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