beneficiary under Beneficiary Information.) You may change your beneficiary designation at any time online, subject to your spouse's approval. If you name a beneficiary and are later married, you should update your information through the RE 401(K) website. If your spouse or any other designated beneficiary does not survive you, RE 401(K) benefits will be paid to your estate. IRS LIMITS (for HCEs - Highly Compensated Employees) The IRS requires plans like RE 401(K) to pass special tests. The tests are designed to assure balanced participation by employees at all pay levels. If the tests are not met, the contributions of highly paid employees may have to be limited. If your contributions are affected, you will be notified. HOW YOU MAY LOSE BENEFITS Under certain circumstances, you or your beneficiary may lose Plan benefits you expected to receive. For example, if as the result of a divorce, you are responsible for child support, alimony or marital property rights payments, your benefits could be assigned to meet these payments if a Qualified Domestic Relations Order has been issued by a court. Also, for employees hired on or after January 1, 2004, if you have not completed three years of service, you will forfeit your unvested account balance at the time you request a payment from the Plan. KEEP YOUR ADDRESS UP TO DATE It is important that terminated employees inform the Plan administrator of any changes in address. If the Plan administrator cannot contact you at the last address you provided, payment of your account balance will be withheld until you or your beneficiary contact the RE 401(K) Information Line. RIGHTS UNDER USERRA If you are absent from employment with a participating company because of your service in the uniformed services of the United States and you return to employment, you may be entitled to reemployment rights and benefits under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which may entitle you to special rights and contributions with respect to your period of qualified military service. You should contact your human resources representative if you think you may be entitled to any of these rights. REPORTS Each participant is provided with a statement of account at least once each calendar quarter and upon distribution of amounts held in his or her Account. In addition, each participant receives a Summary Annual Report which summarizes the financial condition of the Plan each year and a Summary Plan Description, as set forth in this document, which summarizes important Plan provisions. A participant can also obtain up-to-date information about his or her Plan account at any time by calling the RE 401(K) Information Line or logging on to the Plan s website. 34

37 ADMINISTRATIVE INFORMATION This benefit Plan is sponsored by Reed Elsevier Inc. Reed Elsevier reserves the sole rights to modify, revoke, suspend, terminate or change the Plan, in whole or in part, at any time without notice. Reed Elsevier also reserves the sole right to increase or decrease benefit levels and employee contributions at any time. PLAN DOCUMENTS The purpose of this summary is to give you an overview of the information you need to know about the RE 401(K). However, the specific provisions of the Plan are defined in the official Plan documents. This summary does not take the place of those documents that may include insurance policies and contracts, official Plan texts, and trust agreements. Should any questions ever arise about the nature and extent of your benefits, or should there is any inconsistency between the provisions of this summary and the Plan documents, the formal language of the Plan documents, as construed and interpreted by the Company and not the informal wording of this summary - will govern. The Company reserves the sole discretionary authority to interpret and modify all Plan documents, in order to comply with any applicable government regulation or in response to its own business needs. You may obtain a copy of these documents without charge upon oral or written request from the Reed Elsevier Benefits Department, 360 Park Avenue South, 9 th Floor, New York, NY 10010; Telephone: (212) SPONSORSHIP OF THE PLAN The Plan is sponsored by Reed Elsevier Inc. and certain of its affiliated companies. A list of all affiliates participating in the Plan is available from the Plan Administrator. Plan Number: 002 Plan Name: Reed Elsevier US Salary Investment Plan Plan Administrator: Reed Elsevier Inc. Employee Benefits Committee Plan Year Ends: December 31 EMPLOYER IDENTIFICATION NUMBER The employer identification number assigned by the Internal Revenue Service to Reed Elsevier Inc. is PLAN ADMINISTRATOR The Company is designated as the Plan Sponsor of the Plan and the Plan Administrator is the Reed Elsevier Inc. Employee Benefits Committee. A separate committee, the Reed Elsevier Inc. Investment Committee, is responsible for selecting and monitoring the investments offered under the Plan. The Employee Benefits Committee is responsible for controlling and managing the operation and administration of the Plan, interpreting Plan provisions, and computing benefits under the Plan and for furnishing each participant in the Plan with periodic statements showing the value of the participant s account in the Plan. The Employee Benefits Committee also must approve of any changes which the Investment Committee recommends be made in the investments offered under the Plan. Each of the committees is a named fiduciary of the Plan and is appointed by, and serves at the pleasure of, the Board of Directors of Reed Elsevier. None of the members of either committee receives compensation for serving as a member of a committee; they are paid by Reed Elsevier or an affiliate of the Company as employees. Either committee may delegate various duties and responsibilities to one or more employees or agents of the Company. A list of current members of the Employee Benefits Committee and the 35

38 Investment Committee is available from the Reed Elsevier Inc. Benefits Department at PLAN FUNDING The Plan is funded under a trust agreement. The assets of the Plan are accumulated in the Plan s trust fund, which has been established for the exclusive benefit of Plan participants and beneficiaries. Benefits from the Plan are payable by the trustee at the direction of the Employee Benefits Committee. FINANCIAL RECORDS Reed Elsevier maintains the financial records for the Plan based on a plan year that ends on December 31. All financial records are maintained at the Reed Elsevier Benefits Department, 360 Park Avenue South, 9 th Floor, New York, NY 10010; Telephone: (212) PLAN TRUSTEE ING National Trust One Orange Way, C4N Windsor, CT PLAN ADMINISTRATION AND NOTICE OF LEGAL PROCESS Your primary contact for all matters relating to Plan administration and notice of legal process is Reed Elsevier Inc. Attn: Employee Benefits Committee, Reed Elsevier Benefits Department, 360 Park Avenue South, 9 th Floor, New York, NY 10010; Telephone: (212) A notice of legal process can also be served on the Plan Trustee. TYPES OF PLANS The RE 401(K) is subject to the Employee Retirement Income Securities Act of 1974 (ERISA). Under the provisions of ERISA, employee benefit plans are divided into two broad categories: welfare plans and retirement plans. This Plan is a retirement plan. A retirement plan is intended to provide benefits at retirement, through the purchase of insurance or annuity contracts or through the establishment of a trust fund or a combination of both. A retirement plan can either be a defined benefit plan or a defined contribution plan. A defined contribution plan provides for an individual account for each participant. Benefits are based on the amount contributed to that account and any income, expenses, capital gains and losses. The amount of retirement benefit payable is the amount accumulated in a participant s account. The Reed Elsevier US Salary Investment Plan is a defined contribution plan. YOUR RIGHTS TO A BENEFIT Subject to applicable law, the Plan does not permit you to assign, sell, transfer, pledge, alienate or encumber any Plan benefits or interests, nor are benefits, proceeds and interests in the Plan subject to attachment, garnishment, execution or legal process unless pursuant to a Qualified Domestic Relations Order as required by Section 414(p) of the Code. Qualified Domestic Relations Orders require that if certain conditions are met, a participant s interest in the Plan can be alienated or encumbered. A Qualified Domestic Relations Order consists of certain judgments, decrees or judicial orders (including approval of a property settlement agreement) which relate to the provision of child support, alimony payments or marital property rights of a spouse, child or other dependent. Also, in certain circumstances, a levy of Plan assets may be made by the federal government. 36

39 CONTINUATION OF THE PLAN Reed Elsevier Inc. fully intends to continue its employee benefit plans indefinitely but reserves the right to change or discontinue a plan at any time. In the unlikely event the Company should terminate the Plan for any reason without replacing it with comparable benefits, it will attempt to give you advance notice. If the Reed Elsevier US Salary Investment Plan should be terminated for any reason, your total account balance will be fully vested and you will receive payment of your total account balance. TOP-HEAVY PROVISIONS Under current tax law, the Reed Elsevier US Salary Investment Plan is required to contain provisions that will become effective if the Plan should become top-heavy. You will be notified if any of these provisions become effective. MERGERS AND ACQUISITIONS The status of employees who join or leave the Company through mergers and acquisitions regarding the benefit Plan described in this Booklet may be determined by the particular provisions of the applicable agreement entered into with respect to the acquisition or merger. The general representations made in this Booklet may not necessarily apply to such employees. If you have any questions about your status, please contact your local Human Resources Department. 37

40 YOUR RIGHTS UNDER ERISA As a participant in the Reed Elsevier US Salary Investment Plan, you have certain rights and protection under federal law, as stated in ERISA and in regulations issued by other federal agencies, including the U.S. Department of Labor and Internal Revenue Service. Specifically, ERISA entitles you, as a Plan participant, to: Examine, without charge, the Plan document and trust agreement (including copies of all documents filed with the U.S. Department of Labor, such as annual reports and Plan descriptions). The New York Benefits Department has these documents available, or can obtain them, and you may make an appointment to examine them at any time during business hours. Obtain copies of the Plan Document and other pertinent Plan information by requesting these materials in writing. (The Company reserves the right to charge a reasonable fee for copying and mailing any documents you request.) Receive a summary of the Annual Financial Report of the Plan. You do not need to request the summary report; the Company provides this information to all Plan participants once a year. Obtain a statement once a year reporting the value of your accounts under the Plan and whether you are vested in any portion of the Company s matching contribution on your behalf. CLAIMS FOR BENEFITS In order to receive the benefits you are entitled to under the Plan, you or your covered Dependent must first file a claim. The law allows a reasonable amount of time for the Plan Administrator to evaluate a claim and to decide whether to pay benefits based on the information contained in the written claim. However, you have certain rights under ERISA if your claim for benefits is denied as described below. WAITING PERIOD Within 90 days after you file a written claim for benefits, you must be notified whether or not you will receive the benefits. If the Plan Administrator needs more time because of special circumstances to examine your request, you must be informed within the 90 days that additional time is needed, why it is needed, and the date by which you can expect to receive a final decision. However, consideration of your request may be extended for only 90 more days. If your claim is denied, the Plan Administrator must notify you in writing and explain in detail why it was denied. If you receive no answer at all in 90 days or 180 days if an extension is needed, this may be considered the same as denial, and you may use the following rules for appealing the denial. IF A CLAIM IS DENIED If you receive written or electronic notice that your claim has been denied, either in full or in part (i.e., is an adverse benefit determination ), the notice will explain the reasons for the adverse benefit determination, including references to the specific Plan provisions on which the determination was based. If your claim was denied because you did not furnish complete information or documentation, the notice will state the additional materials needed to support your claim. The notice will also include a statement of your right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review and tell you that you must 38

41 make a written request to the Plan Administrator if you wish to appeal the denied claim. As part of your appeal to the Plan Administrator, you may see all Plan documents and other papers that affect your claim and, you may have someone act as your representative in the review procedure if you wish. You may submit written comments, documents, records and other information relating to your claim for benefits regardless of whether the information was submitted or considered in the initial benefit determination. Furthermore, the Plan rules give you 60 days after the claim is denied to request a claim review. In most cases, the Plan Administrator will review and decide on the appeal within 60 days after you file your written request to the Plan Administrator. If the Plan Administrator notifies you that there will be a delay and explains the reasons for needing more time, there may be a limited extension (no longer than 60 days) of the review and decision-making process. Once a decision is reached, the Plan Administrator will notify you in writing or electronically of the outcome. The notice will give exact reasons for the decision, not just general statements, and shall include references to the specific Plan provisions on which any adverse benefit determination is based. The notice will also tell you that you may receive, free of charge, reasonable access to and copies of all documents, records and other information relevant to your claim for benefits. Furthermore, the notice shall describe any voluntary appeal procedures offered by the Plan and your right to bring a civil action under Section 502(a) of ERISA. OBLIGATIONS OF THE FIDUCIARIES In addition to creating rights for Plan participants, ERISA imposes obligations on individuals responsible for the operation of employee benefit plans. These individuals referred to as fiduciaries under the law, have an obligation to administer the Plan prudently and to act in the interest of the Plan participants and beneficiaries. The law provides that fiduciaries who violate ERISA may be removed and required to make good any losses they may have caused the plans. OBLIGATIONS OF EMPLOYERS Many of the specific obligations ERISA imposes on employers are intended to make certain that all Plan participants are fully informed of their rights to benefits and the nature and extent of those benefits. No one may fire you or otherwise discriminate against you to prevent you from receiving benefits or exercising your rights under ERISA. RESOLVING PROBLEMS Normally, your local Human Resources Department should be able to help you resolve any problems you might have about your rights to benefits. Your local Human Resources Department will make available plan documents and other related information if you wish to study these materials. Under ERISA, there are steps you can take to enforce your rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the material, unless the materials are not sent because of reasons beyond the control of the Plan Administrator. If a claim for benefits is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay the court costs and legal fees. If you are successful, the court may order the person who has been sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim to be frivolous. 39

42 A FINAL WORD ABOUT YOUR RIGHTS Reed Elsevier Inc. encourages you to contact your Human Resources Department should you have any questions about the foregoing statement or about your rights under ERISA. Or you may contact the nearest area office of the U.S. Labor-Management Service, Employee Benefits Security Administration, U.S. Department of Labor listed in your telephone directory or in the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W, Washington, DC You can obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. 40