Fiduciary Fundamentals

Retirement & Benefit Plan Services Fiduciary Fundamentals Basics and Best Practices This guide covers the following chapters:

A plan fiduciary serves an important role At Bank of America Merrill Lynch, we understand the important role that you, the plan fiduciary, serve in maintaining the integrity of your company s retirement plan. We also understand the pressure fiduciaries experience trying to keep up with their responsibilities. This guide from Bank of America Merrill Lynch gives you an overview of the role of a plan fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA) and provides suggested best practices that may help you fulfill your fiduciary responsibilities.1 Serving as a plan fiduciary is no small challenge. Here s just a sampling of what a fiduciary needs to consider: Do you offer your participants a diversified menu of investment options that have been prudently selected? If participants make their own investment decisions, have you provided sufficient information and education for them to exercise control in making those decisions? Have you taken advantage of available fiduciary safe harbors? Have you reviewed plan costs for reasonableness? We are prepared to assist you by drawing upon the expansive capabilities across our organization to help you fulfill your challenging fiduciary duties. 1 Bank of America Merrill Lynch does not provide advice on the roles and responsibilities of fiduciaries. Please consult your own counsel regarding the matters discussed in this document to the extent that they may apply to your situation. The selection and monitoring of investments in the plan in question remain the responsibility of the plan fiduciary, which shall in no instance be Bank of America Merrill Lynch, any of its affiliates, or any employees of Bank of America Merrill Lynch or its affiliates, unless the plan sponsor has a service agreement with Bank of America Merrill Lynch for Defined Contribution Investment Consulting Services. 2

The essential role of a fiduciary Bank of America Merrill Lynch offers you a range of tools and services that we have developed based on years of helping clients like you meet their fiduciary responsibilities. Who is considered a retirement plan fiduciary under erisa? A fiduciary under ERISA is any person or entity that exercises authority or control over a plan s assets, gives investment advice for compensation or has discretion over plan administration. Plan sponsors are generally fiduciaries. For some plans, administrative committees or a company s board of directors may be fiduciaries. Attorneys, recordkeepers, accountants and actuaries generally are not fiduciaries when acting solely in their professional capacities. At a minimum, a plan must have at least one fiduciary designated in the plan document as having control over the plan s operation and investments. A person or entity becomes a fiduciary by virtue of the functions they perform. For example, individuals who exercise control over a plan s assets are fiduciaries no matter what titles or positions they hold. the fiduciary role Standards of fiduciary performance under ERISA generally are process-based as opposed to outcome-based. Fiduciaries must act with prudence consistent with the prudent man standard of care. Plan fiduciaries must exercise their duties with the prudence of a person familiar with the business they are responsible for, or employ the assistance of those with the requisite experience. This is also known as the prudent expert rule. The responsibilities of a plan fiduciary generally include: Acting solely in the interest of plan participants and their beneficiaries. Defraying reasonable expenses for the administration of the plan. Following the plan documents (unless inconsistent with ERISA). Diversifying plan investments. ERISA defines a plan fiduciary to include anyone who gives investment advice for a fee or other compensation with respect to any moneys or other property of a plan, or has any authority or responsibility to do so. The complete definition and responsibilities of qualified plan fiduciaries are contained in the Employee Retirement Income Security Act of 1974 (ERISA). Process-based prudence Giving appropriate consideration to those facts and circumstances that the fiduciary knows or should know are relevant to the particular investment or investment course of action involved and then acting accordingly. 3

Responsibilities of a plan fiduciary include: Loyalty Discharge plan duties solely in the interest of participants and beneficiaries Ensure expenses are reasonable Prudence Education Monitoring Diversification Act with the care, skill and diligence of a prudent expert Provide participants with tools and education that enable them to make sound investment decisions Regularly review service providers, including performance and fees Ensure plan investments are adequately diversified to help minimize risk of large losses1 Develop and document processes for decision making Follow terms of plan document Hire third parties where internal expertise is lacking Carefully select service providers 1 Diversification does not ensure a profit or protect against loss. Fiduciaries may be personally liable for any losses to the plan resulting from a breach of fiduciary duty. These duties can be breached by failing to perform their duties with prudence for the benefit of the plan, engaging in prohibited transactions or failing to monitor those to whom fiduciary duties have been delegated. For more information on the duties of a fiduciary, click to see the Fiduciary Compliance Checklist included with this guide. 4

Fiduciary best practices While outcomes are always important, a fiduciary will want to demonstrate procedural prudence by maintaining written policies and procedures, minutes or other documentation of actions and decisions. It is also important to maintain supporting documents and data used in the decision-making process. In addition, fiduciaries should consider taking advantage of safe harbors, which protect them from the liability associated with certain investment decisions. What follows is a list of practices that all plan fiduciaries should consider adopting. 1 Identify all plan fiduciaries It is important to identify all the fiduciaries in an organization and to assure that they are aware of their responsibilities. If an organization maintains an investment committee, it is important that the committee be properly formed. Investment committees are typically created by an organization s board of directors or the chief executive and the establishment of the committee should be documented. When a fiduciary delegates responsibility to another person or committee, the original fiduciary retains a residual fiduciary responsibility. Click to see the Sample Investment Policy Statement and Menu Construction & Fund Selection Due Diligence included with this guide. 2 Maintain a written investment policy statement The selection, monitoring and maintenance of an investment menu are the duties most frequently identified with being an ERISA fiduciary. The investment policy statement provides the framework for this process. The investment policy statement should be reviewed at least annually and amended to reflect changes in the securities markets, plan objectives or other factors relevant to the plan. The policy statement should: Identify the key functions and responsibilities necessary for the ongoing management of the plan s assets. Describe the investment structure for the plan s assets, including the various asset classes that are expected to produce an investment return over the long term while prudently managing risk. Establish formal criteria to monitor and evaluate plan performance results on a regular basis. 5

3 Take advantage of fiduciary safe harbors Fiduciary Liability Safe Harbor 404(c) Section 404(c) of ERISA provides a voluntary safe harbor intended to protect plan fiduciaries from liability for the decisions participants make in managing their investments. Three key requirements for compliance with the Section 404(c) safe harbor are: Participants must be offered at least three core investment alternatives that are diversified and materially different in their risk and return characteristics. Participants must have the opportunity to exercise control over their accounts, such as changing investment options at least quarterly. Pursuant to ERISA 404(a)(5) Participant Disclosures, certain information about the plan must be disclosed or made available to participants, including sufficient details about the investments offered in the plan to make sound investment decisions and more. Plan fiduciaries must continue to prudently select and monitor plan investments. To take advantage of ERISA 404(c), fiduciaries must provide notice to participants of the intent to use this safe harbor. Typically, this notice is provided in the summary plan description. Additional 404(c) Safe Harbors Default investments: The Pension Protection Act of 2006 extended certain protections of Section 404(c) to fiduciaries in plans that invest participants accounts in default investment options in the plan. This protection relieves the fiduciary of liability associated with the choice of asset classes used for default investments. While utilizing a QDIA is optional, fiduciaries for plans that utilize default investments should consider the benefits of this safe harbor protection. Click to see the Default Investment Selection, Success by Plan Design White Paper and Making Plan Health Automatic Fact Sheet included with this guide. Leveraging qualified default investments in automated programs Your qualified default investment option can serve as the centerpiece of an automated program that includes enrollment and regular deferral increases to help your employees achieve retirement success. The Pension Protection Act of 2006 reflected strong endorsement of such programs by Congress based on the legislators desire to encourage sponsors to take more aggressive steps to help employees secure their financial future. 6

4 Review fees and expenses for reasonableness Plan fiduciaries are responsible for ensuring that the fees charged to plan assets are reasonable relative to the services provided. These costs should be reviewed periodically. Two main types of fees are commonly paid out of plan assets: Fees for the maintenance and administration of the plan. Investment management fees paid to fund managers and fund management companies. The Department of Labor (DOL) requires plan sponsors to disclose fees paid directly or indirectly to providers on Schedule C of IRS Form 5500. In 2012, the DOL issued final regulations pursuant to ERISA 408(b)(2). Under 408(b)(2), service providers must disclose to plan sponsors written details of services and fees to help plan fiduciaries evaluate the reasonableness of fees charged to the plan under service contracts or agreements. Click to see the Defined Contribution Fee Policies White Paper, The New Era of Fee Transparency White Paper and Plan Sponsor to Fee Disclosure included with this guide. 5 Maintain fiduciary liability insurance While most documents will provide for the indemnification of fiduciaries by the plan sponsor, many plan sponsors maintain fiduciary liability insurance as an additional layer of protection. This is typically a separate policy distinct from any directors and officers or errors and omissions policy. 6 Educate and update participants with clear, consistent communications It is always a good policy to identify those communication activities that are intended to be educational in nature, as opposed to investment advice. It is important to communicate to participants the responsibilities assumed by them relative to those assumed by the plan fiduciaries. The maintenance of clear documentation on this point is viewed by many as a fiduciary best practice. Bank of America Merrill Lynch delivers participant education in a variety of ways, including brochures, fact sheets, seminars and more. For plans where we provide recordkeeping services, a wealth of educational communications can be accessed through our Benefits OnLine participant website. For more information on employee communication and education, click to see the Participant Communication & Education Program and Sample Participant Communications Schedule included with this guide. 7

Sample Plan Governance Calendar 7 Maintain a regular governance calendar There is a myriad of issues that a fiduciary or fiduciary committee must monitor and manage. The most effective fiduciaries maintain a regular governance calendar. They identify their key areas of focus, set objectives and establish policies, and identify leverage points those action items that can impact the objectives. After setting performance objectives, they implement a monitoring process and document the entire process. Each of the key areas of focus is revisited on a regular basis according to a governance calendar. These processes can be as formal or informal as circumstances require. 1st Quarter Plan Investments Review investment policy Review plan menu construction Evaluate fund/manager performance Washington Outlook Legislative and regulatory updates 2nd Quarter Review Plan Fees for Reasonableness 8 Document, document, document In the unlikely event of litigation, the most effective way of proving a prudent fiduciary process is to produce the documents governing the process and the minutes or other records capturing how that process was followed. It is important that fiduciaries document their efforts to act with prudence by maintaining written policies and procedures. For more information on plan administration and processes as well as the role of a fiduciary, click to see the Plan Sponsor to Compliance Resources included with this guide. Plan Administration Review compliance issues Review 404(c) safe harbor procedures Review recent interpretations of plan language Evaluation of Fund/Manager Performance Quantitative and qualitative analysis 3rd Quarter Business Planning Determine impact of corporate transactions Implement necessary plan or business changes Fiduciary Update Fiduciary education refresher Review fiduciary liability insurance Evaluation of Fund/Manager Performance Quantitative and qualitative analysis 4th Quarter Participant Utilization Participation and contribution rate analysis Investment pattern analysis Review participant communication strategies Evaluation of Fund/Manager Performance Quantitative and qualitative analysis 8

Talk to us today Speak to your Bank of America Merrill Lynch representative to learn more about how we can help you fulfill your fiduciary responsibilities. Learn how we are rethinking retirement and benefit plan design to help you maximize your defined contribution plan s effectiveness and help put your employees on the path toward financial well-being. We can assist with reviewing and refining your investment policy statement as well as monitoring and evaluating your plan s performance on a regular basis. In addition, we can conduct regular portfolio reviews to help you measure the performance of your investment menu relative to your investment policy statement. Bank of America Merrill Lynch can also help you design a tailored employee education and communication strategy that will encourage participants to make the most of the plan. We believe employees who understand and appreciate a plan are more likely to enroll and increase contributions over time. We can help you assess your current communication and education program. Bank of America Corporation is one of the world s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. Important: This publication provides general information about fiduciary-oriented ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any financial or regulatory changes. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ("BAC"). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value Unless otherwise noted, registered trademarks and trademarks are the property of Bank of America Corporation. 2013 Bank of America Corporation. All rights reserved. AR7ETXSN 00-63-0969B-DIG 12/2013 9

Resources The following is a sampling of materials available from Bank of America Merrill Lynch to help you understand and fulfill your fiduciary responsibilities. Click on the images to read the full documents. RETIREMENT & BENEFIT PLAN RVICES RETIREMENT & BENEFIT PLAN RVICES RETIREMENT & BENEFIT PLAN RVICES RETIREMENT & BENEFIT PLAN RVICES Fiduciary Compliance Checklist Sample Investment Policy Statement (IPS) Menu Construction & Fund Selection Due Diligence Default Investment Selection Creating an investment menu and selecting and monitoring the investments that comprise the menu are among the most challenging responsibilities plan fiduciaries face. These complex activities must be carried out in compliance with the Employee Retirement Income Security Act of 1974 (ERISA), which sets standards of fiduciary conduct in relation to retirement plans. Fiduciaries who fail to follow ERISA s principles may be held personally liable for their conduct. That s why it s important to have a good understanding of your fiduciary investment responsibilities. This guide was designed to provide information you may find helpful in fulfilling your fiduciary role. Your Bank of America Merrill Lynch representative is also ready to assist you. Providing a default investment is essential for employers who sponsor an employee-directed defined contribution retirement plan particularly for those who make nonelective contributions or have automatic enrollment. This guide is designed to help you understand Qualified Default Investment Alternatives and your fiduciary obligations. Menu construction Help reduce the likelihood that participants will bring lawsuits against their employer if they lose money in the plan or fail to generate an adequate return over time. You should periodically evaluate your plan s fiduciary governance structure and procedures. Below is a list of basic requirements and best practices that every fiduciary should review to help ensure that they are meeting their responsibilities. Plan Legal Documents 1. Plan document has been updated and reflects the most recent legislative changes. Signed copies of documentation, amendments, resolutions and Summary Plan Description (SPD) are on file. 2. An IRS Determination Letter, if applicable, is on file. 3. Plan s Loan Policy, if applicable, has been completed and signed. 4. Plan s Qualified Domestic Relations Order (QDRO) procedures are on file. Maintenance of an Investment Policy Statement (IPS) is consistent with Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards and is one of the most important duties of an individual fiduciary or a fiduciary committee. The following sample IPS is intended to provide an overview of a typical investment policy statement for large- and mid-sized participant-directed 401(k) retirement plans. Any IPS created should be reviewed by an attorney knowledgeable in this specific area of the law. I. Introduction A. Purpose of Investment Policy Statement. The purpose of this Investment Policy Statement is to document the investment objectives and investment policies for the XYZ, Inc. 401(k) Profit Sharing Plan (Plan). The IPS is intended to assist the XYZ, Inc. 401(k) Profit Sharing Plan Investment Committee (the Committee) in meeting their fiduciary obligations under (ERISA) by: 5. Interpretations of plan language are documented and on file. 6. Signed agreements are on file for all plan-related service providers, outlining responsibilities, fees and service standards. 1) Making a clear distinction between the responsibilities of the Committee, the investment funds, the plan participants and beneficiaries, and other plan service providers; 2) Establishing a framework for the selection, monitoring, and evaluation of the Plan s investment funds; and 3) Affirming the Plan is intended to meet the safe harbor requirements of ERISA Section 404(c). B. Statement of intent. In accordance with their fiduciary responsibility under ERISA, investment decisions of the Committee will be made solely in the interest of the participants and beneficiaries of the Plan and for the exclusive purpose of paying benefits to participants and defraying the reasonable cost of administration. It is the intent of the Committee that its members and any other fiduciary action on behalf of the Plan shall perform their duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Compliance 1. Annual IRS Form 5500 reporting completed by the required filing date. 8. Fidelity bonding requirements met in accordance with ERISA. 2. Annual plan contribution limits reviewed. 9. Pursuant to ERISA 408(b)(2), plan sponsors receive notice of fees charged and should ensure they are reviewed for reasonableness. 3. Nondiscrimination testing completed and corrective action taken as needed. 4. Plan met annual required minimum distribution (RMD) rules. 5. Salary-deferral contributions submitted on a timely basis. 6. Summary Annual Report distributed to participants. 7. Applicable annual written notices provided to plan participants 30 to 90 days before the beginning of the plan year (i.e., Safe Harbor 401(k) Notice, Automatic Enrollment Notice, Qualified Default Investment Alternative (QDIA) Notice). 10. Participants receive various participant fee disclosure notices under ERISA 404(a)(5), including an annual notice that must be distributed to all eligible and participating employees and a quarterly notice that must be distributed to all participating employees. 11. A 404(a)(5) plan related change notice is provided to participants at least 30 days, but no more than 90 days, in advance of a change (e.g., to investment options, plan restrictions or individual fees). This statement is an outline of the Committee s general investment policies and is intended to supersede any earlier statement(s) of investment policies and objectives effective with the date this statement is executed. The Policy will be reviewed at least annually and revised as necessary to reflect changes related to the Plan. C. Plan objective. The Plan was established to provide eligible employees an opportunity to contribute in order to provide a source of retirement income in addition to that received from other savings or benefits they may accumulate over the course of their working careers. The Plan is intended to meet the applicable conditions for qualification under Section 401(a) of the Internal Revenue Code of 1986 as amended and provide for benefits based solely on the amount contributed to each participant s account plus or minus any income, expenses, and gains or losses. The Plan Document and Summary Plan Description for the Plan are the governing plan documents and contain the specific plan provisions and requirements for determining eligibility to make contributions and receive benefit payments under the plan. It is important to note that the goal of menu construction for participant-directed qualified retirement plans is not to attempt to create a single portfolio that can serve the interests of all participants. Instead, fiduciaries should seek to select a mix of investment options sufficient to allow participants to build their own portfolios appropriate to their individual needs and risk tolerances. In order to give plan participants the opportunity to reduce risk in their portfolios, we believe fiduciaries should make investments available in at least three major asset classes. The most basic menu will include cash equivalent, fixed income and equity mutual funds. A Plan Sponsor s To meet the unique needs of its participants, a plan may offer more expanded menus that provide equity funds that follow various investment styles and objectives, such as those that specialize in large or small companies. Equity funds can be further subdivided into those offering growth and value styles of investing. Including international equities in the menu may allow for even more diversification opportunities. Additionally, passively managed funds that track a specific index may provide a low cost menu option. An advanced fund menu can be created by including various fixed income options and non-traditional asset classes as well, such as real estate investment trusts. Some fiduciaries may also choose to make available self-directed brokerage options through mutual fund windows to create additional opportunities for diversification. Sample plan investment menus Basic Menu Expanded Menu Money Market/Stable Value Money Market/Stable Value Intermediate-Term Bond Intermediate-Term Bond Inflation-Protected Securities Intermediate-Term Bond High Yield Global Bond Inflation-Protected Securities Large Cap Value & Growth or Large Cap Blend Small Cap Value & Growth or Small Cap Blend Foreign Large Value & Growth or Foreign Large Blend Large Cap Value & Growth or Large Cap Blend Mid Cap Value & Growth or Mid Cap Blend Foreign Large Blend Small Cap Value & Growth or Small Cap Blend (a) Consistent with ERISA Section 404(c), investment options are selected by the Committee to provide participants with an opportunity to diversify their accounts across a reasonable risk and reward spectrum. (c) The investment options provided under the Plan are intended to accommodate the needs of participants whose investment objectives may range from long-term to short-term nature and may have risk tolerances ranging from high to low. Mid Cap Value & Growth or Mid Cap Blend Foreign Large Value & Growth or 1) Purpose of investment options Large Cap Value & Growth or Large Cap Blend Small Cap Value & Growth or Small Cap Blend D. Investment option menu (b) Participants may select from any combination of investment options provided under the Plan and may change the asset allocation of their investments pursuant to the Plan provisions. Advanced Menu Money Market/Stable Value Commodity Funds Real Estate Investment Trusts Following prudent processes regarding default investments can help fiduciaries: Increase the likelihood that employees who don t select an investment of their own will still have a favorable outcome at retirement. Under the Pension Protection Act of 2006, lawmakers and regulators have given special protection to employers who choose certain types of investments designated as Qualified Default Investment Alternatives or QDIAs. Plan sponsors who choose a QDIA and satisfy its requirements receive safe harbor protection for QDIA assets. What qualifies as a QDIA? The types of investments that qualify as QDIAs are more diversified and generally more aligned with participants financial and retirement needs than the stable value investments that predominated as defaults before QDIA regulations were issued in 2007. The Department of Labor notes in the preamble to its QDIA regulations that it is widely believed to be advantageous to invest retirement savings in diversified portfolios that include equity. Sample Investment Policy Statement If your current default investment fits within one of the designated QDIA investment types. What type of default investment is best for your plan and employees. Approved QDIAs, as defined by Department of Labor regulations, include: Whether a default investment that meets QDIA requirements can be chosen from, or created using, your current investment menu. 1. Managed accounts 2. Target date investments How to document the decisions your investment committee makes in order to protect your firm. 3. Balanced investments The final QDIA regulations also provided grandfathered QDIA protection for certain stable value products used as defaults and invested before December 24, 2007. Going forward, safe harbor protection is predicated on choosing any of the three investment types shown above, not on choosing the correct one from the three. Merrill Lynch provides access to investment products for all three QDIAs and can assist you in making QDIA-related decisions.1 Foreign Large Value & Growth or We offer a breadth and depth of solutions to serve Foreign Large Blend Emerging Markets virtually all plan types, from basic to complex. Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. 1 Fiduciary Compliance Checklist Fact Sheet This guide outlines a process designed to help investment committees determine: What your fiduciary obligations are regarding default investments. Menu Construction & Fund Due Diligence Bank of America Merrill Lynch does not provide advice on the roles and responsibilities of fiduciaries. Please consult your own counsel regarding the matters discussed in this document to the extent that they may apply to your situation. The selection and monitoring of investments in the plan in question remains the responsibility of the plan fiduciary, which shall in no instance be Bank of America Merrill Lynch, any of its affiliates, or any employees of Bank of America Merrill Lynch or its affiliates, unless the plan sponsor has a service agreement with Bank of America Merrill Lynch for Defined Contribution Investment Consulting Services. Default Investment Selection RETIREMENT & BENEFIT PLAN RVICES RETIREMENT & BENEFIT PLAN RVICES Making Plan Health Automatic Defined Contribution Fee Policies WORKPLACE INSIGHTSTM RETIREMENT & BENEFIT PLAN RVICES The importance of 401(k) plans to both businesses and their employees is especially relevant in today s workplace. Results from our 2012 Workplace Benefits Report show that 91% of employees surveyed view the 401(k) as one of the most critical savings vehicles for retirement income.1 And, for employers a healthy, successful retirement plan is valuable in helping attract and retain talent, while maximizing employee satisfaction and productivity. Success by Plan Design Improving 401(k) plan health and employee wellness For these reasons, plan sponsors have made providing a strong retirement program a top priority. However, approximately a quarter of employees don t take advantage of the benefits offered. Procrastination, inertia, and lack of knowledge can prevent them from enrolling, maximizing contributions and investing wisely in their 401(k) plans. Automatic features promote fuller plan participation Automatic plan design features can be a highly effective way of kick-starting employees to invest in their 401(k). Making the decision-making automatic can help increase participation in the plan and gradually raises employees contribution rates to help ensure they save more over time. By encouraging every employee to participate and save more through automatic features, plan sponsors can effectively take steps to improve participant behavior and the health and success of their 401(k) plans. Design your plan with auto features to help influence positive outcomes Automatic enrollment When employees meet your plan s eligibility criteria, and do not take action on their own, they are automatically enrolled in the plan. Automatic deferral increases Automatically increasing employees deferral rates periodically, either annually on a pre-determined date or to coincide with salary increase dates, helps ensure that contributions steadily increase unless participants opt out. Automatic investing Selecting a default investment that helps employees build a strong foundation for retirement is critical. This is the investment in which employee contributions are placed, absent an election by the employee. You should choose an automatic enrollment default investment that is prudent for your participant demographics. And, Bank of America Merrill Lynch offers a number of investment choices that may qualify as a Qualified Default Investment Alternative (QDIA). The New Era of Fee Transparency: Making Sense of the Details Considerations for Plan Sponsors and Fiduciaries When 401(k) plans first came into being, the question Who pays for what? could be answered fairly simply. Over time, however, fees became more complex. Concern grew that sponsors and participants alike did not have the information they needed to properly evaluate the amount being paid and the way fees impact each participant. Recent Department of Labor (DOL) requirements have ushered in a new era of fee transparency. In the early days of the 401(k) plan, before the widespread introduction of mutual funds, 401(k) sponsors typically paid for administrative costs such as recordkeeping and trust services. Participants typically paid for investment management through the fees charged Quick links DOL guidance on fees charged to the plan......... 2 The 401(k) landscape has changed dramatically over the past 30 years. What began as Table of Contents Who pays for what?......... 3 a mention in a code section has become the most valuable savings plan for workers The move to greater fee transparency........... 3 Beginning With a Well-Defined Process................... 2 retirements. Simple plans have become more complex, small balances have grown into The case for creating sponsor and fiduciary fee policies................ 4 Sponsor/fiduciary decision tree............... 6 larger portfolios, and regulators have struggled to keep pace with the speed of change. New laws, new regulations and additional requirements have been appended to the 401(k). But one constant has been the role of the fiduciary, and the obligation to put the best 1 Success by Plan Design White Paper 2012 Workplace Benefits Report Methodology: Boston Research Group interviewed a national sample of 1,000 employers of all sizes and 1,000 employees from January 2012 through March 2012 on behalf of Bank of America Merrill Lynch. To have qualified for the survey, employers must have offered their employees a 401(k) plan. Making Plan Health Automatic Fact Sheet Developing a Benchmarking Strategy.................. 6 One of the most important fiduciary responsibilities is to understand the services being Getting Started Is Easy..... 6 provided and ensure that the fees being charged to the plan are reasonable. This paper The Role of Your Services Team..................... 8 RETIREMENT & BENEFIT PLAN RVICES At Bank of America Merrill Lynch, we seek to deliver industry-leading retirement and benefit plan solutions for companies of all shapes and sizes. It is our mission to be a trusted resource to help you manage your business and help your employees achieve financial wellness. We do this through a number of service and support initiatives. It is our hope that you will take advantage of our resource to help you fulfill your obligations as a plan fiduciary. About this guide We designed this document to help you understand and comply with Department of Labor (DOL) fee disclosure regulations. For the past few years, fee disclosure regulations have evolved in order to provide plan participants more transparency. In this booklet, we help you understand what the regulations mean, outline our responsibilities as a covered service provider and your responsibilities as the plan fiduciary, and map out next steps so that you can feel confident that you are in compliance. You will want to review this guide and familiarize yourself with your requirements and responsibilities. Plan sponsor and participant disclosures DOL regulations 408(b)(2) and 404(a)(5) The fee disclosure regulations are part of a three-stage DOL project that has been under way since 2007. The overall intent is to improve fee transparency. The regulations were developed to help ensure that ERISA fiduciaries understand the fees being charged so they may evaluate whether those fees are reasonable. ERISA requires the responsible plan fiduciary (you, as plan sponsor) to determine the reasonableness of the fees that are being charged to the plan and to the underlying participants (your employees). The first element, which was finalized and effective for plan years beginning on or a er January 1, 2009, is an expansion of the Form 5500 Schedule C, and requires plan sponsors to report any fees paid from plan assets over the course of a plan year to service providers. This guide focuses on the final two elements: 408(b)(2) and 404(a)(5) disclosures. Quick links About this guide 1 Overview of regulations 1 Fee disclosure to plan sponsors 408(b)(2) 1 Fee disclosure to participants 404(a)(5) 3 Participant fee disclosure distribution options 5 Additional considerations 6 recordkeeping and other services were free or at least low cost. The trend started of Labor (DOL) will help you build best practices for evaluating plan fees and determine whether you are with proprietary-only mutual fund families where the mutual fund company adapted requirements have striking a balance between the fees you pay and the services you receive. existing systems that were well suited to a daily valuation environment and used fund ushered in a new era revenue to subsidize recordkeeping costs. of fee transparency. Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. Defined Contribution Fee Policies White Paper Volume 1, Issue 2 Plan Sponsor to Fee Disclosure Recent Department Participant Communication & Education Program HOW WE CAN HELP YOU You want your employees to be able to make the most of the retirement plans you offer. That s why Bank of America Merrill Lynch provides a robust suite of educational materials to help your employees prepare for their financial future and strengthen their overall financial health. Learn about the communications available to you and how to access them. Fee disclosure to plan sponsors 408(b)(2) Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value The New Era of Fee Transparency White Paper RETIREMENT & BENEFIT PLAN RVICES When you make the transition to Bank of America Merrill Lynch, we will be available to consult with you on compliance-related activities and communications, including the Sarbanes-Oxley blackout provisions and 404(a)(5) plan-related change notice requirements, to make your transition as smooth as possible. This guide to compliance resources is designed to advise you of the availability of comprehensive information from a variety of trusted sources that may assist you in meeting your fiduciary responsibilities. Given the 30-day notice requirements, careful decisions must be made about investment offerings, transaction deadlines and availability of records. Your Bank of America Merrill Lynch team will work closely with you to help ensure that your employees are well-informed of important transition and blackout dates, as well as new plan features and investment options. Where to go for... Below are illustrative samples of a participant communications implementation schedule for a defined contribution plan. Scheduling can be modified to fit your needs. General information on meeting your fiduciary responsibilities The Department of Labor (DOL) provides an online publication at http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html that covers such topics as: What are the essential elements of a plan? How do employees get information about the plan? Who is a fiduciary? How are employers required to report plan activities? Months 1 2 Month 4 What is the significance of being a fiduciary? Can a fiduciary terminate its fiduciary duties? Implementation communications planning process begins Review of plan features Final reminder blackout period Limiting liability What help is available for employers who make mistakes? On-boarding communications mailing completed Finalize communications strategy and implementation plan Hiring and monitoring a service provider Tips for employers with retirement plans Information posted on plan sponsor intranet Development of on-boarding and ongoing communication materials Blackout period begins Prohibited transactions Sample communications implementation schedule This schedule is subject to change during the implementation phase. Promote meetings (posters, HTML e-mail) Month 3 GO LIVE Plan sponsor announcement of changes Plan is live announcement and key account access information available on Benefits OnLine (BOL) Advocate and Call Center training Sarbanes-Oxley and 404(a)(5) plan-related change notices sent to all employees (eligible, participating, terminated and retired with a balance) Information to include: Transition overview Enhanced, new services New fund offerings Key dates Enrollment campaign for all eligible, non-participating employees to encourage participation Seminars available (in person, on demand, webcast) Conversion Participation Plan appreciation Implement transition services for terminated employees with balances Make available most recent 404(a)(5) participant disclosure to newly eligible participants Sample plan implementation timelines On-boarding for January go live date On-boarding for July go live date Implementation activity October November December January Implementation activity April May June July This guide addresses two disclosure requirements: On-boarding completed December 31 Go live mid July Service Provider Fee Disclosure, also known as 408(b)(2) disclosure Go live mid January Fee disclosure requirements Investment products: Plan Sponsor to Compliance Resources Pre-conversion web meetings for plan sponsor management This means that Merrill Lynch, the service provider, must provide a disclosure notice to you, the plan sponsor. This will enable you to determine the reasonableness of fees prior to entering into, extending or renewing service contracts. Changes must also be disclosed as soon as practicable, but not later than 60 days from the date we are notified of the change. However, any changes to investment-related information must be updated on an annual basis. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. RETIREMENT & BENEFIT PLAN RVICES Benefits staff and leader preparation Service Provider requirements For institutional use only. Sample Participant Communications Schedule On-boarding completed end of month 4 The final 408(b)(2) disclosure regulations require covered service providers to provide a description of services being offered and the compensation expected in connection with those services. The regulation was effective July 1, 2012. Comparing Costs to the Value of Services................ 5 interests of participants first. by asset managers for separately managed accounts, collective trusts, and similar vehicles. Then in the early 1990 s, the 401(k) market moved to a bundled model where Understanding What You re Paying.................... 4 Compliance information The following DOL site contains information intended to assist plan sponsors in understanding and complying with the requirements of ERISA as it applies to employee retirement and other benefit plans: http://www.dol.gov/ebsa/compliance_assistance.html Contents include: General fiduciary compliance assistance Frequently Asked Questions about pension plans and ERISA Reporting and Disclosure for Employee Benefit Plans Reporting and filing resources Be sure to scroll down all the way to the bottom of this site in order to see all the materials available to help you. Compliance information on fee disclosure regulations The following DOL site contains information intended to assist plan sponsors in understanding and complying with the final fee disclosure regulations pursuant to ERISA 408(b)(2) Service Provider Fee Disclosure and ERISA 404(a)(5) Participant Fee Disclosure: http://www.dol.gov/ebsa Contents include: Overview of final fee disclosure regulations Initial disclosure timing requirements and subsequent changes Final Regulation Relating to Service Provider Disclosures Under Section 408(b)(2) fact sheet Reporting and filing resources On-boarding completed June 30 Participant Disclosure, also known as 404(a)(5) disclosure Plan Sponsor to Fee Disclosure Participant Communication & Education Program Sample Participant Communications Schedule Plan Sponsor to Compliance Resources

RETIREMENT & BENEFIT PLAN RVICES fiduciary compliance checklist You should periodically evaluate your plan s fiduciary governance structure and procedures. Below is a list of basic requirements and best practices that every fiduciary should review to help ensure that they are meeting their responsibilities. Plan Legal Documents 1. Plan document has been updated and reflects the most recent legislative changes. Signed copies of documentation, amendments, resolutions and Summary Plan Description (SPD) are on file. 2. An IRS Determination Letter, if applicable, is on file. 3. Plan s Loan Policy, if applicable, has been completed and signed. 4. Plan s Qualified Domestic Relations Order (QDRO) procedures are on file. 5. Interpretations of plan language are documented and on file. 6. Signed agreements are on file for all plan-related service providers, outlining responsibilities, fees and service standards. Compliance 1. Annual IRS Form 5500 reporting completed by the required filing date. 8. Fidelity bonding requirements met in accordance with ERISA. 2. Annual plan contribution limits reviewed. 9. Pursuant to ERISA 408(b)(2), plan sponsors receive notice of fees charged and should ensure they are reviewed for reasonableness. 3. Nondiscrimination testing completed and corrective action taken as needed. 4. Plan met annual required minimum distribution (RMD) rules. 5. Salary-deferral contributions submitted on a timely basis. 6. Summary Annual Report distributed to participants. 7. Applicable annual written notices provided to plan participants 30 to 90 days before the beginning of the plan year (i.e., Safe Harbor 401(k) Notice, Automatic Enrollment Notice, Qualified Default Investment Alternative (QDIA) Notice). 10. Participants receive various participant fee disclosure notices under ERISA 404(a)(5), including an annual notice that must be distributed to all eligible and participating employees and a quarterly notice that must be distributed to all participating employees. 11. A 404(a)(5) plan related change notice is provided to participants at least 30 days, but no more than 90 days, in advance of a change (e.g., to investment options, plan restrictions or individual fees).

Investments 1. Investment Committee has been established to review fund options available to participants. 8. Reviews of menu construction are conducted on an annual basis. 2. Investment Committee has formally adopted a written Investment Policy to which it conforms. 9. Investment reviews are documented and action is taken as needed (e.g., replacing or eliminating an investment option). 3. The Investment Policy Statement is reviewed periodically, is current and is kept on file with other plan documents. 4. The Investment Policy Statement: Defines the objectives of the investment options in the plan. Defines the people or positions responsible for managing and administering the plan. Outlines criteria to be used in selecting, measuring, monitoring, replacing or eliminating investment options in the plan. Explains that costs of the plan and investments within the plan will be monitored and evaluated against clearly defined benchmarks. 10. 404(a)(5) participant fee disclosure notices are distributed annually to all eligible and participating employees within 12 months of the last distributed 404(a)(5) notice, and a quarterly notice that must be distributed to all participating employees. 11. A 404(a)(5) plan related change notice is provided to participants at least 30 days, but no more than 90 days, in advance of a change (e.g., to investment options, plan restrictions or individual fees). Plan sponsors seeking 404(c) protection should ensure that: 12. The investment menu includes a broad, well-diversified investment lineup that covers the risk/return spectrum. Summarizes ERISA guidelines for participant communications and the plans for addressing those guidelines. 13. The intention to be 404(c) compliant is documented, and legally required information has been distributed to participants. Includes signatures from all known plan investment fiduciaries, acknowledging they intend to manage the plan in keeping with applicable laws, trust documents and the Investment Policy Statement. 14. An up-to-date SPD which describes the features of the plan and has been approved by legal counsel is distributed to participants at the frequency required by law. 5. The election regarding compliance with QDIA regulations has been documented. 15. Enrollment programs explain the importance of plan participation, saving for retirement, investment diversification and other investment basics. 6. Investment performance is regularly reviewed and compared to appropriate benchmarks. 16. Required initial and ongoing participant education and communication is planned, delivered and documented. 7. Plan sponsor provides investment education to the participants. This document is designed to provide general information for plan fiduciaries to assist with planning strategies for their retirement plan and is for discussion purposes only. Representatives of Bank of America Merrill Lynch do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own independent advisor as to any tax, accounting or legal statements made herein. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value 2013 Bank of America Corporation. All rights reserved. ARU946CC 00-63-0970NSB 12/2013

RETIREMENT & BENEFIT PLAN RVICES Sample investment Policy Statement (ips) Maintenance of an Investment Policy Statement (IPS) is consistent with Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards and is one of the most important duties of an individual fiduciary or a fiduciary committee. The following sample IPS is intended to provide an overview of a typical investment policy statement for large- and mid-sized participant-directed 401(k) retirement plans. Any IPS created should be reviewed by an attorney knowledgeable in this specific area of the law. i. introduction A. Purpose of Investment Policy Statement. The purpose of this Investment Policy Statement is to document the investment objectives and investment policies for the XYZ, Inc. 401(k) Profit Sharing Plan (Plan). The IPS is intended to assist the XYZ, Inc. 401(k) Profit Sharing Plan Investment Committee (the Committee) in meeting their fiduciary obligations under (ERISA) by: 1) Making a clear distinction between the responsibilities of the Committee, the investment funds, the plan participants and beneficiaries, and other plan service providers; 2) Establishing a framework for the selection, monitoring, and evaluation of the Plan s investment funds; and 3) Affirming the Plan is intended to meet the safe harbor requirements of ERISA Section 404(c). B. Statement of intent. In accordance with their fiduciary responsibility under ERISA, investment decisions of the Committee will be made solely in the interest of the participants and beneficiaries of the Plan and for the exclusive purpose of paying benefits to participants and defraying the reasonable cost of administration. It is the intent of the Committee that its members and any other fiduciary action on behalf of the Plan shall perform their duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. This statement is an outline of the Committee s general investment policies and is intended to supersede any earlier statement(s) of investment policies and objectives effective with the date this statement is executed. The Policy will be reviewed at least annually and revised as necessary to reflect changes related to the Plan. C. Plan objective. The Plan was established to provide eligible employees an opportunity to contribute in order to provide a source of retirement income in addition to that received from other savings or benefits they may accumulate over the course of their working careers. The Plan is intended to meet the applicable conditions for qualification under Section 401(a) of the Internal Revenue Code of 1986 as amended and provide for benefits based solely on the amount contributed to each participant s account plus or minus any income, expenses, and gains or losses. The Plan Document and Summary Plan Description for the Plan are the governing plan documents and contain the specific plan provisions and requirements for determining eligibility to make contributions and receive benefit payments under the plan. D. Investment option menu 1) Purpose of investment options (a) Consistent with ERISA Section 404(c), investment options are selected by the Committee to provide participants with an opportunity to diversify their accounts across a reasonable risk and reward spectrum. (b) Participants may select from any combination of investment options provided under the Plan and may change the asset allocation of their investments pursuant to the Plan provisions. (c) The investment options provided under the Plan are intended to accommodate the needs of participants whose investment objectives may range from long-term to short-term nature and may have risk tolerances ranging from high to low.

2) Construction of the investment option menu (a) The number and types of investment options and the investment funds (mutual funds, collective trusts of other fund types as approved by the Committee retained to manage the investment options) are subject to change based upon the Committee s on-going review and evaluation of the investment menu offered to participants. (b) The Committee may add, replace, or remove investment options or funds at any time when it concludes such a change is in the best interests of plan participants and beneficiaries. (c) Investment options generally will not be added, if, in the Committee s judgment, they are redundant or duplicative of existing options. (d) When selecting investment options the Committee will bear in mind the wide range of needs of the participants. (e) The investment options that are currently available under the Plan are described in the attached Appendix A. ii. Statement of responsibilities A. Investment Committee. The Board of Directors has authorized the Chief Executive Officer to appoint members to the Committee. It is important to be certain that the fiduciary committee (or individual) is properly named and authorized. Many plan documents name the company as the fiduciary. The Board of Directors subsequently formally delegates the fiduciary role to specific individuals or committees. In fulfilling its duties and obligations hereunder, the Committee shall be responsible for: 1) Selecting the investment design features of the Plan. This includes establishing (a) the investment policy and objectives, (b) the number and types of investment alternatives available to Plan participants, and (c) participant investment procedures. 2) Selecting, monitoring and evaluating all investment funds in accordance with guidelines and benchmarks established within this document and ERISA. 3) Monitoring plan costs which are charged to plan assets and/or paid by plan participants, including but not limited to recordkeeping and administration fees, investment management fees, custodial fees and fees paid to other plan service providers from plan assets. 4) Providing general investment information to plan participants regarding the procedures for making investment choices under the plan and general investment information regarding each of the investment options offered under the plan, including information intended to meet the requirements of ERISA Section 404(c). B. Investment fund menu. At present, the Plan primarily utilizes mutual funds and collective trust funds as plan investment vehicles. The Committee may utilize separately managed accounts, collective trusts, commingled pooled funds, mutual funds and any other funding vehicles as it deems appropriate for use by the Plan. 1) General responsibilities. Plan assets of the Plan shall be maintained in trust in accordance with applicable laws governing the operation of the retirement plans, including ERISA and their fiduciary standards. 2) Information provided to the Committee. The Committee may from time to time request the investment fund manager(s) or others with relevant knowledge and expertise to meet with them to discuss topics, including but not limited to the following: (a) The manager s views concerning the economy and the securities markets, with focus on the likely impact of the fund s strategies on portfolio performance. (b) The effects of any changes to the investment fund s organization, investment philosophy, financial condition, or professional staff.

3) Specific duties. The specific duties and responsibilities of each investment fund provider are as follows: (a) Managing the Plan s assets under their supervision in accordance with their mandates or those contained within their published guidelines or prospectus. (b) Exercising full investment discretion in regards to buying, managing and selling assets held in the portfolio. (c) Promptly voting all proxies and related actions in a manner consistent with the long-term interest and objectives of the investors. Each investment fund shall keep detailed records of the voting of proxies and related actions and will comply with all applicable regulatory obligations. C. Plan participants. The Committee recognizes that the Plan is intended to be a significant source of retirement income for plan participants and their beneficiaries. Investment, contribution, and allocation decisions shall be made solely by each plan participant subject to certain procedural and administrative guidelines and default investment procedures for automatically enrolled or other participants that do not make an investment election. The Committee shall make available to participants the investment results of the Plan s options and provide educational information relating to investment concepts and the investment options. The provision of this information does not constitute investment advice. It is solely the responsibility of each plan participant to direct the investments in their account. In the absence of participant direction, however, the Committee retains the responsibility to invest the accounts prudently for retirement (see the Qualified Default Investment language in section IV). Participants are responsible for the following: 1) Determining their contribution deferral rate. 2) Selecting their investment options for both existing balances and new contributions going forward. 3) Monitoring their asset allocation strategy and making adjustments as personal situations change. 4) Electing the timing and form of distributions according to the terms of the plan. D. Plan Administrator. The Committee is also the Plan Administrator under the plan. The Plan Administrator s duties include: 1) Administering and interpreting the provisions of the plan. 2) Providing plan participants with a Summary Plan Description. 3) Providing plan participants with an annual statement of account. 4) Providing all plan participants and eligible employees with plan-related and investment-related disclosure notices pursuant to ERISA 404(a)(5). 5) Compliance with all laws and regulations governing the plan. 6) The Committee may delegate various functions or tasks to individual employees or outside service providers. The role of Plan Administrator is a fiduciary role. The role is sometimes filled by the Investment Committee, a sub-committee or an individual. The individual or groups serving in this role and the scope of their respective duties should be formally designated. E. Investment related services. Bank of America Merrill Lynch makes investments available to the plan, and informs the Committee on various investment-related issues with respect to the oversight and potential enhancements of the Plan. Such services include: 1) Assisting the Committee with determining an appropriate process for constructing the structure of the investment menu. 2) Providing timely and accurate quarterly reports evaluating return, risk and characteristics (where available) of each of the funds compared to appropriate indexes and/or peer group universes. 3) Apprising the Committee of changes with regard to their funds in an appropriate time frame given the significance of the information. 4) Conducting a fund review at the request of the Committee when, for example, noteworthy changes or significant underperformance occurs. 5) Assisting the Committee in the search and replacement of existing funds when a review so merits this change.

Bank of America Merrill Lynch s role is to provide information to the Committee. Bank of America Merrill Lynch does not provide advice on the roles and responsibilities of fiduciaries. The selection and monitoring of investments in the plan in question remains the responsibility of the plan fiduciary, which shall in no instance be Bank of America Merrill Lynch, any of its affiliates, or any employees of Bank of America Merrill Lynch or its affiliates, unless the plan sponsor has a service agreement with Bank of America Merrill Lynch for Defined Contribution Investment Consulting Services. F. Plan Record Keeper. The Plan Record Keeper has no discretionary authority over the plan and its assets and is not a fiduciary with respect to the plan or its assets. The Record Keeper is responsible for: 1) Maintaining the plan s participant account balances in an accurate and confidential manner. 2) Preparation of quarterly participant statements. 3) Completion of the annual compliance tests as included in their service agreement. 4) Accurate and timely plan data and reports to the Committee as included in their service agreement. 5) Providing participants with electronic access to account information and transactions. 6) Coordination of the provision of fund prospectuses to participants as requested. 7) Provision of various participant communication materials as described in the service agreement and/or requested by Committee. 8) Providing the plan sponsor with disclosure notices pursuant to ERISA 408(b)(2). G. Trustee. The trustee is a non-discretionary trustee that takes direction from the Committee. The trustee is charged with the following responsibilities: 1) Safekeeping all securities, 2) Settling transactions, 3) Receiving contributions, 4) Allocating contributions among investment accounts as instructed, 5) Making participant distributions as instructed, 6) Providing periodic account statements to the Committee and other service providers as requested by the Committee, and 7) Promptly voting all proxies and related actions in a manner consistent with the long-term interest and objectives of the investors. Keeping detailed records of the voting of proxies and related actions and will comply with all applicable regulatory obligations. iii. committee process A. Meeting frequency. The Committee shall meet quarterly. These meetings will be held to review the performance of the investment funds. In the event that a meeting can not be scheduled, individual Committee members will review performance information and initiate Committee actions as necessary. The Committee will also review the investment policy and investment options offered in the plan on an annual basis. It is a best practice for large- and mid-sized retirement plans to conduct quarterly fiduciary investment reviews. It is important that the IPS not set unreasonable expectations for meeting frequency and most policies will allow for some flexibility. B. Investment fund selection. Searches for investment funds should include candidates that have demonstrated successful investment history. In selecting an investment fund, a due-diligence process is followed, which analyzes the investment fund in terms of: 1) Investment performance track record and consistency of returns given the risks taken. 2) Alignment of fund investment philosophy and style with plan option objectives. 3) Size and experience of professional staff.

4) Tenure of investment management team. 5) Competitiveness of investment management fees. 6) Compatibility with plan trading requirements. 7) An assessment of the likelihood of future investment success relative to other opportunities. C. Investment fund performance evaluation. The Committee will review the performance of investment funds quarterly to determine if they are achieving the established objectives. Investment performance reports will be sent to the Committee members semiannually coincident with scheduled Committee meetings. In the event that a meeting cannot be scheduled, individual Committee members will review performance information and initiate Committee actions as necessary. Interim meetings may be called on an ad-hoc basis at the discretion of the Committee Chairman. Performance objectives will be established for each fund and/or asset class at the time the class is included. The performance review will include measuring the funds investment performance to stated benchmarks and peer groups, as well as monitoring risk measures. The following general criteria will be evaluated: 1) Quantitative measures. This section of the policy includes the quantitative performance expectation for funds in the menu. Individual committees develop their own measures of expected fund performance. (a) Active investment strategies. Funds employing active management are compared across various metrics to the appropriate peer group for rolling three-year and five-year periods. It is also expected that the risk of each fund, as defined by standard deviation of returns, be commensurate with the appropriate market index and/or peer group. The benchmarks, peer groups and risk measures are outlined in Appendix A. (b) Passive investment strategies. Passive Funds are expected to track the performance of the index that the option is designed to replicate (less management fees), within a specified margin of error. Typically, rolling three- and five-year periods will be evaluated. It is also expected that the risk of each fund, as defined by standard deviation of returns, be commensurate with the risk of the appropriate market index. The benchmarks and risk measures are outlined in Appendix A. 2) Qualitative measures. The funds will also be monitored on an ongoing basis for other material changes that the Committee may determine are important in the decision to retain an investment fund. Such changes may include personnel departures, organizational changes, or alterations in investment style, philosophy, or strategy, and failure to adhere to stated guidelines. 3) Time periods. The Committee acknowledges that fluctuating rates of return characterize securities markets, particularly during short-term time periods. Recognizing that short-term fluctuations may cause variations in a fund s performance, the Committee intends to employ investment funds with long-term investment strategies and will evaluate fund performance from a long-term perspective. Performance over market cycles of three to five years will be weighted more heavily than performance over shorter time periods, such as one year or less. D. Investment fund termination. All investment funds are expected to perform according to their prescribed objectives. The Committee recognizes the long-term nature of retirement plan investing and the variability of market returns. Periodic underperformance in any of the criteria outlined in this policy will not necessarily lead to the termination of a fund. Underperformance will provoke thoughtful consideration by the Committee of the factors causing underperformance and possible courses of action that the Committee may take. The Committee may place a fund on probation or a watch list that calls for a greater level of review and analysis of the fund s performance. The Committee may decide to take action, including but not limited to the following: 1) Remove the fund from probation, 2) Extend the probation period, 3) Cease new contributions to the fund, 4) Terminate the fund and reallocate fund assets to an alternate fund or replacement fund either by Committee direction or employee direction as deemed appropriate by the Committee.

Factors contributing to placing a fund on probation are: 1) Performance below the performance objectives relative to the peer group over three- and/or five-year rolling periods, 2) Significant change in the risk profile of the portfolio as measured by the standard deviation of returns, 3) Significant increase in management fees or expense ratios, 4) Turnover in the management team of the portfolio, 5) Significant decrease of assets under management due to withdrawals or declining market values, 6) Deviation from the investment style on which selection of the fund was based, 7) Significant organizational change, changes in ownership, mergers, etc., 8) Or other factors which the Committee may determine are important for consideration. The Committee will endeavor to use its best judgment and information available to act in a prudent manner on behalf of the plan and its participants. The Committee reserves the right to terminate any investment fund at any time for any reason when it determines such termination is in the best interests of the plan and its participants and beneficiaries. E. Quorum and manner of acting. A quorum will be a simple majority of the members of the total Committee. A quorum must be present (in person, by telephone, by video, or other electronic access) for the Committee to take action. Decisions for any action taken by the Committee will be by majority vote of the full Committee. F. Action without a meeting. Any action that may be taken at any meeting of the Committee may be taken without a meeting if the written consent to such action by a majority of the Committee is provided. Such written consent may be executed jointly or severally. iv. asset classes The Committee will consider the following asset classes for possible inclusion in the plan s investment menu: A. Domestic Equity Funds. 1) Capitalization Large Cap, Mid Cap, Small Cap 2) Style Growth, Value, or Blended styles B. International Equity Funds. 1) Capitalization Large Cap, Mid Cap, or Small Cap 2) Style Growth, Value, or Blended styles C. Bond Funds. 1) Investment Grade (Portfolio Weighted Average of A) 2) Portfolio Duration (Long-Term, Intermediate, or Short-Term) 3) Government, Corporate, or Blended 4) Domestic and/or International D. Cash & Equivalents Funds. 1) Money Funds 2) Stable Value Funds (GIC/BIC/Synthetics) E. Pre-Set Asset Allocation Funds. The Committee may decide to offer pre-set asset allocation funds and/or balanced funds which are intended to provide an investor with an asset allocation option that they may determine is aligned with their own risk and return preferences. These asset allocation type funds are broadly diversified by asset class, issuer, issue type, and economic sector. These preset asset allocation funds will be made up of funds currently offered individually as fund choices to the participants (see Appendix A). The Committee will be responsible for the asset allocations of each of the pre-set alternatives provided. The Committee may utilize outside research in making determination of the asset allocations of the pre-set mix asset allocation funds.

F. Advice. Investment Choices will also include access to individualized investment advice provided by a third party chosen after due diligence by the Committee. The contract with the Advice Access service dated [MM DD, YYYY] is incorporated in this Investment Policy by reference. This investment alternative will be the default investment used in instances where a participant does not make an investment election for contributions to the Plan. Combined with the required notices, this option is intended to satisfy the requirements of the Department of Labor s Qualified Default Investment Alternative regulations. The choice of a Qualified Default Investment Alternative (QDIA) is an important fiduciary function. This choice should be documented in the IPS. G. Other asset classes. The Committee may also consider other asset classes or strategies as it deems appropriate. v. erisa 404(c) statement A. ERISA 404(c) Safe Harbor Compliance. It is the Committee s intent that the Plan comply with ERISA 404(c) guidelines. The Committee has structured the program (investments and participant services) to meet the criteria outlined within Section 404(c). While the notation of 404(c) status in an IPS does not contribute to the satisfaction of the 404(c) requirements, the IPS is a good place for the fiduciaries to remind themselves of their intention to utilize this safe harbor. 1) The Committee believes it complies with the requirements of ERISA 404(c) and has provided notice of its statement of compliance to plan participants. 2) The plan participants will be responsible for the investment decisions and investment transactions that they make under this plan. vi. adoption and signatures This Investment Policy Statement is adopted by the Committee and effective on this day of,. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value 2013 Bank of America Corporation. All rights reserved. AREUJCJ5 00-63-0973B 12/2013

RETIREMENT & BENEFIT PLAN RVICES menu construction & fund Selection Due Diligence Creating an investment menu and selecting and monitoring the investments that comprise the menu are among the most challenging responsibilities plan fiduciaries face. These complex activities must be carried out in compliance with the Employee Retirement Income Security Act of 1974 (ERISA), which sets standards of fiduciary conduct in relation to retirement plans. Fiduciaries who fail to follow ERISA s principles may be held personally liable for their conduct. That s why it s important to have a good understanding of your fiduciary investment responsibilities. This guide was designed to provide information you may find helpful in fulfilling your fiduciary role. Your Bank of America Merrill Lynch representative is also ready to assist you. menu construction It is important to note that the goal of menu construction for participant-directed qualified retirement plans is not to attempt to create a single portfolio that can serve the interests of all participants. Instead, fiduciaries should seek to select a mix of investment options sufficient to allow participants to build their own portfolios appropriate to their individual needs and risk tolerances. In order to give plan participants the opportunity to reduce risk in their portfolios, we believe fiduciaries should make investments available in at least three major asset classes. The most basic menu will include cash equivalent, fixed income and equity mutual funds. To meet the unique needs of its participants, a plan may offer more expanded menus that provide equity funds that follow various investment styles and objectives, such as those that specialize in large or small companies. Equity funds can be further subdivided into those offering growth and value styles of investing. Including international equities in the menu may allow for even more diversification opportunities. Additionally, passively managed funds that track a specific index may provide a low cost menu option. An advanced fund menu can be created by including various fixed income options and non-traditional asset classes as well, such as real estate investment trusts. Some fiduciaries may also choose to make available self-directed brokerage options through mutual fund windows to create additional opportunities for diversification. Sample plan investment menus Basic Menu Expanded Menu Advanced Menu Money Market/Stable Value Money Market/Stable Value Money Market/Stable Value Intermediate-Term Bond Intermediate-Term Bond Inflation-Protected Securities Intermediate-Term Bond High Yield Global Bond Inflation-Protected Securities Large Cap Value & Growth or Large Cap Blend Small Cap Value & Growth or Small Cap Blend Foreign Large Value & Growth or Foreign Large Blend Large Cap Value & Growth or Large Cap Blend Mid Cap Value & Growth or Mid Cap Blend Small Cap Value & Growth or Small Cap Blend Foreign Large Value & Growth or Foreign Large Blend Large Cap Value & Growth or Large Cap Blend Mid Cap Value & Growth or Mid Cap Blend Small Cap Value & Growth or Small Cap Blend Commodity Funds Real Estate Investment Trusts We offer a breadth and depth of solutions to serve virtually all plan types, from basic to complex. Foreign Large Value & Growth or Foreign Large Blend Emerging Markets

considerations for menu construction Fiduciaries should be careful to consider participant behavior when constructing an investment menu. Some participants may have little or no financial knowledge and may simply divide their assets equally among the funds offered. Others will put all of their assets into last quarter s best performing fund. Some investors may use the menu to attempt to make tactical trading decisions instead of strategic asset allocation decisions. The bottom line to menu construction under ERISA is that there is no one-size-fits-all menu that will serve every plan s need. Fiduciaries are obligated to select plan investments with the demographics of their employee population in mind. More Equity Options Less Participant Investment Knowledge More Participant Investment Knowledge Less Fiduciary Governance Discipline More Fiduciary Governance Discipline Fewer Educational Resources More Educational Resources Less Sophisticated Asset Allocation Tools More Sophisticated Asset Allocation Tools Advanced Menu Basic Menu Younger Older More Fixed Income Options Asset allocation tools Asset allocation tools have become the centerpiece of qualified retirement plan investing. Balanced funds are the most basic of asset allocation tools and have existed for years. More recently, fund managers and retirement plan service providers have brought a wide array of tools to the marketplace. For example, risk based portfolios, target date funds and individual advice products, such as Bank of America Merrill Lynch s Advice Access, are now widely used. Your Bank of America Merrill Lynch representative can work with you to help you determine which allocation tools are best suited for your plan. fund screening and due diligence The focus list With a universe of more than 5,000 mutual funds from over 151 fund families to choose from1, narrowing the choices to a manageable list of suitable funds to be considered for a plan s menu can be a substantial challenge for a fiduciary. Bank of America Merrill Lynch assists clients by creating our focus list of funds developed by a proprietary screening process employing both quantitative and qualitative measures. 1 As of September, 2013. The focus list is typically made up of the six funds that scored the highest based on our screening process in 23 Morningstar fund investment categories. The focus list is evaluated and monitored on an ongoing basis and is updated as changes occur. This provides plan sponsors with investment options based on Bank of America Merrill Lynch s proprietary fund screening and due diligence.

How the focus list is derived Our proprietary screening process employs both quantitative and qualitative measures to create the focus list. Quantitative measures help narrow the list to a manageable number of potential candidates for our clients to consider for their menus. Qualitative analysis employs a due diligence process to help confirm the quantitative results in providing the final list. Mutual Fund Universe Retirement & Benefit Plan Services Fund Universe Morningstar Categorization Initial Pass/Fail Screens Quantitative Score (65%) Qualitative Score (35%) Focus List Quantitative analysis The screening process to create the focus list begins with a universe of mutual funds, each of which has been categorized according to investment style descriptions developed by a widely-respected third party source, Morningstar, Inc. We subject the list to further rigorous screenings based on fund expenses and various risk and return measures. The funds are compared to standard industry benchmarks or peer groups over three- and five-year periods. Some of the risk and return measures we use include Upside/ Downside Capture, which examines performance during up cycles and down cycles of the Market; R2, a statistical measure that represents how closely returns of one investment correlate to the returns of another, or to a benchmark index; and Alpha, which measures the difference between actual return on an investment and the expected return, given the level of risk. Each fund that passes through the quantitative screens receives a score that represents 65% of the total score for each fund. The remaining 35% of the total score is based on the qualitative analysis. Qualitative analysis Qualitative analysis helps Bank of America Merrill Lynch to develop an understanding of the personnel, philosophy and processes of the fund company. A variety of characteristics are evaluated, such as: organizational stability, portfolio manager experience and tenure, portfolio construction methodology of the fund, risk reduction strategies and fund disciplines for buying and selling securities for its portfolio. We examine many aspects of a fund s operating procedures: How does a fund go about finding the kinds of stocks it is seeking? Does its management team have the depth, experience and organization to execute the fund s strategy? What portfolio modeling technique is used by the fund and how does this impact the end results? Ongoing investment monitoring Bank of America Merrill Lynch provides reviews of the investment performance of your plan though the Plan Sponsor Investment Review (PSIR) report that is customized with your plan information. Your plan s investments are monitored using the same quantitative parameters used in our initial screening process. The report offers a Scorecard showing the results for all the funds on your menu or includes a watch list of funds whose total quantitative score falls in the bottom quartile of their peer group. Your Bank of America Merrill Lynch representative can assist you in reviewing all your investment options based on your Investment Policy Statement and the PSIR Scorecard results. The PSIR report provides for your consideration a list of alternative funds from our focus list, should you decide it is appropriate to consider replacing a fund. The alternatives will show historical performance as well as more detailed portfolio statistics to assist the fiduciary in selecting a new fund.

We can help As a Bank of America Merrill Lynch client you do not have to face the complex tasks of menu construction, fund selection and monitoring alone. Your Bank of America Merrill Lynch representative is ready to assist you at every step. Bank of America Corporation is one of the world s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. Through your Bank of America Merrill Lunch representative, the strength of our services can support you in fulfilling your important duties as a plan investment fiduciary. The Advice Access service uses a probabilistic approach to determine the likelihood that participants in the service may be able to achieve their stated goals and/or to identify a range of potential wealth outcomes that could be realized. Additionally, the recommendations provided by Advice Access do not consider an individual s comfort level with investment risk, and may include a higher level of investment risk than a participant may be personally comfortable with. Participants are strongly advised to consider their personal goals, overall risk tolerance, and retirement horizon before accepting any recommendations made by Advice Access. Participants should carefully review the explanation of the methodology used, including key assumptions and limitations, which is provided in the Advice Access disclosure statement. It can be obtained through Benefits OnLine or through your Bank of America Merrill Lynch representative. IMPORTANT: The projections or other information shown in the Advice Access service regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time. Investors should consider the investment objectives, risks, charges and expenses of investment options carefully before investing. This, and additional information about the investment options that are mutual funds, can be found in the prospectuses and, if available, the summary prospectuses, which can be obtained by contacting your Merrill Lynch Financial Advisor or Bank of America Merrill Lynch representative. Investors should read the prospectuses and, if available, the summary prospectuses carefully before investing. Important: This publication provides general information about fiduciary-oriented ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any financial or regulatory changes. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value Bank of America Merrill Lynch makes available investment products sponsored, managed, distributed or provided by companies that are affiliates of BAC or in which BAC has a substantial economic interest, including BofA Global Capital Management. Unless otherwise noted, registered trademarks and trademarks are the property of Bank of America Corporation. 2013 Bank of America Corporation. All rights reserved. ARGW6KGY 00-63-0972NSB 12/2013

RETIREMENT & BENEFIT PLAN RVICES Default investment Selection A Plan Sponsor s Providing a default investment is essential for employers who sponsor an employee-directed defined contribution retirement plan particularly for those who make nonelective contributions or have automatic enrollment. This guide is designed to help you understand Qualified Default Investment Alternatives and your fiduciary obligations. Following prudent processes regarding default investments can help fiduciaries: Increase the likelihood that employees who don t select an investment of their own will still have a favorable outcome at retirement. Help reduce the likelihood that participants will bring lawsuits against their employer if they lose money in the plan or fail to generate an adequate return over time. Under the Pension Protection Act of 2006, lawmakers and regulators have given special protection to employers who choose certain types of investments designated as Qualified Default Investment Alternatives or QDIAs. Plan sponsors who choose a QDIA and satisfy its requirements receive safe harbor protection for QDIA assets. What qualifies as a QDia? The types of investments that qualify as QDIAs are more diversified and generally more aligned with participants financial and retirement needs than the stable value investments that predominated as defaults before QDIA regulations were issued in 2007. The Department of Labor notes in the preamble to its QDIA regulations that it is widely believed to be advantageous to invest retirement savings in diversified portfolios that include equity. Approved QDIAs, as defined by Department of Labor regulations, include: 1. Managed accounts 2. Target date investments 3. Balanced investments The final QDIA regulations also provided grandfathered QDIA protection for certain stable value products used as defaults and invested before December 24, 2007. This guide outlines a process designed to help investment committees determine: What your fiduciary obligations are regarding default investments. If your current default investment fits within one of the designated QDIA investment types. What type of default investment is best for your plan and employees. Whether a default investment that meets QDIA requirements can be chosen from, or created using, your current investment menu. How to document the decisions your investment committee makes in order to protect your firm. Going forward, safe harbor protection is predicated on choosing any of the three investment types shown above, not on choosing the correct one from the three. Merrill Lynch provides access to investment products for all three QDIAs and can assist you in making QDIA-related decisions.1 Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. 1 Bank of America Merrill Lynch does not provide advice on the roles and responsibilities of fiduciaries. Please consult your own counsel regarding the matters discussed in this document to the extent that they may apply to your situation. The selection and monitoring of investments in the plan in question remains the responsibility of the plan fiduciary, which shall in no instance be Bank of America Merrill Lynch, any of its affiliates, or any employees of Bank of America Merrill Lynch or its affiliates, unless the plan sponsor has a service agreement with Bank of America Merrill Lynch for Defined Contribution Investment Consulting Services.

Your fiduciary obligations Selecting an appropriate default Absent participant investment directions, the fiduciaries of a participant directed plan are responsible for prudently investing participant assets for retirement. When choosing a default investment, fiduciaries must: Your plan s investment committee or a similar decision-making group should schedule time on its agenda or set a special meeting to consider whether your current default (if your plan has one) is still appropriate, or if a new default investment should be put in place in light of the QDIA safe harbor. Act solely in the interest of participants for the purpose of providing benefits to those participants and their beneficiaries and defray reasonable expenses associated with the plan. Diversify assets to minimize the risk of large losses. Act in accordance with their investment policy statement, the plan document and the law. When choosing a QDIA If a plan sponsor2 chooses a QDIA, the type of investment chosen is deemed prudent without the plan sponsor having to prove it was an appropriate choice. The plan sponsor must still act prudently in selecting and monitoring the specific investment within the QDIA type. This includes the requirement that the fiduciaries ensure that the fees associated with the investment are reasonable. A plan sponsor s decision to use a target date portfolio as its default investment type would be deemed a prudent decision, for example, because a target date portfolio is one of the designated QDIAs. The selection of funds or investments within that portfolio, however, must be prudently made and regularly monitored. When choosing a default that s not a QDIA A fiduciary can choose a default that is not a QDIA (a stable value fund, for example); however, the plan sponsor would have the responsibility to prove, if challenged, that the investment type selected was prudent. With stable value and money market funds, this may be difficult to demonstrate since the Department of Labor, in setting QDIA rules, explicitly considered them, concluded they lack the potential for long-term growth and did not include them in the list of QDIAs. The standard used to determine the prudence of a plan sponsor s decisions and actions is that of a prudent expert, acting in like capacity, familiar with such matters. The plan sponsor must give appropriate consideration to the facts and circumstances that the plan sponsor knows, or should know, are relevant to the investment and act accordingly. The fiduciary must not only choose appropriately in the beginning, but regularly monitor and evaluate the appropriateness of the selections made. 2 With appropriate legal counsel, the committee should consider these questions: Do we want the safe harbor protection provided by using an approved QDIA, or do we believe the current default is appropriate for our employees and participants even if it is not a QDIA? If safe harbor protection is desired, is the current default on the list of approved QDIAs? If safe harbor protection is desired and the current default is not an approved QDIA, what type of investment (managed account, target date or balanced) and which specific investment, group of investments, or investment manager is appropriate? All decisions should be made by committee vote and formally recorded in the minutes of the meeting. The committee should also assess and implement any changes to the plan s investment policy statement if needed. The investment policy statement should formally describe the designation of a default investment and the process used for choosing and monitoring the default. Default investments should be reviewed regularly by the investment committee. Any changes decided on by the committee should be clearly and formally communicated internally (to participants, employees, administrators and the like) and externally to service providers. Which default is appropriate for your plan? If QDIA protection is preferred, the next step is to determine which investment type is appropriate. Each has advantages and disadvantages. QDIAs can be ranked as follows, with managed accounts being most closely tied to the participant s individual needs, and target date investments being more personalized than balanced investments. 1. Managed account programs, such as those offered through the PersonalManager feature of Advice Access. 2. Target date investments, such as target date mutual funds, or GoalManager target date portfolios. 3. Balanced investments, such as GoalManager risk-based portfolios or balanced funds. The fiduciary for a plan makes the investment offering decisions for a plan, including the default investment decisions. For many plans, the plan sponsor and the fiduciary are one and the same. For others, a designated committee may be the fiduciary. We use plan sponsor and fiduciary interchangeably in this guide.

considerations for default options Here is a summary of just some of the items to consider, as well as tools available from Bank of America Merrill Lynch for evaluating each type of QDIA investment. Managed accounts As the plan sponsor, you are responsible for selecting the managed account program (such as the Advice Access PersonalManager service), unless you hire an ERISA investment manager to oversee the program on your behalf. As the plan sponsor acting as the manager, you must establish an ongoing process for reviewing the selection of the Advice Access service (or other such service) and the investment management process used. Managed accounts create individual solutions but generally require accurate and complete participant data, since poor data can lead to inappropriate investment selections. Many managed account services impose fees in addition to those related to the underlying funds. Merrill Lynch does not charge participants for the PersonalManager service.3 Please refer to the Advice Access agreement and disclosure materials and feel free to contact your Bank of America Merrill Lynch representative should you need further information. Target date investments4 Target date mutual funds offer a simple solution but generally are made up exclusively of proprietary funds from the investment company managing the overall fund. Custom target date portfolios can provide best in breed investments or managers but may lead to greater fiduciary responsibility and likely greater fees, except for very large plans. In either case, a target date investment, unlike a managed account, is a onesize-fits-all solution for participants within the same age range. GoalManager using target date portfolios is a custom solution designed to support gradual shifts in the asset allocation models to become more conservative as the target date approaches. GoalManager target date portfolios allow you to construct portfolios using investments from within your current menu investments which you have already evaluated. These investments will still need regular review. If any underlying fund underperforms, it can be replaced. As with managed accounts, the target date solution requires quality participant data particularly accurate date of birth information. Industry-recognized peer groups and benchmarks do not consider strategy differences among target funds with the same target date. Each target date series utilizes a distinct strategy that governs the asset class mix at each point on the glide path. ( Glide paths refer to the evolving mix of investments equities, fixed income and cash required to potentially achieve the appropriate outcome at retirement.) The variability of glide paths among target date series means that some offerings have a high equity exposure and the associated risk at or near retirement age. Comparing options is also made difficult by the fact that some funds determine asset mix based on life expectancy, rather than retirement date. Asset allocation strategies among target date fund managers differ and investments that are appropriate for an investor depend not only on their anticipated retirement date, but on other factors, including appetite for certain types of risk, other investments, retirement and labor income, expected longevity, and contribution rate. Even in the absence of benchmarks, plan sponsors need to determine and document how they will assess and monitor a target date investment. Options include: Total Equity and Real Estate Exposure by Target Date 100% 80% Performance of the underlying funds, using traditional measures such as risk and three or five-year performance. 60% 40% Asset allocation and conformity to the designated asset mix. 20% 0% 2015 2020 2025 2030 2035 2040 2045 2050 2055 Target Retirement Date Asset allocation can vary widely, even for the same target date, because of the varying approaches taken by different target date investment funds. Each line above represents a target date fund offered by a different provider. Source: Bank of America Merrill Lynch Institutional Investment Consulting Group, September, 2013. Ultimately, the true measure of success is whether the target date investment is performing in a manner that will help participants reach their retirement goals with the understanding that participant and employer contributions are also major factors in reaching those goals. 3 Contact your Bank of America Merrill Lynch representative to find out about plan sponsor setup or administrative fees for the Advice Access service, if any, as well as data requirements to use the service. 4 The target date for these funds and/or custom portfolios is the approximate date when an investor plans to start withdrawing the assets from a retirement account. The principal value of these investments are not guaranteed at any time, including at the target date. These funds and/or custom portfolios are designed to become more conservative over time as the target date approaches.

Balanced investments Asset allocation within the investment must create a target level of risk that is appropriate to overall plan demographics a more subjective determination than asset allocation for target date investments or managed accounts, and one which changes as the employee population evolves. Demographic considerations include: Participant age (Can a single asset mix meet the needs of a broad range of participants?) Sample Employee Demographic Profiles 12 Population 10 8 6 4 2 0 20 30 40 Age 50 60 70 Three plans might have the same average participant age, but a very different distribution of ages. These differing populations may require a very different asset allocation if a balanced investment is chosen as a default. This sample does not refl ect actual client demographic profiles. Income (Lower salaries might mean a different investment mix, since Social Security will replace a higher percentage of ending salary.) Plan design (If a defined benefit plan and/or a high employer match are offered, a different percentage of equities may be appropriate.) The asset allocation of many balanced funds and the associated risk level can vary over time. This may impact the appropriateness of the fund. Detailed regulatory requirements, including a notice to participants and a prohibition against redemption fees for withdrawals made during the first 90 days, must be met for any QDIA. Each of the alternatives requires a mix of equity and fixed income products. (Before the finalization of the QDIA rules, many target date or managed solutions did not include any fixed income exposure in their most aggressive portfolios.) Evaluating the performance of all three QDIA investment types is challenged by the limited availability of benchmarks or indices for comparison, but all three must be regularly monitored for their ongoing ability to meet participant needs. Default investment options a quick reference The following chart provides a simplified overview of some issues to consider in selecting a default investment option. It is not an exhaustive list, and your investment committee should seek appropriate legal and financial advice. Current Default Considerations Personalmanager or other managed account Program Highly targeted toward individual s needs, if the plan sponsor and participant provide complete and accurate data. Automatically updates target asset allocation and reallocates investments. Merrill Lynch assumes fiduciary responsibility for selection of the third-party investment advice provider and for delivery of the service. Goalmanager target Date Portfolio or other target Date funds Targets asset allocation based on amount of time until retirement. QDIA Alternatives Which Provide a Greater Degree of Personalization N/A Potential for the greatest degree of personalization for each participant and can address the individual differences that make a one-size-fits-all investment approach undesirable. Managed account Requires accurate data regarding employee age. Must make assumptions about retirement date. Plan sponsors must prudently select the specific series of target date funds, or if choosing custom target date portfolios, select the glide path target asset mix for various investment periods and assume fiduciary responsibility for same. Goalmanager Risk-Based Portfolio or other Balanced investment Fiduciary must determine that the selected option is suitable based on overall demographics of the plan, then periodically monitor and revisit the appropriateness of the option selected. Periodically rebalances investments. Target date investment Managed account

next steps For more information and assistance in selecting an appropriate default investment, contact your Bank of America Merrill Lynch representative. If your investment committee decides to utilize a QDIA, your Bank of America Merrill Lynch representative can also: Help determine the effective date of the QDIA. Provide you with a document called The Funds Directive Form, which is used to formally notify Bank of America Merrill Lynch of your decision to add a QDIA and which specific investment option is to be used. Provide you with a QDIA Sample Participant Notice, which you can use or adapt to meet the employee notice requirements associated with implementing a QDIA. Bank of America Corporation is one of the world s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The Advice Access service uses a probabilistic approach to determine the likelihood that participants in the service may be able to achieve their stated goals and/or to identify a range of potential wealth outcomes that could be realized. Additionally, the recommendations provided by Advice Access do not consider an individual s comfort level with investment risk, and may include a higher level of investment risk than a participant may be personally comfortable with. Participants are strongly advised to consider their personal goals, overall risk tolerance, and retirement horizon before accepting any recommendations made by Advice Access. Participants should carefully review the explanation of the methodology used, including key assumptions and limitations, which is provided in the Advice Access disclosure statement. It can be obtained through Benefits OnLine or through your Bank of America Merrill Lynch representative. IMPORTANT: The projections or other information shown in the Advice Access service regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value Bank of America Merrill Lynch makes available investment products sponsored, managed, distributed or provided by companies that are affiliates of BAC or in which BAC has a substantial economic interest, including BofA Global Capital Management. Unless otherwise noted, registered trademarks and trademarks are the property of Bank of America Corporation. 2013 Bank of America Corporation. All rights reserved. ARLCJ3N8 00-63-0974B 12/2013

Success by Plan Design Improving 401(k) plan health and employee wellness

In the broad evolution of benefits, one of the greatest unmet needs is in personal financial benefits, which could be pivotal in optimizing talent and innovation especially if we can also measure financial wellness. I m very optimistic that we are on the brink of this change. Employees are ready for it. And sponsors are, too. For most employees, their 401(k) plan will be the sole source of retirement funding. In this paper, Bank of America Merrill Lynch highlights historically proven actions that can help improve 401(k) plan health and employee financial wellness. We also propose solutions to challenges that are preventing some sponsors from taking action. - Andy Sieg Head of Global Wealth & Retirement Solutions Bank of America Merrill Lynch We believe that privately sponsored corporate retirement systems, particularly 401(k) plans, are successful and can be even more so. With the greater employee engagement we are seeing, and with plan and service enhancements, we can help make 401(k) plans even more vibrant. - Kevin Crain Head of Institutional Retirement & Benefit Services Bank of America Merrill Lynch Most people and the young in particular have a tough time imagining their financial situation years from now. Yet this understanding is key to planning a successful strategy for achieving financial wellness. Plan sponsors that are equipped with tools that help employees envision their financial future can help craft a goalsbased strategy aimed at making that vision a reality. Table of contents: 3 America s retirement plan Employees and employers are ready and willing - Michael Liersch Director of Behavioral Finance Bank of America Merrill Lynch 4 Action-based plan design Raise participation rates Increase contribution rates Improve financial wellness 9 Taking action: Easier than you think Changing the mindset Important: This publication provides general information about fiduciary ideas and strategies for retirement plans and is for discussion purposes only. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. Working around difficult demographics Bank of America Merrill Lynch and its associates do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own independent advisor as to any tax, accounting or legal statements made herein. Making it simpler Finding cost-aware solutions Communicating more effectively 11 Taking your next steps The strategies and case studies presented are intended to illustrate the products and services available from Bank of America Merrill Lynch. it should not be considered an offer, solicitation or endorsement. This material does not take into account your plan s objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument or strategy. Before acting on any information in this material, you should consider whether it is suitable, and if necessary, seek professional advice. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation (BAC). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., Member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of BAC. For Plan Sponsor Use Only. Not for Distribution to the General Public. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

America s retirement plan The 401(k) plan has never been more important for employees or for plan sponsors. Over 50 million1 employees in the U.S. are invested in a 401(k) plan, which for most people is their sole source of retirement funding. But research shows that employees aren t using their plans as well as they could be about eight million employees do not participate in their 401(k) plans at all.2 However, there is good news... Employees and employers are ready and willing According to the 2012 Workplace Benefits Report from Bank of America Merrill Lynch, not only are employees more aware than ever that they are responsible for funding their retirement they also want to do something about it. We found that 82% of employees surveyed are willing to give up a portion of their salary to secure guaranteed retirement income. But procrastination, inertia, and lack of knowledge about how to take advantage of the benefits offered (and, in some cases, about plan offerings) prevent many employees from maximizing contributions and investing wisely in their 401(k) plans. Plan sponsors are also eager to take action: Nearly 70% of employers surveyed feel at least somewhat responsible for helping employees understand the assets needed to sustain them later in life. Employers are rapidly seeking ways to make their 401(k) plans more effective. And they are finding that plan design can do just that. Research has shown that better outcomes can result from plan design strategies that drive such positive participant decision-making as enrolling, contributing, and improving financial wellness. We believe that with help, employees can prepare themselves for retirement, and that it is in the best interests of sponsors to help their employees do so. What is more, we believe that long-term financial security is easier to achieve than many think. With both employers and employees in agreement that the 401(k) can and should succeed, there has been no better time for sponsors to improve the health and vibrancy of their plans. When considering financial benefits in the workplace, employers place significant importance on a plan s usefulness to employees (88%). A distinct competitive edge In a recent survey, 90% of employers believe that financial benefits are equally or more important to potential hires today than they were five years ago and nearly 80% of employees view these benefits as a key factor when considering or accepting a new position.3 In today s war for talent, a healthy, successful retirement plan has great value. We believe the best practices outlined in this paper can get plan sponsors much closer to achieving their three most critical goals: 1) Maximizing employee satisfaction, awareness and productivity by providing competitive benefits 2) Attracting and retaining talent by rewarding your best performers, high potentials and executives 3) Succeeding by helping all employees understand their company benefits, compensation and award packages, which may in turn result in improved employee long-term financial security Retirement & Benefit Plan Services 3

Action-based plan design We ve identified plan design actions that are industry best practices. All of them can be considered appropriate solutions that seek to leverage processes and products that are already available to plan sponsors. All can be employed to help improve plan health and promote employee wellness. And all can be easily implemented. 3 Improve financial wellness Offer advice and guidance Measure wellness Go beyond retirement 2 Increase contribution rates Increase the automatic enrollment default rate Extend automatic increase to all eligible employees Combine automatic enrollment with automatic increase Raise the automatic increase threshold Redesign the employer match 1 Raise participation rates Implement automatic enrollment Extend automatic enrollment to all eligible employees Integrate 401(k) enrollment with annual healthcare enrollment Action-based plan design Retirement & Benefit Plan Services 4

1 Raise participation rates Implement automatic enrollment By taking the choice out of enrolling in the plan, sponsors can easily boost participation rates, can effectively engage employees, and may even be able to keep them in the plan long-term. Plans with automatic enrollment demonstrate: 25% 43% higher participation rates among younger employees higher average participation rates 97% of employees who are automatically enrolled do not opt out even with a higher default rate of 6% Source: Bank of America Merrill Lynch analysis, recordkept plans, as of June 30, 2012. Automatic enrollment is a powerful tool. Studies have shown that if done correctly, automatic enrollment can help assure sponsors that most if not all employees will stay engaged in the plan. Notably, 85% of employees surveyed said that automatic enrollment helped them start investing earlier than they would have on their own. And even at higher default contribution rates, a high percentage of automatically enrolled participants stay in the plan (see red bar in the chart above). The introduction many years ago of automatic enrollment was originally met with skepticism, says Crain. But evidence is, it works exceedingly well. A very high percentage of employees enrolled automatically remain active contributors. Extend automatic enrollment to all eligible employees Integrate 401(k) enrollment with annual healthcare enrollment Sponsors can also boost participation rates by synchronizing 401(k) enrollment with annual healthcare enrollment. Associating overall health and financial wellness creates a sense of urgency on the part of employees to engage in their plan. And when sponsors make it easier for employees to enroll in the plan and raise their contribution rates, employees are more likely to take action. Proof is in the numbers. In 2011, 90% of participants in Bank of America Merrill Lynch plans took positive action by either enrolling or increasing their contributions when healthcare and 401(k) events were connected. Automatic enrollment works even better when it is extended to all eligible employees and not just offered to new hires. By ensuring that all eligible employees enroll in the plan, it assures sponsors that they are leaving no eligible employee behind. We have seen automatic enrollment also improve overall plan wellness. Among our clients, plans with automatic enrollment have significantly higher participation rates, especially among young employees (see chart above). Retirement & Benefit Plan Services 5

2 Increase contribution rates Extend automatic increase to all eligible employees The same factors that keep employees from participating in their plan often keep them from increasing their contribution rates once they are enrolled. Allowing participants to schedule gradual contribution rate increases over time makes it easier for them to commit to saving more and helps put them on an even better retirement savings track. Automatic enrollment gets employees in the plan. But it doesn t guarantee that employees are saving enough for retirement. Indeed, participants who are automatically enrolled tend to remain at the default rate, which for most plans is 3%. The average employee is not contributing enough: 18% ** annual salary employees need to save for retirement 3% * most common default contribution rate (60% of plans) Offering automatic increase is a growing trend among sponsors, who appreciate its power. Among our clients, we have seen a 23% increase in plans offering automatic increase in the past year.4 To understand the power of automatic increase, consider a participant who is 35 years old, earns a salary of $40,000 a year, contributes at an annual 6% rate at the beginning of each period, and opts in for a 1% yearly automatic increase to a threshold of 18%. The contributions grow at an earnings rate of 6%. After 30 years, that participant could have saved as much as $576,000, which is $330,000 more than he or she might have without automatic increase.* * Hypothetical results are for illustrative purposes only and do not reflect actual investments made. Returns are not guaranteed and results will vary. Sources: *Profit Sharing Council of America (54th Annual Survey of Profit Sharing and 401(k) Plans); **The Center for Retirement Research at Boston College (How Much to Save for a Secure Retirement, November 2011). Here are a number of actions that can lift contribution rates. Increase the automatic enrollment default rate Sponsors offering automatic enrollment can immediately improve contribution rates by setting the default rate above 3%. As we ve shown, higher default rates do not cause participants to opt out of the plan (see bar chart on previous page). One sponsor wanting to make it easier for all participants to increase their contribution rates is DuPont. Many of the company s employees were already increasing their contribution rate from the 3% default rate to 6% to take advantage of the match. DuPont sought to get participants contributing beyond 6% by increasing the automatic enrollment default rate and raised the automatic increase threshold, as shown on the right: Results: A higher total contribution opportunity for participants that helps them save more for retirement. The maximum contribution, with match, went up from 15% to 24% of compensation. Combine automatic enrollment with automatic increase We ve demonstrated the effectiveness of both automatic enrollment and automatic increases. But combining the two can be more powerful than either design feature on its own. By itself, automatic enrollment may not do enough to encourage participants to increase their contribution rates beyond the default rate. In fact, plans that combine automatic enrollment and automatic increase enjoy an average contribution rate that is double that of plans that offer automatic enrollment alone. How DuPont is raising contribution rates Old design (prior to 2012) New design (beginning in 2012) Automatic enrollment default contribution rate 3% 6% 100% on the first 6% of employee contribution 100% on the first 6% of employee contribution Retirement Savings Contribution* 3% 3% Automatic increase Annual 1% increases up to a max. of 6% Annual 1% increases up to a max. of 15% Maximum contribution opportunity 15% of compensation 24% of compensation Company match * DuPont makes a monthly Retirement Savings Contribution of 3% of eligible pay. Retirement & Benefit Plan Services 6

Many participants either don t believe or have no idea whether they are on track to support their desired retirement lifestyle, according to our latest research. Combining automatic enrollment and automatic increases can be hugely effective in getting this majority of employees into the plan and contributing at rates that help get them on track for the retirement they want. It is undoubtedly one reason that we have seen a 20% increase over the past 12 months alone in the number of plans combining automatic enrollment and automatic increase. Raise the automatic increase threshold Automatic increase works well by taking advantage of employee inaction. The gradual increase isn t noticed, and yet participants contribute more each year. We believe sponsors should take full advantage of this momentum and raise the automatic increase threshold to a level that helps participants save enough. Sponsors who raise the automatic increase threshold can work with their plan providers to help ensure that costs are kept in control. Redesign the employer match There is a direct behavioral correlation between employer match levels and participant contribution rates. Our research corroborates what the industry has long known: participants generally seek to maximize the employer match contributing as much of their money as needed to get all the free money offered through the company match. Sponsors can take advantage of this behavior and encourage higher contribution rates by raising the match threshold. They can also adjust the match to encourage higher contribution rates (see table below). Both techniques can entice participants to contribute more of their money. And adjusting the match can also be implemented without increasing the sponsor s matching costs. Redesigning the match Higher contribution rates, same costs Match formula Participant contribution Employer contribution Total contribution 100% of 3% 3% 3% 6% 50% of 6% 6% 3% 9% 25% of 12% 12% 3% 15% 3 Improve financial wellness Financial wellness the state of being in a good financial position is reached by making the appropriate financial decisions, year after year. Its scope covers budgeting, home ownership, insurance, healthcare, college planning, and retirement. The financial wellness approach fits the way employees actually view retirement planning as an evolving target. Says Andy Sieg, Our clients know that retiring isn t about their age or a magic number. They see it as an ongoing assessment of the lifestyle, goals and assets they want for their later years. For them, planning is a winding road that requires close attention and frequent course correction. Employees want financial wellness solutions and plan sponsors are listening: 79% * of surveyed employers anticipate greater employee demand for investment advice on their plans 75% ** of plan sponsors agree that employers should offer voluntary planning and advisory workshops 70% *** of plan participants would likely use company-sponsored personal financial and investment services Sources: *2012 Workplace Benefits Report, Bank of America Merrill Lynch; **Spectrem (Retirement Market Insights, 2009); and ***2011 Quantitative Insights Report. Retirement & Benefit Plan Services 7

Offer advice and guidance Our 2011 Workplace Benefits Report showed that 79% of employers foresee greater demand from employees for investment advice on their benefit plans. In turn, this year s study revealed that 56% of sponsors now offer access to professional advice. We believe financial advice is a critical part of overall financial wellness. Employees want advice, they use it, and, we find, it more fully engages them with their plans. Advice Access a Bank of America Merrill Lynch foundational offering for 401(k) clients incorporates the key features we think any advice program must offer plan participants: Goals-based, easy-to-implement, individualized advice Unbiased third-party recommendations (in the case of Advice Access, delivered by Ibbotson Associates) Situational, comprehensive planning that takes all key parameters into account, from participant data and plan provisions to non-plan assets and fund restrictions Automatic reallocation and rebalancing, which helps ensure better investment management5 Measure wellness Just as the medical field relies on measurement and diagnostics to gauge the efficacy of treatments and the wellness of individual patients, so must plan sponsors find ways to regularly measure the efficacy of their offerings and the financial wellness of their employees. Sponsors are clearly on board with measuring effectiveness: 88% of the employers we recently surveyed put great importance on their plans usefulness to employees. For example, Bank of America Merrill Lynch s Plan in Review provides sponsors with comprehensive data on plan participation, deferral rates, investment concentration, accumulated assets, and other metrics. We offer the Financial Wellness Monitor, which gives sponsors a view of how well participants are using their 401(k) plans by applying a 0-10 scoring format that can be easily communicated to plan committees. We also use the Financial Wellness Monitor to measure and communicate the effectiveness of Advice Access among our clients plans. For more details, read our latest quarterly 401(k) Wellness Scorecard. Go beyond retirement Plan sponsors are well aware that their employees have financial needs beyond planning and saving for retirement. According to the 2012 Workplace Benefits Report, employee well-being has become a core value for companies. This accounts for the recent growth in flexible benefit offerings that integrate a range of financial benefits from healthcare savings accounts to consumer lending into their financial benefits platform. Financial wellness programs often include services and offerings across the financial spectrum: general financial fitness, life transitions, money management, education and retirement planning, estate planning, eldercare, and offerings tailored to the unique needs of women. A number of robust tools are now available from most providers that measure such wellness indicators as participation and contribution rates, diversification, concentration in company stock, and plan compliance. Indicators of poor overall wellness for example participation rates under a benchmarked level or a projected gap in retirement savings can point to areas for improvement at the plan level and, when appropriately shared with participants, can encourage healthier plan behavior. Retirement & Benefit Plan Services 8

Taking action: Easier than you think Many sponsors are adopting these best practices and many more are considering them. What keeps some sponsors from starting is what prevents most of us from taking action time, resources, costs, competing priorities. Here s how sponsors are solving these challenges. Making it simpler Employees may hesitate to enroll because they are numbed by too many choices or options. Says Michael Liersch, For people who face a decision, it s been demonstrated that less information and simpler choices help them take action. And in saving for retirement, the sooner in their career that employees take action, the better prepared they will be for retirement. Consider narrowing down the investment options. Think about automating enrollment and deferral increases. Keep decision making simple for employees. Changing the mindset Many sponsors with plan health challenges have long taken a hands-off approach to their 401(k) plan, leaving it entirely up to employees to take advantage of the plan. Given the state of retirement savings, increasing demand for financial wellness solutions in the workplace, and recent advances in understanding investor behavior, we believe this is not a winning strategy. Says Crain, A company culture known for making investments in their employees financial wellness, in addition to their professional growth, can attract top talent and foster a more productive and loyal workforce that is more deeply invested in the company s success. J.B. Hunt Transport Services, Inc. has a competitive retirement plan, with matching contributions, personalized advice, and low-cost investment options. But with its large segment of truck drivers, who tend to be mobile and have high turnover, J.B. Hunt had relatively low plan participation and difficulty motivating employees to use it effectively. The company s data on turnover showed that employees who stayed at least six months were much more likely to remain with the company. J.B. Hunt used this key finding about their demographic to initiate a number of design changes, including: a reengineered enrollment process during new hire orientation targeted communications to nonparticipating employees at the six-month mark reintroduction of Advice Access five new investment options employee workshops in both and Results of J.B. Hunt s plan enhancements A healthier plan: Higher participation, contributions, diversification and advice utilization. Changing the company culture can take years. But a slightly dialed-up, more proactive approach can put sponsors on a path to success something that experienced benefit service providers routinely identify and can help the sponsor implement. Working around difficult demographics Workforce demographics can often be addressed by plan design tactics. For example, companies with high employee turnover may be able to improve plan health by delaying automatic enrollment for six months to a year. 41% 7% increase in participation rates 9% increase in average number of holdings 10% increase in average account balance increase in participants choosing Advice Access Plan design results from January 2011 to March 2012. Retirement & Benefit Plan Services 9

Finding cost-aware solutions Young employees need better communication Plan sponsors are justifiably concerned about costs. But the costs of many plan design changes, including these best practices, are more modest than most sponsors may think. How young people think $400 invested every month at a 10% annual rate of return will grow over time, relative to how the investments would actually grow. For example, the average nonparticipating employee has a modest salary, and therefore the cost of that employee s match will also be modest. Moreover, the match is tax-deductible for the sponsor. An experienced benefit plan provider can help identify cost-agnostic solutions the classic case being tiered match levels to reduce or nullify the cost of automatic enrollment. Communicating more effectively Consistent communication and education are critical to plan effectiveness. Of the 30% of employees who don t feel they are taking full advantage of the financial benefits offered to them, 35% said they don t know how to take advantage of what s available, according to our 2012 Workplace Benefits Report. We believe better, more personalized, more targeted communications and education provide sponsors with an opportunity to significantly improve employee satisfaction with retirement benefits. Ongoing outreach on the importance of saving for retirement has historically shown to drive employee action, particularly when tailored to age and life stages and when reinforced through multiple touch points. Milestones such as annual salary increases and bonus periods are additional opportunities to restate the benefits of contributing to 401(k) accounts and to remind employees that they can go beyond default deferral and increase rates. $2,500,000 $2,000,000 True answer What college students thought $1,500,000 $1,000,000 $500,000 $0 After 10 Years After 20 Years After 30 Years After 40 Years This chart is a hypothetical example meant for illustrative purposes only. How young people think $400 invested every month Source: McKenzie and Liersch, 2011. at a 10% annual rate of return will grow over time, relative to how the investments would actually grow. Many people think that money increases in straight lines, growing in value at the same rate over identical time periods. The group shown in the chart above, vastly underestimates the ending wealth of small sums saved monthly. In reality, however, due to the power of compounding, money can grow exponentially. Scientific evidence suggests that calculating compound interest is a challenge for the human mind.6 And imagine how much more difficult it is to project future money growth as complexity increases e.g., when rates of return change over time because instead of one, there are many possible outcomes. The best way to overcome this challenge and motivate younger employees entering the workforce to save, suggests Liersch, is to regularly show them their potential 401(k) account balances at retirement. The best communications programs incorporate advances in behavioral finance to connect with particularly hard-to-reach employee segments and explain abstract concepts. Liersch cites the difficulty younger employees have in understanding the power of compounding. Retirement & Benefit Plan Services 10

Taking your next steps Implementing plan design changes involves preparation, education and advocacy not to mention paperwork. These extra steps may keep some sponsors from making necessary changes. But help is available. Work with a benefit provider that has the expertise to help you start the process and keep it moving. Presenting to the committee, explaining new design features, putting together employee communications, and even helping with documentation are all part of what a proactive provider will help you accomplish. Our country s retirement system is facing a great deal of scrutiny, Crain adds. We all need to work together to continuously improve the health and vibrancy of this system and the financial lives of the people participating in it. To find out more about these best practices and how you might implement them, contact your Bank of America Merrill Lynch representative or call 1.877.902.8730. You can also visit us online at benefitplans.baml.com or email us at benefitplans@baml.com. 1 ICI Research Perspective, December 2011, Investment Company Institute. 2 Deloitte 401(k) Benchmarking Study, 2009. 3 Bank of America Merrill Lynch, 2012 Workplace Benefits Report. Methodology: Boston Research Group interviewed a national sample of 1,000 employers of all sizes and 1,000 employees from January 2012 through March 2012 on behalf of Bank of America Merrill Lynch. To have qualified for the survey, employers must have offered their employees a 401(k) plan. 4 Bank of America Merrill Lynch analysis, recordkept plans, as of June 30, 2012. 5 Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets. 6 Eric Eisenstein and Stephen Hoch, Intuitive Compounding: Framing Temporal Perspective, and Expertise, working paper, Johnson School of Management, Cornell University. The Advice Access service uses a probabilistic approach to determine the likelihood that participants in the service may be able to achieve their stated goals and/or to identify a range of potential wealth outcomes that could be realized. Additionally, the recommendations provided by Advice Access do not consider an individual s comfort level with investment risk, and may include a higher level of investment risk than a participant may be personally comfortable with. Participants are strongly advised to consider their personal goals, overall risk tolerance and retirement horizon before accepting any recommendations made by Advice Access. Participants should carefully review the explanation of the methodology used, including key assumptions and limitations, which is provided in the Advice Access disclosure statement. It can be obtained through Benefits OnLine or through your Bank of America Merrill Lynch representative. IMPORTANT: The projections or other information shown in the Advice Access service regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time. 2012 Bank of America Corporation. All rights reserved. ARZ28391 WP-08-12-0221 10/2012 Retirement & Benefit Plan Services 11

RETIREMENT & BENEFIT PLAN RVICES making Plan Health automatic The importance of 401(k) plans to both businesses and their employees is especially relevant in today s workplace. Results from our 2012 Workplace Benefits Report show that 91% of employees surveyed view the 401(k) as one of the most critical savings vehicles for retirement income.1 And, for employers a healthy, successful retirement plan is valuable in helping attract and retain talent, while maximizing employee satisfaction and productivity. For these reasons, plan sponsors have made providing a strong retirement program a top priority. However, approximately a quarter of employees don t take advantage of the benefits offered. Procrastination, inertia, and lack of knowledge can prevent them from enrolling, maximizing contributions and investing wisely in their 401(k) plans. automatic features promote fuller plan participation Automatic plan design features can be a highly effective way of kick-starting employees to invest in their 401(k). Making the decision-making automatic can help increase participation in the plan and gradually raises employees contribution rates to help ensure they save more over time. By encouraging every employee to participate and save more through automatic features, plan sponsors can effectively take steps to improve participant behavior and the health and success of their 401(k) plans. 1 Design your plan with auto features to help influence positive outcomes Automatic enrollment When employees meet your plan s eligibility criteria, and do not take action on their own, they are automatically enrolled in the plan. Automatic deferral increases Automatically increasing employees deferral rates periodically, either annually on a pre-determined date or to coincide with salary increase dates, helps ensure that contributions steadily increase unless participants opt out. Automatic investing Selecting a default investment that helps employees build a strong foundation for retirement is critical. This is the investment in which employee contributions are placed, absent an election by the employee. You should choose an automatic enrollment default investment that is prudent for your participant demographics. And, Bank of America Merrill Lynch offers a number of investment choices that may qualify as a Qualified Default Investment Alternative (QDIA). 2012 Workplace Benefits Report Methodology: Boston Research Group interviewed a national sample of 1,000 employers of all sizes and 1,000 employees from January 2012 through March 2012 on behalf of Bank of America Merrill Lynch. To have qualified for the survey, employers must have offered their employees a 401(k) plan.

choose the automatic enrollment program to fit your plan needs With each of these programs, eligible employees receive advance notification and are automatically enrolled if they take no action. Automatic Contribution Arrangement (ACA) Provides the flexibility to choose any automated program design offered through Bank of America Merrill Lynch Eligible Automatic Contribution Arrangement (EACA) Automatically enrolls all eligible employees who never enrolled, unless they opt out. An EACA affords you the option to offer a 90-day unwind2. With this option you can also receive an extension for making non-discrimination testing refunds (from 2½ months after plan year-end to 6 months after plan yearend), to help avoid the 10% excise tax. An EACA also requires a notice before the beginning of each plan year that includes detailed information about the terms of the plan. And, the timing used for salary deferral increases must be uniform. Improve Financial Wellness Increase Contribution Rates Raise Participation Rates Qualified Automatic Contribution Arrangement (QACA) Generally satisfies non-discrimination testing (ACP and top-heavy requirements are not always satisfied). A QACA requires: participant notice be distributed annually, prior to the beginning of each plan year; 3% minimum automatic deferral rate in the first year, and 4%, 5%, and 6% minimum automatic deferral rates in the three subsequent years, with deferral rates automatically increasing to a maximum of 10%; an employer matching contribution equal to at least 100% of the first 1% of compensation, plus 50% of the next 5%, or at least a 3% nonelective contribution; and 100% vesting after 2 years of service. With a QACA, you may offer a 90-day unwind and the default investment can be a QDIA. The timing used for salary deferral increases must also be uniform. Defaulting into advice services can simplify investment choices and increase tendency toward better financial wellness3 90% of auto-enrolled employees continue to participate4 27% higher average participation rates in plans with automatic enrollment5 Designing a plan in which employees are enrolling right away, contributing at a high enough level, and investing wisely can lead to better retirement outcomes. 2 Employees who are automatically enrolled are permitted to opt out and withdraw their automatic contributions within 90 days of the payroll date for their first automatic contribution. Any employer matching contributions on such withdrawn amounts are forfeited by the participant. 3 Participants enrolled in PersonalManager maintain on average higher wellness scores (8.5) compared to participants not enrolled in the service (7.2). Source: Bank of America Merrill Lynch analysis, recordkept plans, as of June 2013. 4 Bank of America Merrill Lynch analysis, recordkept plans, as of June 30, 2013. 5 Source: Bank of America Merrill Lynch analysis, recordkept plans, as of June 30, 2013.

trends we see Year over year, more plan sponsors are adopting automated programs. 16% increase in plans offering Auto Enrollment 16% 26% increase in plans offering Auto Increase 26% 76% increase in the number of plans offering default contribution rates of 3% or greater 76% Source: Bank of America Merrill Lynch 401(k) Wellness Scorecard, June 30, 2013. Start early and save more over time by combining auto features Combine auto enroll with auto increase. Plans that combine auto enroll with auto increase see average contribution rates of 8% or higher compared to 4% for plans that don t.6 Extend auto increase to all employees. Automatically enrolled participants tend to remain at initial default contribution rates without automatic increases to help ensure adequate savings levels.7 Use auto increase to steadily increase contribution rates to maximize the opportunity for participants to save as much as possible over time. Choose an automatic enrollment default investment prudent for the participant demographic to help simplify investment choices for employees and help them manage their accounts. 85% of workers said automatic enrollment helped them start investing earlier than they would have on their own.8 6 Pensions and Investments, July 12, 2012. 7 Defined Contribution Institutional Investment Association, Plan Sponsor Survey, Structuring DC Plan Automatic Features to Pump Up Retirement Savings, March 2011. 8 Harris interactive study on behalf of Retirement Made Simpler, November 2007.

For more information on how to make your plan health automatic, please contact your Bank of America Merrill Lynch representative. Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. Bank of America Merrill Lynch and its representatives provide only general information and/or materials regarding retirement plans and do not provide investment advice or recommendations. All retirement plan investment decisions are to be made by the plan sponsor. Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value 2013 Bank of America Corporation. All rights reserved. ARSYLFQY 00-63-0649NSB 12/2013

RETIREMENT & BENEFIT PLAN RVICES Defined contribution fee Policies Considerations for Plan Sponsors and Fiduciaries When 401(k) plans first came into being, the question Who pays for what? could be Quick links answered fairly simply. Over time, however, fees became more complex. Concern grew DOL guidance on fees charged to the plan......... 2 that sponsors and participants alike did not have the information they needed to properly evaluate the amount being paid and the way fees impact each participant. Recent Department of Labor (DOL) requirements have ushered in a new era of fee transparency. In the early days of the 401(k) plan, before the widespread introduction of mutual funds, 401(k) sponsors typically paid for administrative costs such as recordkeeping and trust services. Participants typically paid for investment management through the fees charged Who pays for what?......... 3 The move to greater fee transparency........... 3 The case for creating sponsor and fiduciary fee policies................ 4 Sponsor/fiduciary decision tree............... 6 by asset managers for separately managed accounts, collective trusts, and similar vehicles. Then in the early 1990 s, the 401(k) market moved to a bundled model where Recent Department recordkeeping and other services were free or at least low cost. The trend started of labor (DOl) with proprietary-only mutual fund families where the mutual fund company adapted requirements have existing systems that were well suited to a daily valuation environment and used fund ushered in a new era revenue to subsidize recordkeeping costs. of fee transparency. Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes.

DEFINED CONTRIBUTION FEE POLICIES 2 In the mid-1990 s, technology was developed to allow trust companies, mutual funds, insurance companies, and plan administrators to exchange trades, settlements, and information each day. This open architecture environment created more flexibility among plan investment choices, and was built on a foundation of revenue sharing where the investment manager or fund distributor shared asset-based revenues with recordkeepers and intermediaries to subsidize the cost of servicing the plan and participants. As these trends developed, few could question their validity. The mutual fund industry had better technology with daily valuation, better transparency with daily publication of the price of the funds in many newspapers and a single regulated price for admission to the fund. However, in the 21st century, their technological advantage has dissipated. There are many types of investment vehicles now available on a daily valuation basis, and there is widespread use of the internet replacing the importance of published fund values. In addition, many fund companies have introduced multiple share classes of the same fund investment portfolio, making it possible to offer the same investments to larger plans at lower costs. While the open architecture environment that is supported by revenue sharing arrangements has served to increase investment choice for plan sponsors and participants, it has created a complex fee structure that is often not understood by plan sponsors, and certainly not understood by most plan participants. What could be thought of as free at the inception of the mutual fund trend has changed to free to the employer. In brief, participants began paying virtually all expenses related to their plan, often without realizing that was the case. In addition, different participants within the same plan may be paying fees in a manner that is not transparent, and could be considered by some to be inequitable. These approaches to plan fees are still widely used, but that may be changing in the face of greater fee transparency. With fee transparency, sponsors increasingly face discrete decisions on how to pay the myriad of fees associated with their plan. Sponsors need to have a more rigorous governance process in place to deal with these issues. We believe that the best tool to position plan sponsors to address their fiduciary duties regarding fair and equitable fees is a set of Fee Policy Statements that govern the decisions regarding fees. 1 DOl guidance on fees charged to the plan The Employee Retirement Income Security Act of 1974 (ERISA) sets a basic framework for plan fiduciaries to follow. Fees charged to participant accounts must be reasonable in amount, relative to the service provided, and necessary to the operation of the plan. In addition, the service must be for the benefit of participants. Fiduciaries must make each of these determinations on a case-by-case basis. The Department of Labor (DOL) has provided guidance on a number of occasions: Advisory Opinion 94-32A indicated that some expenses (such as loan processing costs) could be charged directly to a participant s account, while others (such as QDRO processing) could not. Advisory Opinions 97-03A and 2001-01A provided guidance on certain specific expenses, indicating which should be charged to the settlor (sponsor) and which may be charged to the plan or its participants (ERISA allowable expenses). Field Assistance Bulletin 2003-3 provided expanded guidance on how fees can be charged within the plan (pro-rata, per-participant, transaction-based, etc.). It largely validated the wide range of fee-charging methods which exist today, reiterating that fees must be reasonable and appropriate. This bulletin did, however, reverse the earlier decision that QDRO processing costs could not be charged to the participant.1 fees charged to participant accounts must be reasonable in amount, relative to the service provided, and necessary to the operation of the plan. in addition, the service must be for the benefit of participants. fiduciaries must make each of these determinations on a case-by-case basis. Bulletin 2003-3 explicitly states that compliance with its guidance does not ensure compliance with the Internal Revenue Code, including the significant detriment language in 1.411(a)-11(c)(2)(I).

DEFINED CONTRIBUTION FEE POLICIES 3 Who pays for what? the move to greater fee transparency In Advisory Opinion 2001-01A, the DOL provided guidance on whether the plan could bear several specific types of costs and which specific types of fees must be paid by the sponsor. (See below.) Importantly, this opinion confirmed that a plan can pay fiduciary-related expenses even if the payment is for services that incidentally benefit the plan sponsor. More recently, the DOL has taken steps to increase the transparency of defined contribution plan fees. In theory, better information will lead to better understanding and better decisions. Plan design expenses or settlor costs (Primarily related to plan design or creation, and must be paid by the sponsor) DOL guidelines now require disclosure on Schedule C of Form 5500 of direct and indirect compensation paid from plan assets to parties who provide services directly or indirectly to a plan. The disclosures are required starting with plan years that begin on or after January 1, 2009. Legal fees for plan implementation and the like Plan sponsor fee disclosure Communication expenses which benefit the sponsor Effective July 1, 2012, covered service providers must provide plan sponsors with a description of services being offered and the compensation expected in connection with those services pursuant to ERISA 408(b)(2) disclosure regulations. This notice enables sponsors to determine the reasonableness of fees prior to entering into, extending or renewing service contracts. Changes must also be disclosed as soon as practicable, but not later than 60 days from the date the covered service provider is notified of the change. Changes to investment-related information must be updated on an annual basis. Plan design consulting Plan administrative expenses erisa allowable expenses (Primarily related to plan administration or operation, and can be borne by the sponsor or by the plan) Legal fees for required, on-going plan amendments and the like Recordkeeping and administration fees Investment fees (including management fees, operating fees, servicing and sub-account fees, distribution fees and annuity fees) Communication expenses which benefit employees Plan design change implementation fees Investment consulting Auditing fees If Plan Administrative Expenses are to be charged to plan assets, the Plan Document needs to reflect the ability to do that. The Plan Document, Summary Plan Description (SPD) and Investment Policy Statement (where applicable) should also be consistent with actual expense payment practices. Participant fee disclosure Participant disclosure regulations under ERISA 404(a)(5) require plan administrators to provide certain plan-related and investment-related information to participants and beneficiaries in participant-directed individual account plans for the purpose of helping participants make informed decisions. All existing participants and beneficiaries in a plan must have received their initial disclosure no later than (a) 60 days after the first day of the first plan year beginning on or after November 1, 2011, or (b) 60 days after the July 1, 2012 effective date of the fiduciary-level fee disclosure rule.

DEFINED CONTRIBUTION FEE POLICIES 4 Newly eligible participants and beneficiaries must receive their initial 404(a)(5) participant disclosure before they can direct their investments in the plan. This means that the initial disclosures for calendar-year plans must have been provided to participants by August 30, 2012, and annually thereafter. Sponsors were also required to provide the first quarterly statement containing fees deducted from each participant s account no later than November 14, 2012 (i.e., 45 days after the end of the quarter that the initial disclosure was required). Though more information may lead to better decisions, the push for transparency may also place a greater burden on sponsors and fiduciaries and may cause greater confusion among some participants. the case for creating sponsor and fiduciary fee policies As noted above, costs which primarily benefit the sponsor must be paid by the sponsor, also known as the settlor. The sponsor and/or fiduciary must decide, however: 1 2 3 Whether the sponsor or the plan and its participants will pay Plan Administrative costs, which primarily benefit participants or their beneficiaries. How the costs to be borne by the plan and the participants will be assessed, i.e. through forfeited balances, an asset-based fee, a per-participant fee, a transaction-related fee or a behavior-based fee. How excess plan-generated revenue will be allocated among participants or applied to a valid plan purpose. Sponsors and fiduciaries who have already made some of these decisions essentially have an implicit or ad hoc fee policy in place. In the interest of good governance, these decisions should be formally made, and both the process followed and the outcomes reached formally documented in two Fee Policy Statements. the Plan Sponsor fee Policy First, the plan sponsor must decide what Plan Administrative Expenses, if any, the sponsor will bear. There is no requirement for the sponsor to bear any of these costs, but the effect on employee savings and employee relations should be considered. If a portion of Plan Administrative Expenses is to be paid by the sponsor, decisions must still be made regarding which costs, or what portion of those costs, will be borne by the sponsor and what part will be paid from plan assets. The sponsor might choose, for example, to pay certain types of fees, a certain percentage of all fees, or a specific dollar amount each year. These decisions should be made by the appropriate body (board of directors, executive committee, or the like) at an official meeting and should be documented in writing in a Plan Sponsor Fee Policy. though more information may lead to better decisions, the push for transparency may also place a greater burden on sponsors and fiduciaries and may cause greater confusion among some participants.

DEFINED CONTRIBUTION FEE POLICIES 5 the Plan fiduciary fee Policy If any costs are to be borne by the plan and the participants, the plan fiduciaries (often members of the plan committee, investment committee, or a similar body), should decide and document how those costs will be assessed and how any excess investment-related revenue will be allocated recording the results in a Plan Fiduciary Fee Policy. Once again, the reasonableness and necessity standard applies. The amount of fees paid should bear a reasonable relationship to the quality and volume of the services provided. The amount being paid is part of that standard, i.e. fees should be examined for fairness. Generally speaking: Asset-based fees provide participants with lower balances a relative advantage, with participants with high balances paying the bulk of the fees. (Using asset-based fees is one form of pro-rata allocation, which FAB 2003-3 addresses.) Per-participant fees provide employees with higher balances a relative advantage, and each participant makes an equal contribution regardless of their account balance. However, these fees may deter those with low balances from contributing to the plan. This can be especially impactful in an automatic enrollment design. Transaction-based fees such as check fees must be reasonable and proportionate to the service provided. Behavior-based fees such as the choice to receive a paper statement rather than an electronic file must be in line with reasonable usage and service costs. Each of these types of fees may be appropriate within a given plan if they are reasonably associated with a particular cost. Varying fee structures and fee sharing may result in some participants subsidizing others. Fiduciaries may well deem this reasonable, but the implications should be considered. Other considerations include the impact the Fee Policy may have on an Investment Policy Statement. Available investment vehicles include multiple share classes of mutual funds, collective trusts, insurance products, separately managed accounts and others. Each can have different levels of fees and fee sharing arrangements. Not only must the plan fiduciary consider the type of vehicles to be used, but they must also consider the use of multiple types of investment vehicles, or multiple share classes within the same menu, carefully in terms of the impact on different participants. in the interest of good governance, these decisions should be formally made, and both the process followed and the outcomes reached formally documented in two fee Policy Statements. In other words, is the menu itself creating unintended inequities among participants in terms of fees being charged? With each decision along the way it will be important and difficult to understand and document if the decisions being made are strictly due to the merits of a particular investment vehicle, or due to the fit of that vehicle within the fee policy framework, or both. Plan fiduciaries must also act regularly to match fees and revenues, since the fees charged to the plan and the revenue collected from investment fee sharing, participant fees, etc. will vary over time. The frequency and method of adjustment should be addressed in the Fiduciary Fee Policy and in contracts between the plan and its service providers. Plan sponsors and service providers are in the beginning stages of developing best practices for managing this process.

DEFINED CONTRIBUTION FEE POLICIES 6 Sponsor/fiduciary decision tree The diagram below illustrates the process of developing a Plan Sponsor Fee Policy and a Plan Fiduciary Fee Policy. Identify all plan expenses as ERISA allowable or sponsor expense Sponsor expense ERISA allowable Paid by sponsor Will sponsor pay any ERISA allowable expenses? Yes No How will amount of erisa allowable expenses paid by sponsor be determined? Specific dollar amount Specific fees Specific percentage of fees How will remaining expenses* be paid out of trust assets? Per participant fee Asset based Transaction based Behavior based What transactions? What behaviors? What level? What level? Ad hoc decisions What dollar amount? Which fees? What percentage? Fee sharing What level? Remaining erisa allowable expenses to be paid by trust Wrap fees Based on Sponsor Fee Policy Is the level of fees collected sufficient? Insufficient revenue how will the shortfall be addressed? Perfect match are any changes anticipated? Repeat steps at top to remedy shortfalls or excess revenues Excess revenues how will the excess be allocated or used for other ERISA allowable expenses? Based on Fiduciary Fee Policy * As reduced by forfeitures if allowed by plan design.

DEFINED CONTRIBUTION FEE POLICIES 7 Bank of america corporation is one of the world s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. For more information on defined contribution plan fees, please contact your Bank of America Merrill Lynch representative. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value Unless otherwise noted, registered trademarks and trademarks are the property of Bank of America Corporation. 2013 Bank of America Corporation. All rights reserved. ARWNYP4R 00-63-0977B 12/2013

WORKPlace insightstm RETIREMENT & BENEFIT PLAN RVICES The New Era of Fee Transparency: Making Sense of the Details The 401(k) landscape has changed dramatically over the past 30 years. What began as table of contents a mention in a code section has become the most valuable savings plan for workers Beginning With a Well-Defined Process................... 2 retirements. Simple plans have become more complex, small balances have grown into larger portfolios, and regulators have struggled to keep pace with the speed of change. New laws, new regulations and additional requirements have been appended to the 401(k). But one constant has been the role of the fiduciary, and the obligation to put the best Understanding What You re Paying.................... 4 Comparing Costs to the Value of Services................ 5 interests of participants first. Developing a Benchmarking Strategy.................. 6 One of the most important fiduciary responsibilities is to understand the services being Getting Started Is Easy..... 6 provided and ensure that the fees being charged to the plan are reasonable. This paper The Role of Your Services Team..................... 8 will help you build best practices for evaluating plan fees and determine whether you are striking a balance between the fees you pay and the services you receive. For institutional use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

THE NEW ERA OF FEE TRANSPARENCY 2 Our Perspective for years Bank of america merrill lynch has been a strong proponent of more consistent and complete fee disclosures. We believe our clients are best served when they can see the The ERISA Section 408(b)(2) regulations published in February 2012 specify serviceprovider-fee disclosure requirements and outline how service providers deliver specific fee information in a format that makes it easier and clearer for plan fiduciaries to understand the services they receive and the fees they pay for those services. In the Plan Sponsor to Fee Disclosure, we shared the initial actions fiduciaries should take to understand the fee disclosure regulations and make a fee reasonableness determination (see table below). details of the fees and the corresponding services provided in support of each plan. ACTIONS TO TAKE: Familiarize yourself with the fee disclosure regulations (if you haven t already). Identify any additional covered service providers that are required to provide you with a 408(b)(2) notice. Evaluate the reasonableness of fees charged to the plan under the service agreement. Consider all of the factors to determine whether the fees are reasonable. Include the review within the governance process and maintain adequate documentation of the review process. Now that fee disclosures have been delivered, plan fiduciaries are asking how to leverage the new fee disclosures to help assess whether plan fees are reasonable. Beginning with a Well-Defined Process Best practice governance routines and fee disclosure regulations place equal emphasis on documenting the process for determining reasonableness and making the determination itself. If you establish and document processes and procedures for understanding and assessing the fees paid by your plan, and you are diligent in following them, generally you are assured that you ve fulfilled the fee disclosure requirements.

3 THE NEW ERA OF FEE TRANSPARENCY Consider these best practices for establishing and documenting a formal fee review process: Identify all of your covered service providers the list may include attorneys, benefits consultants, actuaries, CPAs, investment advisors, TPAs and record keepers. Document the steps you will take to ensure you ve received all required fee disclosures by the deadline and that they are adequate and in good order for your evaluation. Document the steps you will take if information is missing from any of your covered service providers. If you determine that information is missing you must request the disclosures in writing. - If you do not receive the information within 90 days, you must terminate services with the service provider while allowing time to find a suitable replacement. It is also your responsibility to report the offending service provider to the Department of Labor. Name key people who will be accountable for each step of the process and consider establishing a formal plan fee review committee. Document the plan committee s annual reviews and decisions in formal meeting minutes. Convert Fee Information to Dollars for Fair Comparisons even with new fee disclosure statements, it can be challenging for plan fiduciaries to know how much they actually pay for a particular service and how that fee compares with those of other providers. One tip is to convert all fees listed in basis points (bps) or percentages into dollars. comparing dollar amounts is important in your review. for example, let s say one service provider reports a charge of 45 bps for providing advice to plan participants, and another provider in the same plan charges $25,000. How can the fiduciary Identify the benchmark you will use to compare fees and determine how often you will benchmark fees. compare pricing? the fiduciary Set up a calendar for fiduciary tasks, indicating how long the tasks may take and if they need to coordinate with any of your company s other processes. the payment and complete the will need to find the basis for computation. if the provider that charges 45 bps bases it on the participant s account balance, take the total balance of all participants receiving advice and multiply it by 45 bps. converting all fees into dollars will be important for benchmarking to determine whether the amount you are paying is reasonable and valuable to the plan.

THE NEW ERA OF FEE TRANSPARENCY 4 Managing Participant Fee Disclosure as a part of ongoing fiduciary duties, employers also must communicate plan fees to employees. the regulations are under Section 404(a)(5). Understanding What You re Paying and the Services Provided Evaluating plan fees requires plan sponsors to understand the services they are receiving and the costs associated with each of them. Here are guidelines for understanding your fees: 1. Ensure each covered service provider has clearly defined the services being provided and the amount you are paying for those services. employers may want to: 2. Evaluate whether you have received all of the services listed in the disclosures provided to you. document the procedures Review the details of direct compensation. and requirements for implementing participant fee disclosure; determine whether they will draſt and deliver participant fee disclosures or hire someone to do it for them; and document how eligible nonparticipating employees will be notified and who is responsible for tracking eligibility. Familiarize yourself with all indirect compensation fees and arrangements between the service provider and any subcontractors. - Understand revenue-share arrangements. - Fully understand indirect costs, including float arrangements, conferences and training sessions, subcontractor payments, etc. - Recognize advisory costs from financial advisors and brokers who help manage the plan or investments and whether the costs are commission based or fee-for-service. Review record-keeping services for direct and indirect costs. Understand the investment-related fees that are passed along to plan participants. 3. Review all disclosures to identify any conflicts or discrepancies in the fees versus services provided and know how to remedy or report the situation. Compare cost increases from year to year. Are they warranted? Check whether the increases are related to increases in services, transactions or the number of participants in the plan. Document any necessary action items with specific covered service providers, as well as a plan and specific time frame for addressing them. Ask questions if you don t understand the information you have received.

5 THE NEW ERA OF FEE TRANSPARENCY comparing costs to the value of Services Provided Plan fiduciaries are required to ensure that the costs of operating the plan are reasonable compared to the value of the service being received. When comparing fees for reasonableness, it may be helpful to think of a balance or scale. Services you receive are on one side; fees paid are on the other. Are they relatively equivalent? Any side-byside comparison must be careful not to be weighted in favor of fees. Here are some guidelines for comparing fees and value: Test the balance for each covered service provider who is involved in your plan. When you find a balance between value and cost you ll be in position to deem the fees reasonable. Compare all plan services received with the costs, and decide the real value gained from each provider based on the qualitative aspects of your plan, like plan health and participant financial wellness. Assess how much support the provider delivers to your employees. Is the service provider helping employees reach retirement goals and overall financial wellness? Determining Reasonableness of Investment Options in Your Plan for investment assessment and evaluation, leverage your investment committee processes already in place under the investment Policy Statement, and adjust as needed to: understand the intersection of investment fee competitiveness, fee-sharing arrangements and the impact on individual funds performances; include your policy on considering investment options that provide fee sharing; and Continuous improvement and examination of any plan is crucial. We must stay focused on protecting and improving the value of the 401(k) system, and one of the key components is to provide fee transparency that helps build confidence with plan sponsors and participants alike in the value of the services provided and the impact it s having on participant financial wellness, says Kevin Crain, Head of Institutional Retirement & Benefits Services, Bank of America Merrill Lynch. Determining reasonableness of fees does not mean you seek the lowest-cost provider. Focus instead on overall value, experience, service and confidence that the provider is servicing both the plan and the participants well. If you determine reasonableness solely on the lowest cost, you probably are not meeting the fee reasonableness requirement. determine whether investment objectives of each fund continue to meet plan participants needs.

THE NEW ERA OF FEE TRANSPARENCY 6 Use Outside Benchmarks Developing a Benchmarking Strategy important it is critical that your comparative data be from unrelated outside sources. if any covered service providers recommend their own benchmarks even with the best of intentions this could be considered flawed or a conflict of interests. While benchmarking can be an effective way of fulfilling your fiduciary responsibility for validating fee reasonableness, one size does not fit all. There are a number of approaches and methods to consider when establishing a benchmarking strategy. It can be challenging for plan fiduciaries to know which approach is most appropriate for their plan. Yet the fiduciary must still determine reasonableness, and understanding these quantitative and qualitative measures is important in developing a benchmarking strategy. $ $ Quantitative industry standards and peer averages. These include the rates you pay for services, and the total dollars relative to the services provided for the plan. Qualitative aspects that help you define overall plan success. You might assess and track employee activities and corresponding results over time. These behaviors may help employees reach a better level of financial wellness. When creating your benchmarking strategy, also consider the size of your plan, the depth of resources available and the budget available for obtaining benchmark information. This Benchmarking (opposite) may assist you in developing a strategy that meets the needs of your company. Getting Started is easy Your team at Bank of America Merrill Lynch is available to help navigate the process of determining reasonableness for plan fees. As part of our continuing support for plan sponsors, we have resources and information you may find helpful as you design and document your policies and procedures. We encourage you to: Use materials and information from Bank of America Merrill Lynch to analyze total plan fees, assess reasonableness and list any questions you may want to discuss with your Merrill Lynch Financial Advisor. Work with your Bank of America Merrill Lynch representatives to outline your specific fiduciary duties. Set up well-organized written internal processes you can readily repeat and measure. Establish a calendar of fiduciary tasks related to assessing fees and determining reasonableness.

7 THE NEW ERA OF FEE TRANSPARENCY Benchmarking BENCHMARK RVICES PROVIDED EXAMPLES OF BENCHMARKING RESOURCES* Surveys and benchmarking studies from unbiased sources Third-party assessments Request for Information (RFI) Consultant Request for Proposal (RFP) Broad industry view of various plan fees and practices General pricing comparisons for your plan Plan specific pricing information from service providers In-depth pricing comparisons and competitive data Comprehensive plan specific comparison and pricing review Fiduciary Benchmarks Internal Resources Benefits Consultant Internal Resources Brightscope Benefits Consultant Investment Advisor Benefits Consultant Investment Advisor DC Consultant Investment Advisor 401(k) Averages Book Plan Sponsor Council of America Annual Survey Deloitte Defined Contributions/ 401(k) Fee Study DC Consultant DC Consultant COST? $ $$ $$ $$$ $$$$ Annual 1 2 years 2 3 years Periodic, as resources allow Every 3 5 years FREQUENCY *Not a complete list. Please contact your Bank of America Merrill Lynch representative for more information.

8 THE NEW ERA OF FEE TRANSPARENCY the Role of Your Services team You may find it most helpful to develop your policies and procedures with a team. Reach out to benefits consultants, tax advisors, legal counsel, investment advisors, actuaries and other financial professionals who support your plan. They can help a plan sponsor align fees with services in a meaningful way in order to meet the plan s objectives and needs. There is strength in a having a support team in place, and you already have many such resources at Bank of America Merrill Lynch. Bank of America Merrill Lynch representatives are uniquely positioned to help with both structural plan design and investment options. They look at your goals and needs, and recommend improvements for the financial wellness of each and every plan participant. Anyone involved in supporting your plan is required to specifically report the fees associated with provided services. Our representatives who support your plan may be compensated for their services, and you will see their fees listed separately in these categories: direct compensation, indirect compensation, or compensation paid among related parties. If you have any questions about our compensation or fees, please contact your Bank of American Merrill Lynch representative. Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. The strategies presented are intended to illustrate the products and services available through Bank of America Merrill Lynch; it should not be considered an offer, solicitation or endorsement. These illustrations may not be used with the general public under any circumstances. This material does not take into account your plan s objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument or strategy. Before acting on any information in this material, you should consider whether it is suitable, if necessary, to seek professional advice. Unless otherwise noted, all trademarks and registered trademarks are the property of Bank of America Corporation. 2013 Bank of America Corporation. All rights reserved. AR14F0E9 05/2013 Fee Disclosure Resources Review these materials available from Bank of America Merrill Lynch, including your fee disclosure from July 2012.* Fiduciary Fundamentals: Basics and Best Practices Fiduciary Compliance checklist Plan Sponsor to Fee Disclosure *Starting in 2013, fee disclosures will be updated and posted on Benefits OnLine every month so you will always have access to updated fee information.

Plan Sponsor to fee Disclosure At Bank of America Merrill Lynch, we seek to deliver industry-leading retirement and benefit plan solutions for companies of all shapes and sizes. It is our mission to be a trusted resource to help you manage your business and help your employees achieve financial wellness. We do this through a number of service and support initiatives. It is our hope that you will take advantage of our resource to help you fulfill your obligations as a plan fiduciary. about this guide We designed this document to help you understand and comply with Department of Labor (DOL) fee disclosure regulations. For the past few years, fee disclosure regulations have evolved in order to provide plan participants more transparency. In this booklet, we help you understand what the regulations mean, outline our responsibilities as a covered service provider and your responsibilities as the plan fiduciary, and map out next steps so that you can feel confident that you are in compliance. You will want to review this guide and familiarize yourself with your requirements and responsibilities. Plan sponsor and participant disclosures DOl regulations 408(b)(2) and 404(a)(5) The fee disclosure regulations are part of a three-stage DOL project that has been under way since 2007. The overall intent is to improve fee transparency. The regulations were developed to help ensure that ERISA fiduciaries understand the fees being charged so they may evaluate whether those fees are reasonable. ERISA requires the responsible plan fiduciary (you, as plan sponsor) to determine the reasonableness of the fees that are being charged to the plan and to the underlying participants (your employees). The first element, which was finalized and effective for plan years beginning on or after January 1, 2009, is an expansion of the Form 5500 Schedule C, and requires plan sponsors to report any fees paid from plan assets over the course of a plan year to service providers. This guide focuses on the final two elements: 408(b)(2) and 404(a)(5) disclosures. Fee disclosure requirements This guide addresses two disclosure requirements: Service Provider Fee Disclosure, also known as 408(b)(2) disclosure Participant Disclosure, also known as 404(a)(5) disclosure Quick links About this guide 1 Overview of regulations 1 Fee disclosure to plan sponsors 408(b)(2) 1 Fee disclosure to participants 404(a)(5) 3 Participant fee disclosure distribution options 5 Additional considerations 6 fee disclosure to plan sponsors 408(b)(2) The final 408(b)(2) disclosure regulations require covered service providers to provide a description of services being offered and the compensation expected in connection with those services. The regulation was effective July 1, 2012. Service Provider requirements This means that Merrill Lynch, the service provider, must provide a disclosure notice to you, the plan sponsor. This will enable you to determine the reasonableness of fees prior to entering into, extending or renewing service contracts. Changes must also be disclosed as soon as practicable, but not later than 60 days from the date we are notified of the change. However, any changes to investment-related information must be updated on an annual basis.

Our responsibility Merrill Lynch is responsible for ensuring its own compliance with the 408(b)(2) notice requirements by providing you disclosure that includes the requirements listed below. The notice is updated on a regular basis and available on the Benefits OnLine administrative site. The 408(b)(2) regulation requires service providers to include explanations of the following in the disclosure notices you receive: Description of services: a description of the services to be provided to the covered plan. Fiduciary status: if applicable, a statement that the covered service provider, an affiliate or a subcontractor will provide services either (i) directly to the covered plan (or to a plan assets vehicle in which the covered plan has a direct equity investment) as a fiduciary or (ii) directly to the covered plan as a registered investment advisor. Compensation: a description of the compensation (direct and indirect) that a covered service provider, an affiliate or a subcontractor reasonably expects to receive in connection with the services: Direct compensation is all compensation received directly from the covered plan, either in the aggregate or by service. indirect compensation is all compensation received from any source other than the covered plan, the plan sponsor, the covered service provider or its affiliate(s). Compensation among related parties: this includes any compensation that will be paid among the covered service provider, an affiliate or a subcontractor, in connection with the services if it is set on a transaction basis (e.g., commissions, soſt dollars, finder s fees, etc.) or is charged directly against the covered plan s investment and reflected in the net value of the investment (e.g., Rule 12b-1 fees). Termination fees: Describes any compensation in connection with termination of the contract or arrangement, and how any prepaid amounts will be calculated and refunded upon such termination. Manner of receipt: Describes the manner in which the compensation will be received, such as whether the covered plan will be billed or the compensation will be deducted directly from the covered plan s account(s) or investments. Recordkeeping services: if recordkeeping services will be provided to the covered plan, then the covered service provider must describe all direct and indirect compensation that the covered service provider, an affiliate, or a subcontractor reasonably expects to receive in connection with such recordkeeping services. Investment disclosure: Providers of recordkeeping and brokerage services to a participant-directed individual account plan must disclose additional investment-related fee and expense information if they make available one or more designated investment alternatives for the plan. in addition, covered service providers must provide the covered plan administrator with information regarding the designated investment alternatives that is required to comply with the DOl s participant disclosure regulations. Your responsibility Consider the quality and type of services provided. You are responsible for reviewing the information provided by Merrill Lynch, and should follow these general guidelines: Weigh service provider qualifications. Familiarize yourself with the fee disclosure regulations if you have not already. Review other factors specific to your plan s needs, such as plan complexity. Identify any additional covered service providers that are required to provide you with a 408(b)(2) notice. Assess participant success. Evaluate the reasonableness of fees charged to the plan under the services agreement(s). Consider all of the factors to determine if fees are reasonable: Cost is only one of the criteria. Keep in mind that the service provider with the lowest fees may not be the best choice to meet the needs for your plan. Evaluate investment products and anticipated performance. Include the review within the governance process and maintain adequate documentation of the review process.

fee disclosure to participants 404(a)(5) The final participant disclosure regulations (404(a)(5)) require plan administrators to provide certain plan-related and investment-related information to participants and beneficiaries in participant-directed individual account plans for the purpose of helping participants make informed decisions. Any changes to plan-related information must be communicated to your participants at least 30 days but no more than 90 days in advance of the change. You must provide disclosures to existing participants and beneficiaries annually. Newly eligible participants and beneficiaries must receive their initial 404(a)(5) participant disclosure before they can direct their investments in the plan. Your requirements The regulation requires that you provide an initial fee disclosure notice to participants, beneficiaries, and eligible employees on or before employees can first direct their investments in the plan and annually thereafter. Your notice must provide: Plan-related information General plan information: Regarding the structure and mechanics of the plan, including investment direction instructions, limitations and restrictions, voting rights, identification of designated investment alternatives, and description of brokerage windows. Administrative expenses information: An explanation of any fees and expenses for general plan administrative services such as legal, accounting and recordkeeping services. Individual expenses information: An explanation of any fees and expenses that may be charged against individual accounts on an individual basis, such as loan fees, Qualified Domestic Relations Order (QDRO) fees, investment sales commissions/ loads, redemption fees, and investment management and brokerage fees charged directly to a participant s account. Performance data: This varies depending on whether or not the investment has a fixed rate of return. For alternatives that do not have a fixed rate of return, the annual total return for one-, five- and 10-calendar-year periods must be disclosed. For alternatives with a fixed rate of return, both the fixed rate of return and the terms of the investment must be disclosed. Benchmarks: For designated investment alternatives where the return is not fixed, disclosure must include the name and returns of an appropriate broad-based index for the same one-, five- and 10-calendar-year periods in which performance data is provided. Fee and expense information: For each designated investment alternative, the amount and description of each shareholder-type fee that is not included in the total annual operating expenses of the investment alternative must be disclosed. In addition, for each investment alternative that does not have a fixed rate of return, the total annual operating expenses must be expressed as both a percentage and as a dollar amount, for each $1,000 invested. The 404(a)(5) participant disclosure must include statements indicating that (i) fees and expenses are only one of several factors to consider when making investment decisions, (ii) the cumulative effect of fees and expenses can substantially reduce the growth of the participant s or beneficiary s retirement account, and (iii) participants and beneficiaries can visit the Employee Benefits Security Administration s website for an example demonstrating the long term effect of fees and expenses. Glossary of financial terms A general glossary of financial terms must be provided directly or via an internet website address to assist participants understanding. Supplemental website information Investment-related information An internet website address to provide participants and beneficiaries access to specific additional information about a plan s investment options. Identifying information regarding investment alternatives: The name of the investment alternative and the type or category of the investment for each designated investment alternative offered under the plan. Any required information that is not included within the initial and annual disclosures, but instead is found on the website (prospectuses, financial statements, etc.), must be delivered to participants and beneficiaries via hard copy upon request.

The website requirements for designated investment options are: The name of the designated investment options issuer The investment objectives or goals of the designated investment options The principal strategies (including a general description of the types of assets held by the investment) and principal risks The designated investment options portfolio turnover ratio The designated investment options performance data, updated at least quarterly The designated investment options fee and expense information as required under the new rules. The Merrill Lynch solution includes providing certain investment information via Benefits OnLine and Morningstar profile pages. The Morningstar profile pages include the investment objectives, principal strategies and risks, as well as the name of issuer and portfolio turnover ratio as required by the regulations and are available for all broadly distributed investments. However, if your plan includes an investment that is custom to your plan, there will be a charge to create a custom fact sheet for that investment. In the event that you are using non-morningstar profile pages, please work with your Investment Manager and/or profile page provider to ensure 404(a)(5) compliance for that investment s required information. Benefits OnLine provides investment performance data as well as fee and expense information for the designated investment options. Quarterly notices In addition to the annual disclosures, at least quarterly (i.e., once in any three-month period without regard to the actual plan year), each of your participants must receive a statement that includes: The actual dollar amount charged to their account during the preceding quarter for plan-level administrative services (administrative, recordkeeping, legal, and accounting) The actual dollar amount charged for individual services (loan processing, distributions, etc) A general description of the services to which the charges relate. Change notices If there is a change in the plan-related information, you must furnish each participant and beneficiary a description of that change at least 30 days, but not more than 90 days, in advance of the effective date of the change unless the inability to provide in such time frame is due to unforeseeable circumstances beyond your control. Please note: A change in investment-related information would not trigger the need to provide an updated notice to participants who have already received an initial disclosure. Participants who have already received an initial disclosure would be made aware of the new investment-related information when they receive the next annual disclosure or by checking the Benefits OnLine website. However, the investment-related information used in any initial and annual disclosure must be the latest information available to the plan. You should follow your current process for communicating changes to participants. Your responsibility You are required to provide both an initial and an annual fee disclosure notice to plan participants; however, we are fully prepared to assist you in complying with the regulations by creating the fee disclosure notice and distributing to your plan participants on your behalf. You may choose to manage the distribution of the notice yourself, or both create and distribute the notice. (We address these options in more detail in a following section.) Preparing your participants You should prepare your participants by providing education in connection with the participant fee disclosure notice. We can help you satisfy this responsibility by developing educational materials to: Help participants interpret the 404(a)(5) participant disclosure detail Help put the fees into context with the plan benefits Reinforce that although the disclosure is now required, the fees are not new. Participant fee disclosure distribution options We are automatically providing quarterly disclosure information, website,1 and glossary information. You have a choice in how the Annual and Newly Eligible Employee disclosures are managed and distributed. Please review the options on the following pages. Your Bank of America Merrill Lynch representative can work with you to review your choices and help you choose the fee disclosure solution that best meets your needs. Review the 404(a)(5) distribution elections outlined on the next page if you want Merrill Lynch to create and distribute your 404(a)(5) participant disclosures.

404(a)(5) Participant Disclosure: For existing participants, eligible employees and beneficiaries Must be sent to all participants, eligible employees, and beneficiaries in the plan annually. For new eligible employees, participants and beneficiaries Must be sent to new eligible employees, participants and beneficiaries on or before the date they can first direct their investment, and annually thereafter. Please review the following distribution options, then make your selection on the 404(a)(5) Participant Fee Disclosure Distribution Election form, which will be provided to you: No Merrill Lynch assistance Plan Sponsor will create, print and distribute its own 404(a)(5) participant disclosure to all participants, beneficiaries and eligible employees. We will, however, continue to post our participant disclosures on the Benefits OnLine administrative website. These disclosures will be updated as needed. Merrill Lynch shall have no responsibility for creating, printing and distributing any 404(a)(5) participant disclosure for the Plan Sponsor. Online services only Plan Sponsor will print and distribute the Merrill Lynch-created disclosure to all participants, beneficiaries, and eligible employees. Merrill Lynch will post the latest Merrill Lynch-created disclosure on the Benefits OnLine participant website. Merrill Lynch will have no responsibility for printing and distributing any 404(a)(5) participant disclosure for the Plan Sponsor. Please note, posting the 404(a)(5) participant disclosure online generally does not satisfy the distribution requirement. Partial services Merrill Lynch will: Create, print and distribute the 404(a)(5) participant disclosure annually to all existing participants, beneficiaries and eligible employees. Any 404(a)(5) participant disclosure distribution by Merrill Lynch to eligible employees is contingent upon Merrill Lynch possessing such eligible employee information in its recordkeeping system, and it is the responsibility of the Plan Sponsor to provide Merrill Lynch with correct and updated eligible employee information. Post the latest 404(a)(5) participant disclosure to the Benefits OnLine participant website. We will periodically provide disclosure drafts to plan administrators for review and approval prior to posting. The Plan Sponsor will be solely responsible for the distribution of the Merrill Lynch-created 404(a)(5) participant disclosure to all newly eligible employees on or before the date they can first direct their investments. The Plan Sponsor will be charged $0.75 for each disclosure printed and mailed by Merrill Lynch.* Full Services Merrill Lynch will: Create, print and distribute the 404(a)(5) participant disclosure annually to all participants, beneficiaries and eligible employees. Post the latest 404(a)(5) participant disclosure to the Benefits OnLine participant website. We will periodically provide disclosure drafts to plan administrators for review and approval prior to posting. Create, print and distribute a 404(a)(5) participant disclosure to all newly eligible employees on or before the date they can first direct their investments. * The Plan Sponsor will be charged $0.75 for each disclosure printed and mailed by Merrill Lynch.* Important: This Full Services option is available only if we track employee eligibility. In addition, Merrill Lynch will not be responsible for the failure to deliver the initial ERISA Section 404(a)(5) Participant Disclosure to any immediately eligible employee of the Plan on or before the date on which the participant or beneficiary can first direct his or her investments. Note that this expense is estimated based on the disclosure template with no more than 10 pages, printed in black and white. (For disclosure documents that exceed 10 pages, additional print costs may apply.)

additional considerations If you have an outside Investment Manager, contact them to ensure they are able to provide the following 404(a)(5) investment data to Merrill Lynch and the agents listed below: Morningstar: Investment-related information required to be disclosed on the Plan website, including Issuer Name, Objectives or Goals, Principal Strategies and Risks, and Portfolio Turnover Ratio. Lipper: Investment-related information pertaining to benchmarks, including Fund Inception Date and Rates of Return. Manage investment changes to your plan menu to make sure the changes are complete in advance of the 404(a)(5) participant disclosures being produced. If you elect to have Merrill Lynch print and mail the 404(a)(5) participant disclosures on your behalf: You will have the responsibility of reviewing the plan-related information, and any information that you provide to us, for accuracy. You should notify your Bank of America Merrill Lynch representative if corrections are required prior to distribution. Only incorrect or inaccurate information specific to your Plan can be modified in the 404(a)(5) participant disclosures. Review the ereport ( Demographic Detail Report ) on the Benefits OnLine administrative site to confirm the population (participants, beneficiaries, and newly eligibles) we will mail to. You must ensure that the correct participant addresses are in our files by reviewing the Undeliverable Mail Report in ereporting that lists all the employees that have had mail returned due to a bad address on file. We cannot take responsibility for undeliverable mailings due to our not having correct addresses. We recognize that you may have additional questions about the fee disclosure regulations. if you have any questions or concerns, please contact your Bank of america merrill lynch representative. Important: This publication provides general information about fiduciary ideas and strategies for retirement plans. Always consult with your legal, tax, insurance and investment advisors before implementing any changes. Bank of America Merrill Lynch and its associates do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own independent advisor as to any tax, accounting or legal statements made herein. For plan sponsor and consultant use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services are performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed 2013 Bank of America Corporation. All rights reserved. ARTJSCJ7 05-12-0335 08/2013 May Lose Value

volume 1, issue 2 RetiRement & Benefit Plan SeRviceS Participant Communication & Education Program HOW We can HelP YOU You want your employees to be able to make the most of the retirement plans you offer. that s why Bank of america merrill lynch provides a robust suite of educational materials to help your employees prepare for their financial future and strengthen their overall financial health. learn about the communications available to you and how to access them.

Table of Contents 2 Getting Started 4 Making Key Account Decisions 5 Understanding Plan Features and Services 7 Employee Financial Services 8 Meeting Compliance Requirements 9 Supporting Executive Needs 12 Employee Communications Experience Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

The Participant Communication and Education Program offers a wide variety of educational materials designed to support your efforts to help your employees enhance their financial well-being. These communications can help your employees understand the benefits of their plan, choose how to invest their contributions, learn about the resources available to them, prepare for a healthy financial life and much more. Participant Communication & Education Program website http://rg.ml.com/public/eck It s easy to access the communications you need for your participants. Just go to the Participant Communication & Education Program website and download the material(s) you want. You ll find the communications organized as they are in this brochure. Lifestages We take a personalized approach to employee education and communication. We believe that our lifestage approach can help your employees pursue financial well-being by considering their individual financial goals, their unique perspective and their changing needs and priorities throughout their lifetime. Starting Early Enrolling in the company s 401(k) plan Making 401(k) investment elections Establishing skills required to manage money Making sense of other company benefits including health care, vacation policy, etc. Asset Accumulation Determining an appropriate contribution rate required to balance immediate needs with retirement expectations Deciding what to do with defined contribution assets from prior employer(s) Establishing realistic financial goals Learning more about other benefits available through their employer Balancing Goals and Needs Focusing on financial priorities and managing family spending Reviewing 401(k) plan elections Understanding and managing equity awards Saving to help fund college expenses for children Planning for the freedom years once children are grown The scenarios depicted above are not representative of actual clients. 1 Nearing Catching Up Restarting contributions to 401(k) plan Figuring out ways to maximize contribution rate Understanding more about investments to confidently manage retirement savings Reviewing and updating beneficiary designations Learning more about retirement benefits Retirement Consolidating the analysis and reporting of financial holdings Managing complex company benefits Restructuring investments to optimize cash flow during retirement Establishing a wealth transfer strategy

Getting Started Your employees need to understand the benefits of participating in their 401(k) plan, the enrollment process and how they can manage and monitor their account. A number of emails, brochures and other communications are available to help your employees get started. Starting Early Suggested Lifestage** Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language Account Access Brochure* A guide to managing and monitoring your account through Benefits OnLine. Automatic Enrollment Letter Explains automatic enrollment and the default investment option. Automatic Enrollment/Increase Letter Explains automatic enrollment and the automatic increase feature. Automatic Increase Flyer Reviews the participant-elected automatic increase feature. Automatic Increase Letter Explains automatic increase of participant contributions (plan sponsor-directed or participant-elected). Beneficiary Designation Email* Instructions on how to designate a beneficiary online or by form. Beneficiary Designation Self-Mailer Instructions on how to designate a beneficiary online or by form. Beneficiary Flyer Promotes the ease and convenience of online beneficiary designations. Benefits Online Poster Promotes the educational and transactional features available to participants on the Benefits OnLine site. Conversion Brochure Explains the process and timeline for a plan s transition to Merrill Lynch, including new investments and services. Conversion Email* Announces that Merrill Lynch has been chosen as plan s new service provider. Conversion "Go Live" Email* Announces that conversion of the plan to Merrill Lynch is complete and account access is available. Conversion Seminar Explains the process and timeline for a plan s transition to Merrill Lynch, including new investments and services. Enrollment Brochure Promotes the benefits of plan participation to encourage enrollment. Enrollment Email* Promotes enrollment; links directly to Benefits OnLine log-in page. Enrollment Email (E-Kit)* Links to interactive enrollment guide for automatic enrollment in the plan. Enrollment Email (E-Kit)* Links to interactive enrollment guide. Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 2

Getting Started (continued) Starting Early Suggested Lifestage** Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language Enrollment Seminar Promotes the benefits of plan participation; reviews basic investing principles. to Your Retirement Plan Statement Helps participants understand their account statement. Key Fob Displays Benefits OnLine address and Retirement & Benefits Contact Center phone number. Order through your Plan representative. Plan Highlights Brochure* Overview of a plan's key features and services. Smartphone Screen Cleaner Displays Benefits OnLine address and Retirement & Benefits Contact Center phone number. Order through your Plan representative. (Order limits may apply.) Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 3

Making Key Account Decisions Your participants need to understand how their contributions to the plan work. They also need the resources that can help them choose how to invest those contributions. The communications listed on this page are designed to help a participant with those key decisions. Starting Early Suggested Lifestage** Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language 401(k) Meeting Email An invitation, with dates, times and locations, to a 401(k) meeting. Catch-up Contributions Email* An explanation of catch-up contributions and their potential benefit. Catch-up Contributions Flyer An explanation of catch-up contributions with a potential accumulation example. Sample On-Demand Presentation Understanding Plan Features and Services Dollar Cost Averaging Flyer It s important that your employees understand the features and services offered by their plan. A variety of communications Describes the benefits, with an example, of the dollar cost are available to help participants make the most of what their plan offers. averaging strategy. Investing Wisely Through Your Company s 401(k) Plan Brochure* Provides an overview of key investing principles. Investing Wisely Seminar Reviews key investing principles to help a participant learn how they might invest their account. Investing Wisely - Beyond the Basics Seminar A more advanced look at investing for participants already familiar with the basics. Risk Assessment and Investment A questionnaire to help participants determine their tolerance for investing risk. Safety of Assets Letter Explains the safeguards in place for a participant s 401(k) account. Saver's Tax Credit Flyer An explanation of this tax credit and its income qualifications; updated annually. Seminar Invitation Email An invitation, with dates and location, to a scheduled seminar. Seminar Poster Announces dates and location of a planned seminar. Should You Borrow From Your 401(k)? Reviews the advantages - and disadvantages - of taking a plan loan. Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization Alternate sizes available * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 4

Understanding Plan Features and Services It s important that your employees understand the features and services offered by their plan. A variety of communications are available to help participants make the most of what their plan offers. Starting Early Suggested Lifestage** Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language Advice Access Launch Email* Email announcing availability of Advice Access in plan. Advice Access Brochure* Describes the Advice Access service and its potential benefits to participants. Advice Access Seminar Reviews the Advice Access service and how it works. Advice Access Seminar Module A short overview of Advice Access for inclusion in other standard presentations. Advice Access Statement FAQ Answers frequently-asked questions about the participant Advice Access statement. GoalManager Flyer Overview of the GoalManager Portfolio Rebalancing Service. GoalManager Seminar Module A brief overview of GoalManager for inclusion in other standard presentations. Personal Pension Builder Brochure Explains Personal Pension Builder, a fixed income annuity investment option. Retirement Bank Account Flyer Overview of the Retirement Bank Account, a money-market deposit investment option. Roth 401(k) Brochure Describes the features of the Roth 401(k) contribution option. Roth 401(k) Seminar Explains the Roth 401(k) contribution option. Advice Access Poster Promotes Advice Access, and how participants can learn more about the service. Advice Access Statement Email* Explains the projection statement and links to Benefits OnLine for accessing the statement. Sample On-Demand Presentation Roth 401(k) Seminar Module A short overview of the Roth 401(k) contribution option, for inclusion in other standard presentations. Roth 401(k) Email* Encourages participants to access the Roth 401(k) Comparison Calculator on Benefits OnLine. Self-Direct Brokerage Brochure Describes the Self-Direct Brokerage service. Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization Alternate sizes available * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 5

Understanding Plan Features and Services (continued) Starting Early Suggested Lifestage** Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language Self-Direct Brokerage Seminar Module A brief overview of Self-Direct Brokerage, for inclusion in other standard presentations. Target Date Funds FAQ Answers frequently-asked questions about target date funds. Target Date Funds Seminar Module A brief look at target date funds, for inclusion in other standard presentations. Self-Direct Brokerage Fee Schedule Lists the fees for the Self-Direct Brokerage service. Self-Direct Brokerage: Available Fund Families Flyer Lists the fund families whose funds are available through Self-Direct Brokerage. Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 6

Employee Financial Services Financial well-being means more than just preparing for retirement. Your employees can benefit from understanding how to deal with both their daily financial needs and their larger financial goals. Suggested Lifestage** Language An Education for Them, a Potential Tax Savings for You Seminar Reviews the different ways to fund educational expenses. Balancing Your Competing Goals Seminar Discusses ways to balance today s financial needs with tomorrow s financial goals. Building Sound Financial Habits Seminar Explains the importance of following several key financial habits. Distribution Options Flyer A guide for understanding plan distribution options. Making Choices About Your Social Security Benefits Seminar Explains Social Security basics and strategies for maximizing benefits. Managing Your Career Transition Brochure A guide to key decisions to consider when changing jobs or retiring. Managing Your Career Transition Seminar Discusses key decisions to consider when changing jobs or retiring. Managing Your Money Wisely Seminar Reviews six key action steps to help participants take greater control of their finances. Plan for the Retirement You Want Brochure Reviews the strategies that can help participants as they seek to secure their financial future. Plan for the Retirement You Want Seminar A guide to making the transition to retirement. Planning for Health Care Costs in Retirement Seminar Discusses how to prepare for a healthy and financially sound retirement. Reclaim Your Retirement Seminar Covers the ways to save and prepare for retirement. Retirement Income Worksheet Provides a snapshot of how ready you are for retirement. Strategies for a Healthy Financial Life Seminar Reviews the importance of budgeting, investing and saving for your financial goals. Taking Control of Your Retirement Seminar Reviews how to plan for a changing retirement landscape. Targeted Campaigns Overview Plan Sponsors elect to enroll in our monthly participate and save more targeted campaigns. Updated annually, these multitouch communications are designed to promote plan benefits and make it easier for employees to take positive action. Wealth Transfer Planning Seminar A review of estate planning basics, and how Merrill Lynch can help. Women and Money: Putting Yourself First Explains how women can address their particular financial challenges. Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. * Items are listed in alphabetical order. 7

Meeting Compliance Requirements As a Plan Sponsor, you want your participants to understand the key compliance and other documents you may provide them, including the annual Fee Disclosure Statement. (This is not a complete list of all documents required to meet compliance requirements.) Starting Early Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Suggested Lifestage** Language COLA Limits Flyer Lists IRS annual limits for regular pre-tax and catch-up contributions. Compliance Mailing Email* Links to plan-specific legal and regulatory information. Fee Disclosure FAQ Answers frequently-asked questions about the participant fee disclosure document. Fees and Expenses in Your Employer-Sponsored Retirement Plan Explains the fees and expenses associated with 401(k) participation. Fund Change Announcement Announces upcoming changes to a plan s investment line-up. Fund Change Email* Email linking to a PDF of a fund change announcement. Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 8

Supporting Executive Needs A select group of your employees may require special communications about benefits, particularly their opportunity to participate in an Equity Award Plan or a Nonqualified Deferred Compensation Plan. The materials that could be used to support these needs are listed below. Starting Early Suggested Lifestage Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language About Equity Award Plans Seminar General explanation of equity award plans and the potential benefits they can offer. Not applicable About Restricted Awards Seminar Learn the basics of Restricted Stock and Restricted Stock Unit awards. Not applicable About Stock Options Seminar Explains the basics of stock option awards. Not applicable Accepting Your Awards Online Quick Tip Step-by-step guide for accepting awards granted in an equity award plan. Not applicable Benefits OnLine Equity Awards User A quick-reference guide for managing equity awards using Benefits OnLine. Not applicable Benefits OnLine International Quick Tip Step-by-step guide for choosing a default language preference on Benefits OnLine. Not applicable Cashless Hold Quick Tip Information about this exercise method and how to initiate this type of transaction. Not applicable Cash Purchase Quick Tip Information about this exercise method and how to initiate this type of transaction. Not applicable Cashless Sell Quick Tip Information about this exercise method and how to initiate this type of transaction. Not applicable Conducting Transactions Seminar Teaches participants how to conduct equity award transactions. Not applicable Create Your User ID and Password Quick Tip Step-by-step guide for creating a User ID and Password for Benefits OnLine. Not applicable Equity Comprehensive Brochure - All Audiences Detailed guide for managing equity awards for a combined audience of executives and non-executives. Not applicable Not applicable Not applicable Not applicable Sample On-Demand Presentation Equity Comprehensive Brochure - Non-Executive Audience Detailed guide for managing equity awards for the non-executive audience. Equity Getting Started Brochure - All Audiences Quick reference guide for managing equity awards for a combined audience of executives and non-executives. Equity Getting Started Brochure - Non-Executive Audience Quick reference guide for managing equity awards for the non-executive audience. Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. * Items are listed in alphabetical order. 9

Supporting Executive Needs (continued) Starting Early Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Suggested Lifestage Language Equity Go Live Email Email designed to accompany an Equity Brochure to introduce resources available for managing equity awards. Not applicable Equity "Ongoing" Email Email designed to accompany an Equity Brochure to promote resources available for managing equity awards. Not applicable Making a Tax Election for Your Equity Award Quick Tip Step-by-step guide for making an election to satisfy the tax obligation for equity awards. Not applicable Managing Your Awards Seminar Provides valuable information on how participants can manage their equity awards. Not applicable Modeling Your Restricted or Performance Awards Quick Tip Step-by-step guide for modeling restricted or performance awards online. Not applicable Modeling and Exercising Your Stock Option Awards Quick Tip Step-by-step guide for modeling, or modeling and exercising, stock options. Not applicable NQ Account Access Brochure A guide to managing and monitoring your nonqualified plan account through Benefits OnLine. Not applicable NQ Conversion Letter Announces selection of Merrill Lynch as service provider for a nonqualified plan. Not applicable NQ Distribution Letter Reviews the potential advantages of changing distribution elections for a nonqualified plan. Not applicable NQ Enrollment Email* Announces the opening of the enrollment period for a nonqualified plan with a link to the Account Access brochure. Not applicable NQ Enrollment Brochure An overview of a client s nonqualified plan and Merrill Lynch s services for nonqualified plans. Not applicable NQ Newly Eligible Letter Announces participant s eligibility to enroll in the nonqualified plan. Not applicable NQ Seminar Discusses the benefits and features of nonqualified plans and how to enroll. Not applicable Opening Your Merrill Lynch Brokerage Account Quick Tip Step-by-step guide for opening a Merrill Lynch Limited Individual Investor Account (LIIA) to manage equity awards. Not applicable Performance Awards Seminar Explains what performance awards are, how they work and what a participant may want to do if granted performance awards. Not applicable Restricted Stock / Restricted Stock Units Quick Tip Learn about both Restricted Stock and Restricted Stock Unit (RSU) awards. Not applicable Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 10

Supporting Executive Needs (continued) Starting Early Suggested Lifestage Asset Balancing Goals Catching Nearing Accumulation and Needs Up Retirement Language Restricted Stock Quick Tip Learn about the basics of Restricted Stocks. Not applicable Restricted Stock Units Quick Tip Learn about the basics of Restricted Stock Units. Not applicable Selling Company Stock Quick Tip Step-by-step guide for selling company stock received through an equity award plan. Not applicable Stock Appreciation Rights Seminar Learn about the basics of Stock Appreciation Rights. Not applicable Stock Option Exercise Methods Seminar Learn about the various ways to exercise stock options available in equity plans. Not applicable Stock Options Quick Tip Learn about the basics of Stock Options. Not applicable Your Merrill Lynch Brokerage Account Seminar Describes the account needed to conduct transactions related to equity awards and provides instructions on how to open one. Not applicable Sample On-Demand Presentation Check with your Plan representative Requires plan personalization Alternate versions available Variable data area for customization * Includes active resources links ** Suggestions represent the lifestage at which a communication might be relevant to a participant. Items are listed in alphabetical order. 11

Employee Communications Experience Research has shown over and over again that, when asked, most people identify their finances as their primary source of stress. Financial concerns can have a negative impact on all aspects of your employees lives, including lack of motivation and decreased productivity. As an employer, one of the most important benefits you can provide is the opportunity to help your employees achieve financial peace. The Bank of America Merrill Lynch Employee Financial Services program provides a seamless offering of employee education, personalized guidance and employee initiated access to a wide variety of financial solutions. Account Balance Contribution Advice Rates Access Status Status Equity Award Info Plan Sponsor Data Age Online Print Match relevant solutions with employees needs Telephone Face to Face UNDERSTANDING YOUR EMPLOYEES Personalized Interactions Engagement Channel Empowerment By taking a proactive approach, we are able to tailor meaningful education and programs to the diverse needs of each employee. By utilizing a multi-channel communications strategy, we can consistently engage your employees in a way that best suits their needs and lifestyle. Employees are equipped with the tools and resources they may need to prepare for a lifetime of financial wellness. The case study presented is hypothetical and does not reflect an actual client. It is for illustrative purposes only and results will vary. 12

We know your employees are your most valuable asset and recognize how hard you work to provide benefits to attract and retain a talented, motivated workforce. Employee Financial Services is offered at no additional cost to you and has the potential to give your employees the peace of mind they need to be less distracted by their financial concerns and focused on a sustainable path to financial success. Janet at 46, my husband and i have done our best to manage our money. Despite some setbacks i m comfortable with what we ve achieved, with only modest debt - three great, educated kids, a comfortable home, occasional vacations and about $300,000 in our 401(k) and ira accounts. We always believed we d get around to the rest of our goals, but now the future doesn t seem so far off. Understanding how much we ll need to retire and what we ll need to do to accumulate enough money are definitely our priorities. 13

Benefits OnLine International ml.com Benefits OnLine : www.benefits.ml.com Secure Login Remember me Password (Case Sensitive) merrill lynch s dedicated, secure website allows participants to: Login enroll online. view up-to-date information on their plan account. check investments and track investment performance. conduct and review account transactions. view their rate of return. Help User ID Create User ID Reset your Password Forgot your Password The information you are accessing is personal and confidential. We suggest you logout when you finish viewing your data. Need help logging in? Featured Articles View Demo change investment elections and contribution rate. Add Benefits OnLine to your Favorites Click Here Research & Insights Saving for College and Retirement» Should you pay for your children's college education or invest for your retirement? Making the Most of Your Financial Legacy: Six Key Steps» If you plan and invest wisely, chances are that some of your savings will outlive you. What's next for the global markets & the economy? Learn more about timely insights on investment opportunities and risks. Go now» Six Steps That Could Boost Your Savings» Would you like to save more, but think you can't? Accessing Your Communications Privacy Statement Terms & Conditions It s easy to access the communications you want for your participants. To access the interactive Voice Response System, you will need to use your Social Security/Account Number and your six to twelve character Password. Participant Communication & Education Program website http://rg.ml.com/public/eck If you need to bookmark this page, please make sure to save the generic address, http://benefits.ml.com. Numbers appearing in the address should not be saved. Just visit the Participant Communication & Education Program website. You ll find the materials arranged the same way as in this document. You can then download the communication(s) you want. Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other subsidiaries of Bank of America Corporation. MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation. MLPF&S make available investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation or in which Bank of America Corporation has a substantial economic interest, including BofA Global Capital Management and BlackRock. Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Investment products offered through MLPF&S: Are Not FDIC Insured Online Education Resources Are Not Bank Guaranteed May Lose Value 2012 Bank of America Corporation. All rights reserved. Your participants also have access to a variety of educational resources on Benefits OnLine. THE EDUCATION CENTER MY FINANCIAL LIFE MYFUTURE articles, on-demand seminars, videos and interactive guides aligned to different lifestages. www.education.ml.com features information and tools on investing, budgeting, and much more. www.benefits.ml.com Bilingual quarterly e-newsletter featuring timely news and articles on how to prepare for your financial future. www.mlwmmyfuture.com For Plan Sponsor Use Only The screen shots shown in this document are intended to illustrate the functionality and services available to participants on Benefits OnLine. They are not meant as exact representations of the screens available through your plan. Unless otherwise noted, all trademarks and registered trademarks are the property of Bank of America Corporation. 2013 Bank of America Corporation. All rights reserved. ARUJXGW3 20132355-1 00-63-1313B 11-2013

RETIREMENT & BENEFIT PLAN RVICES Sample Participant communications Schedule When you make the transition to Bank of America Merrill Lynch, we will be available to consult with you on compliance-related activities and communications, including the Sarbanes-Oxley blackout provisions and 404(a)(5) plan-related change notice requirements, to make your transition as smooth as possible. Given the 30-day notice requirements, careful decisions must be made about investment offerings, transaction deadlines and availability of records. Your Bank of America Merrill Lynch team will work closely with you to help ensure that your employees are well-informed of important transition and blackout dates, as well as new plan features and investment options. Below are illustrative samples of a participant communications implementation schedule for a defined contribution plan. Scheduling can be modified to fit your needs. Sample communications implementation schedule This schedule is subject to change during the implementation phase. Months 1 2 Month 4 Implementation communications planning process begins Final reminder blackout period Review of plan features On-boarding communications mailing completed Finalize communications strategy and implementation plan Information posted on plan sponsor intranet Development of on-boarding and ongoing Blackout period begins communication materials Promote meetings (posters, HTML e-mail) On-boarding completed end of month 4 Month 3 GO LIVE Plan sponsor announcement of changes Plan is live announcement and key account access Benefits staff and leader preparation Pre-conversion web meetings for plan sponsor management Advocate and Call Center training Sarbanes-Oxley and 404(a)(5) plan-related change notices sent to all employees (eligible, participating, terminated and retired with a balance) Information to include: Transition overview Enhanced, new services New fund offerings Key dates information available on Benefits OnLine (BOL) Enrollment campaign for all eligible, non-participating employees to encourage participation Seminars available (in person, on demand, webcast) Conversion Participation Plan appreciation Implement transition services for terminated employees with balances Make available most recent 404(a)(5) participant disclosure to newly eligible participants Sample plan implementation timelines On-boarding for January go live date On-boarding for July go live date Implementation activity October November Implementation activity April May June July December January On-boarding completed December 31 Go live mid January On-boarding completed June 30 Go live mid July

Ongoing participant communications We work with you to give participants the information they may need to maximize their benefits. All communications, including statements, online messaging, targeted campaigns and education curriculum, promote understanding and full utilization of benefits. Powerful-yet-easy investment tools enable employees to take sensible action on their own behalf. Your Merrill Lynch Financial Advisor will work with you to customize a calendar specific to your company s needs. Sample schedule of events January/April/July/October Participant statements mailed in bulk to plan sponsor and available on Benefits OnLine Participant newsletter, myfuture, available through Benefits OnLine Enrollment meetings for newly eligible employees Employee seminars available upon request October Administrative mailings Health benefits enrollment recommend adding 401(k) enrollment component to annual benefit enrollment period November Planning and discussion of next year s communications strategy December Annual IRS contribution limit announcement e-mail Optional services available Annual benefits fair Rollover options Transition services 529 College Savings Plans 404(a)(5) participant disclosure production and mailing Wealth management, retirement and estate planning services Advice Access seminars For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value 2013 Bank of America Corporation. All rights reserved. ARK98F7R 00-63-0979B 10/2013

RETIREMENT & BENEFIT PLAN RVICES Plan Sponsor to compliance Resources This guide to compliance resources is designed to advise you of the availability of comprehensive information from a variety of trusted sources that may assist you in meeting your fiduciary responsibilities. Where to go for... General information on meeting your fiduciary responsibilities The Department of Labor (DOL) provides an online publication at http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html that covers such topics as: What are the essential elements of a plan? How do employees get information about the plan? Who is a fiduciary? How are employers required to report plan activities? What is the significance of being a fiduciary? Can a fiduciary terminate its fiduciary duties? Limiting liability What help is available for employers who make mistakes? Hiring and monitoring a service provider Tips for employers with retirement plans Prohibited transactions compliance information The following DOL site contains information intended to assist plan sponsors in understanding and complying with the requirements of ERISA as it applies to employee retirement and other benefit plans: http://www.dol.gov/ebsa/compliance_assistance.html Contents include: General fiduciary compliance assistance Frequently Asked Questions about pension plans and ERISA Reporting and Disclosure for Employee Benefit Plans Reporting and filing resources Be sure to scroll down all the way to the bottom of this site in order to see all the materials available to help you. compliance information on fee disclosure regulations The following DOL site contains information intended to assist plan sponsors in understanding and complying with the final fee disclosure regulations pursuant to ERISA 408(b)(2) Service Provider Fee Disclosure and ERISA 404(a)(5) Participant Fee Disclosure: http://www.dol.gov/ebsa Contents include: Overview of final fee disclosure regulations Initial disclosure timing requirements and subsequent changes Final Regulation Relating to Service Provider Disclosures Under Section 408(b)(2) fact sheet Reporting and filing resources

General information for plan sponsors IRS publications are a key source for information about retirement plans. The primary IRS website is http://www.irs.gov. On this site, you ll find such resources as: Tax information for plan sponsors at http://www.irs.gov/retirement/sponsor/index.html Retirement Plans Frequently Asked Questions plus information on how to get answers to your technical and procedural questions concerning retirement plans at http://www.irs.gov/retirement-plans/retirement-plans-frequently-asked-questions-(faqs)-1 401(k) Plan Checklist, a quick review highlighting some of the basic operational questions for 401(k) plan to help you develop a better understanding of the requirements for these plans at http://www.irs.gov/pub/irs-tege/pub4531.pdf Topics for retirement plans at http://www.irs.gov/retirement-plans/plan-participant,-employee/retirement-topics Helpful tools and information From the main site of the 401(k) Help Center you can access a wide variety of compliance tools and information. Organizations you may want to consider joining The following are two examples of organizations that offer resources that may be helpful to plan fiduciaries: The Profit Sharing/401(k) Council of America The Employee Benefits Research Institute For more information please contact your Bank of America Merrill Lynch representative. Merrill Lynch is not affiliated with the websites provided and does not monitor, maintain or specifically approve any of the information available on the websites. For plan sponsor use only. Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ( MLPF&S ), a registered broker-dealer and member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value 2013 Bank of America Corporation. All rights reserved. ARKNUY5G 00-63-0971NSB 12/2013