US Salary Investment Plan Summary Plan Description

(1)

Reed Elsevier Inc.

US Salary Investment Plan

Summary Plan Description

Effective January 1, 2011

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

(2)

INTRODUCTION

Reed Elsevier Inc. (“the Company”) has established the Reed Elsevier US Salary Investment

Plan (called the “RE 401(k)” or the “Plan”) to help you build a financially secure future.

The RE 401(k) offers an easy way for employees to take charge of their future retirement savings. Its valuable features include:

• Eligibility is immediate (prior to January 1, 2011, participation commenced after three months of service)

• Convenient savings through payroll deductions

• A choice of before-tax, traditional after-tax or Roth 401(k) after-tax contributions or a combination of the three options

• Valuable tax advantages

• Company matching contributions • A wide range of investment options

• Access to your account 24 hours a day - 7 days a week - - through the RE 401(k) website:

http://re401k.ingplans.com and the RE 401(k) Information Line: 1-800-448-5189.

This booklet is called a Summary Plan Description. It explains the provisions of the RE 401(k) and how the Plan can help you achieve your financial goals for retirement.

(4)

THE RE 401(k) WEBSITE – http://re401k.ingplans.com

You can open and manage your RE 401(k) Account through the RE 401(k) website at

http://re401k.ingplans.com. The website provides detailed information on topics such as:

Joining the Plan Changing your PIN/Online PIN Reset

Contributing to the Plan Accessing your Account

Vesting Information Company Matching Contributions

Changing Plan Options Investment Options

Loans Requesting Forms

Payment Options When Leaving the Company Withdrawals

Keeping Track of Your Account Fees

Statements on-demand All Plan Highlights

IMPORTANT TELEPHONE NUMBERS

The RE 401(k) Information Line: 1-800-448-5189

The RE 401(k) Information Line offers valuable telephone services.

You may: enroll in the RE 401(k); change your investments; get up-to-date account balances; change your PIN; initiate a loan or withdrawal; request a final distribution; and/or speak to a Customer Service Representative.

The RE 401(k) Information Line provides:

• Automated telephone service - available 24 hours a day, 7 days a week.

• Customer Service Representatives - available 8:00 am to 6:00 p.m. Eastern Time Monday-Friday (except stock market holidays).

• Hearing impaired service phone number - 1-800-579-5708

Your PIN is required to access the website or the Information Line. If you lose your

PIN, please call 1-800-448-5189.

Self-Managed Account (SMA)

• State Street Global Markets: 1-866-548-5595 • Website: www.fiibg.com/my/citistreet

• Licensed Registered Representatives are available to execute securities trades 8:30 a.m. to 5:00 p.m. Eastern Time, Monday-Friday (except stock market holidays).

You will receive a separate Brokerage User ID and PIN which you will need for all

SMA transactions.

(5)

THE PLAN AT A GLANCE

PLAN FEATURE HIGHLIGHTS

Participation Enrollment in the Plan is not automatic.

Eligible employees may join the Plan immediately after hire by calling the RE 401(k) Information Line at 1-800-448-5189 or by logging on to the RE 401(k) website and electing to contribute to the Plan.

How Much You Can Save You can save from 1% to 75% of your pay

through convenient payroll deductions, subject to certain IRS limits. (See page 10 for more information.)

How Much the Company Contributes (depends upon whether you are eligible for active pension plan participation)

Those Eligible for Pension Plan Pay Credits. The Company matches $.50 for every

dollar you contribute up to the first 6% of your pay (results in a 3% match if you contribute 6% or more of your pay)

Those Hired On Or After August 1, 2009 or Not Eligible for Pension Plan Pay Credits.

The Company matches:

$1.00 for every dollar you contribute up to the first 5% of your pay if you have less than three years of service (results in a 5% match if you contribute 5% or more of your pay);

$1.00 for every dollar you contribute up to the first 5% of your pay and $2.00 for any

additional dollars you contribute up to an additional 1% of your pay, if you have 3 to 6 years of service (results in a 7% match if you contribute 6% or more of your pay);

additional dollars you contribute up to an additional 2% of your pay, if you have 7 or more years of service (results in a 9% match if you contribute 7% or more of your pay)

(6)

THE PLAN AT A GLANCE

How to Manage Your Account Call the RE 401(k) Information Line at:

1-800-448-5189 or log on to the website at:

http://re401k.ingplans.com. The Information

Line and the website can be accessed 24 hours a day – 7 days a week. You can transact Plan changes, request forms, check your account balances and ask questions relating to the RE 401(k).

A quarterly statement is also available to RE 401(k) participants reporting current Plan elections and account balances.

On-demand statements are available on the RE 401(k) website at any time.

Valuable Tax Advantages Before-tax savings reduce your taxable

income. Also, you pay no taxes on Company matching contributions or gains from investments while the money remains in the Plan.

Traditional after-tax contributions are taxed at the time of contribution, and then any earnings on those contributions are taxed at the time of distribution.

Roth 401(k) after-tax contributions offer tax benefits on the back-end – with “qualified withdrawals” that are tax-free.

How Your Contributions and the Company Matching Contributions are Invested

The RE 401(k) offers a wide range of investment options including:

12 Core Funds

10 Target Retirement Funds

A Self-Managed Account (SMA) that allows you to invest a portion of your RE 401(k) account in stocks, bonds and mutual funds. The ING Advisor Service which provides access to personalized investment advice and recommendations across all the core funds in the Plan.

Loans You may borrow money from your Plan

account while you are employed, unless you already have two or more loans outstanding. There are two types of loans: a Standard Loan and a Primary Residence Loan.

You pay back the loan and the interest on the loan to your 401(k) Plan account through payroll deductions.

Withdrawals While You are still Employed You may withdraw certain funds from the Plan while actively employed. There are two types of withdrawals: Non-Hardship Withdrawals and Hardship Withdrawals.

(7)

THE PLAN AT A GLANCE

How Vesting Works Vesting refers to your right to all or part of the value of your Plan account. You are always 100% vested in the value of your own 401(k) Plan contributions (including rollover contributions) and any earnings on those contributions. If you are hired on or after January 1, 2004, you will be 100% vested in the Company matching contributions – and any earnings on those contributions – after completing three “years of vesting service”. * *Employees hired prior to January 1, 2004 will be 100% vested in the Company matching contributions after completing one “year of vesting service”.

Payments When You Leave the Company If you leave the Company due to normal retirement (i.e., age 65), death or disability, the full value of your 401(k) Plan account will be available to you, your beneficiary or estate. If you terminate employment, the vested portion of your account will be available to you. The unvested portion of your account will be forfeited.

(8)

PARTICIPATION

ELIGIBILITY

Employees (both full-time and part-time) of Reed Elsevier Inc. or an affiliated company participating in the RE 401(k) are eligible to join the Plan immediately following hire by electing to contribute to the Plan.

You are not eligible to participate in this plan if you are: • A leased or contract employee

• Covered by a collective bargaining agreement between the Company and a union (unless the agreement specifically provides for your participation in the 401(k) Plan)

• A nonresident alien who receives no earned income from the Company • An at-home employee of Reed Technology and Information Services, Inc.

• An employee who is paid on a per diem basis or is paid on an hourly project basis, or is hired for a period of fixed duration not exceeding nine months

If you are a leased or contract employee and you are retroactively reclassified as a regular employee of a participating Reed Elsevier company, you will not be eligible to participate in the Plan for the retroactive period.

Transferred Employees

If you are transferred to work with a group of employees of Reed Elsevier Inc. (or one of its affiliates) that is not covered by the RE 401(k), your Plan account balances at the time of your transfer will continue to be held in the Plan, and you will continue to have all the rights of a Participant. However, you cannot make contributions to the Plan during this time. If you are making loan payments to the Plan, those payments will continue to be made through payroll deductions and will be credited to your Plan account.

If you later transfer to a group of employees that is covered by the RE 401(k), you may again begin making contributions to Plan.

Rehired Employees

If you terminate employment after you become eligible to participate in the RE 401(k) and are later rehired as a eligible employee, you may resume Plan participation by electing to contribute to the Plan. Your eligibility for Company matching contributions will be determined in accordance with the criteria outlined on page 9.

Rehired employees with an original hire date prior to January 1, 2004 are 100% vested after one year of service.

Note: You are not considered to have terminated employment if you are transferred to a company that is owned or controlled by, or under common control with, Reed Elsevier Inc.

(9)

ENROLLMENT

Eligible employees will no longer be automatically enrolled under the Plan on or after January 1, 2011. However, if you were previously automatically enrolled, you will remain enrolled in the Plan at a 2% contribution level unless and until you elect otherwise. You may enroll in the Plan and commence making before-tax, traditional after-tax, or Roth 401(k) after-tax contributions (or a combination of the three options) by calling the RE 401(k) Information Line at: 1-800-448-5189 or logging on to the website at: http://re401k.ingplans.com.

You can enroll at the level that best suits your savings and investment objectives (in 1% increments to a maximum of 75% of pay). The Company will participate by matching your contributions. See the Company Matching Contribution section below for more details.

Upon enrollment, you will also have the opportunity to elect how your contributions (and corresponding Company matching contributions) are invested. If you fail to make an investment election your contributions and the Company matching contributions will be invested in the appropriate Target Retirement Fund based on your year of birth and assuming retirement at age 65*.

At any time after initial enrollment in the RE 401(k) you may choose to change your contributions to the Plan and/or change your fund allocation(s) by calling the RE 401(k) Information Line or by logging on to the RE 401(k) website.

Refer to the Information Kit, PIN and a welcome letter you received upon hire. The Kit includes important information about the Plan, including the enrollment process.

Once you are participating in the RE 401(k), you can change or stop your contributions and change your investment options at any time by calling the RE 401(k) Information Line or logging on to the RE 401(k) website. Please see the Changing Your Contributions and Changing Your Investments sections in this booklet.

Note: Highly compensated employees (generally, for 2011, someone who made over $110,000) may be limited in the amount of contributions they may make. For instance, for 2011, highly compensated employees may not contribute more than 10% of compensation as a traditional after-tax contribution. The limit may change as to type of contribution and/or amount from year to year. Call the RE 401(k) Information Line or log on to the RE 401(k) website Inc for updated information..

When You Make Changes

You can use the website or the RE 401(k) Information Line to choose:

• How much of your eligible compensation you want to contribute (your payroll deductions); • Whether you want to contribute on a before-tax, traditional after-tax and/or Roth 401(k)

after-tax basis;

• Where to invest your contributions; and

• How much of your eligible pay (in 1% increments) you want to invest in each of your investment options.

Your contributions are deducted from your paycheck each pay period and invested in the options you choose. You may change your investment options and contribution levels by logging in to the website or calling the RE 401(k) Information Line.

If you fail to make an investment choice, your contributions will automatically be invested in the appropriate Target Retirement Fund based on your year of birth and assuming retirement at age 65.*

(10)

CONTRIBUTIONS TO THE RE 401(k)

The RE 401(k) offers participants the opportunity to save between 1% and 75%* of their pay, in

1% increments, on a before-tax basis, traditional after-tax or Roth 401(k) after-tax basis, or a

combination of all three.

BEFORE-TAX CONTRIBUTIONS

If you save on a before-tax basis, your contributions are deducted from your gross pay each pay period before any federal and, in most instances, state or local taxes are withheld. Before-tax contributions reduce your current income taxes because they lower your taxable income. In addition, you will not have to pay income tax on these contributions until you receive a distribution from the RE 401(k). Your before-tax contributions are subject to Social Security (FICA) taxes.

TRADITIONAL AFTER-TAX CONTRIBUTIONS

After-tax contributions are deducted from your pay after all taxes have been withheld. Although after-tax contributions do not reduce your taxable income, they are more readily available for withdrawal during your active employment. These contributions also share fully – on a tax-deferred basis – in any gains from your investment fund choices. After-tax contributions are not taxed again when they are withdrawn from the Plan – only the earnings on these contributions will be taxed at that time.

ROTH 401(K) AFTER-TAX CONTRIBUTIONS

Roth 401(k) after-tax contributions are designed to give participants increased tax-planning flexibility by combining some features of Roth IRAs and 401(k) Plans.

Roth contributions are made on an after-tax basis and are included in current taxable income. Unlike before-tax and after-tax contributions, earnings are tax free if they are part of a “qualified distribution.” A “qualified distribution” is one that is taken at least 5 tax years from the year of your first Roth 401(k) after-tax contribution and after you have attained age 59 ½, become disabled or die. You may contribute to both the traditional pre-tax and Roth option as long as you do not exceed the total IRS contribution limit for that year. In 2011, the combined IRS contribution limit for both Roth and traditional pre-tax contributions is $16,500.

OR A COMBINATION

You may elect to make your Plan contributions in a combination of all three options - before-tax, traditional after-tax or Roth 401(k) after-tax. The total of your contributions cannot be more than 75%* of your pay. In any case, investment growth on either before-tax, traditional after-tax or Roth 401(k) after-tax savings accumulates tax-free until the funds are paid out of your RE 401(k) Account.

*IRS rules may further limit the total annual contributions certain highly compensated employees may be eligible to have credited to the RE 401(k) Plan and, under certain circumstances, a highly compensated employee may have his or her individual contribution and/or matching contribution limited for a given year. You will be notified if these limitations apply to you.

(11)

COMPANY MATCHING CONTRIBUTIONS

To encourage you to save and help you accumulate additional funds for retirement, the Company contributes to your Plan account as determined below.

Legacy Match - If you are an active participant

in the Reed Elsevier US Retirement Plan.

The Company matches $.50 for every dollar you contribute up to the first 6% of your pay (results in a 3% match if you contribute 6% or more of your pay)

For example, if you earn $2,000.00 biweekly and contribute 6% to the Plan ($120.00) each pay period, the Company will add $60.00 to your RE 401(k) Account each pay period – whether your contributions are on a before-tax, traditional after-tax or Roth 401(k) after-tax basis.

Enhanced Match - If you fall under any one of

the following categories:

you were hired on or after August 1, 2009; you were rehired on or after August 1,

2010*;

you opted out of continued eligibility for the Reed Elsevier US Retirement Plan under the Choice Program; or

you are otherwise not eligible for active participation in the Reed Elsevier US Retirement Plan.

*Not applicable to disabled participants who upon re-hire are eligible to recommence Reed Elsevier US Retirement Plan participation.

The Company matches:

$1.00 for every dollar you contribute up to the first 5% of your pay if you have less than three years of matching contribution service (results in a 5% match if you contribute 5% or more of your pay);

additional dollars you contribute up to an additional 1% of your pay, if you have 3 to 6 years of matching contribution service (results in a 7% match if you contribute 6% or more of your pay); or

$1.00 for every dollar you contribute up to the first 5% of your pay and $2.00 for additional dollars you contribute up to an additional 2% of your pay, if have 7 or more years of matching contribution service (results in a 9% match if you contribute 7% or more of your pay).

For example, if you earn $2,000.00 biweekly, have 4 years of matching contribution service, and contribute 6% to the Plan ($120.00) each pay period, the Company will add $140.00 to your RE 401(k) Account each pay period – whether your contributions are on a before-tax, traditional after-tax or Roth 401(k) after-tax basis.

Important notes: Calculation of the annual Company matching contribution may not include compensation in excess of the IRS annual compensation limit for the year ($245,000 for 2011). This limitation is subject to adjustment in future years to reflect cost of living increases.

(12)

COMPANY MATCHING CONTRIBUTION TRUE-UP

The “True-up” feature is an adjustment made to your RE 401(k) account to ensure that you receive the full Company match attributable to your total Plan contributions for the year. Since Company matching contributions for a pay period do not apply to employee contributions that exceed the maximum contribution percentage taken into account under the formula applicable to you, there are circumstances when you may not receive the maximum Company matching contribution for the year. This may occur if:

• You contribute at a rate above your formula’s maximum contribution percentage and reach the IRS’ annual contribution limit ($16,500 for 2011); or

• You contribute at a rate below your formula’s maximum contribution percentage for part of the year and above that percentage for part of the year; or

• You begin participating in the Plan other than at the beginning of the year. To qualify for the true-up,

• You must be an active employee of a Reed Elsevier company on the last day of the year; and

• Did not receive the maximum match under the formula applicable to you based upon your contributions for the year.

If you otherwise qualify for a year end true-up, Reed Elsevier will compare the Company Matching Contributions you were credited for the year to the maximum contributions available to you for the year based upon your total contributions for the year and credit your plan account with any shortfall.

Any additional contribution for a plan year resulting from this true-up process will be made to your account in the following year.

HOW MUCH YOU CAN CONTRIBUTE

The IRS sets limits on the amount of before tax and Roth 401(k) after-tax contributions that can be made in a calendar year. For 2011, the maximum combined before-tax and Roth 401(k) after-tax contributions was $16,500. Employees who participate in more than one 401(k) Plan in the same calendar year must not contribute more than $16,500 in before-tax and/or Roth 401(k) after-tax contributions to the Plan(s), combined. This limitation is subject to adjustment for inflation in future years.

2008 $15,500 2009 $16,500 2010 $16,500 2011 $16,500 2012 (and after, indexed for inflation)

CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 AND OVER

Employees who will be at least age 50 by the last day of a calendar year may make additional contributions to the Plan if they have already contributed the maximum allowed. Catch-up contributions can be made on either a before-tax or Roth 401(k) after-tax basis. The amount of additional savings allowed for 2011 is $5,500. This limitation will be adjusted for inflation in future years.

(13)

BEFORE-TAX VERSUS AFTER-TAX CONTRIBUTIONS

The following example shows the advantages of saving with before-tax dollars versus after-tax dollars. Let’s assume your annual compensation is $35,000 and you elect to save 6% or

$2,100/year.

Before-tax Savings After-tax Savings Annual Compensation $35,000 $35,000

Before-tax Savings 2,100 0

Taxable Income 32,900 35,000

Estimated Federal Income Tax 3,231 3,546

Balance 29,669 31,454

After-tax Savings 0 2,100

Take Home Pay $29,669 $29,354

This example assumes a single employee earning $35,000 with no itemized deductions and is based on the 2010 tax tables. State and local taxes are not included.

Note that there may be special considerations for contributing on a traditional after-tax basis of a Roth 401(k) after-tax basis, and you should review with your tax advisor whether either of these options is appropriate for you.

TAX SAVER’S CREDIT

Additional tax incentives are available to individuals in certain income tax brackets. In addition to the taxes you save with each paycheck, there is an additional tax credit in the form of a retirement savings contribution credit (see Internal Revenue Service Form 8880 for more details regarding this credit) available at the time you file your tax return and is based on your adjusted gross income. This additional incentive only applies to the first $2,000 of before-tax savings you make in a tax year and is as follows:

ADJUSTED GROSS INCOME

Credit Single Filers Head of Household Joint Filers

50% of Contribution 0–$15,500 0–$23,250 0 - $31,000

20% of Contribution $15,500–$17,000 $23,250–$25,500 $31,000 - $34,000 10% of Contribution $17,000–$26,000 $25,500 –$39,000 $34,000 - $52,000 Credit not available More than $26,000 More than $39,000 more than $52,000

The credit is reduced by certain distributions received from 401(k) plans, Individual Retirement Accounts and certain other plans during the tax year and may include any similar distributions to your spouse.

(14)

ABOUT COMPENSATION

Under the RE 401(k), you elect to contribute a certain percent of your pay. For the purposes of this Plan, “Pay” is defined as the amount paid to you under the payroll system before deductions to the RE 401(k), to a Section 125 plan (also known as a cafeteria plan) or a qualified

transportation fringe benefit plan are withheld. However, it does not include: tuition reimbursement, moving expenses, car allowances, commutation allowances, severance payments made in a lump sum or periodically, Yes and other cash awards, flex cash amounts, signing and completion/termination bonuses, expense allowances or reimbursements, executive non-qualified deferred compensation, and Long-term Incentive Plan payments. Otherwise includable pay must be paid as part of, or prior to, the payroll that includes your severance from employment date to be considered eligible pay.

The IRS limits the maximum compensation that may be recognized by the Plan. The limit for

2011 is $245,000, which is subject to adjustment in future years to reflect cost of living

adjustments. Any compensation earned above this limit is ineligible for all contributions to an IRS-qualified 401(k) plan, like the RE 401(k). Once your RE 401(k) eligible pay for the year has reached the IRS compensation limit, all contributions to the RE 401(k) will stop even if you have not contributed the maximum before-tax or catch-up contributions permitted for the year.

ROLLOVERS INTO RE 401(K)

You may roll over the qualified taxable lump sum distribution you receive from another IRS 401(k) or certain other tax-qualified plans into your RE 401(k) account, provided you are considered to be a RE 401(k) eligible employee.

If you elect to roll over your distribution into the RE 401(k), you may use the website or call the RE 401(k) Information Line to determine if the rollover can be accepted by the Plan and, if so, to request a Rollover Contribution Form and instructions about completing the rollover transaction. Only checks will be accepted. Shares of stock cannot be accepted nor can rollovers be accepted from any non-qualified plan.

Please consult your personal tax advisor to make sure you understand the consequences of making a rollover contribution to the RE 401(k).

CHANGING YOUR CONTRIBUTIONS

You may change your payroll contribution percentages at any time by logging on to the RE 401(k) website or calling the RE 401(k) Information Line. The change will be reflected in your paycheck as soon as administratively practical. For example, if you log on or call on January 14th, the change would normally be effective in your January 31st paycheck.

Participating After You Have Stopped Your Contributions

If you have stopped contributing to the RE 401(k) and want to begin contributing again, you may do so by logging on to the website or calling the RE 401(k) Information Line. Your contributions (payroll deductions) will begin again as soon as administratively possible.

Contribution Rate Escalator

Through the RE 401(k) website, the Contribution Rate Escalator allows you to automatically increase your contributions on a specific date in the future. You elect a target contribution percentage, select the frequency of each increase and choose the start date. You can discontinue this feature at any time.

(15)

VESTING

Vesting means your right to the money in your RE 401(k) Account. You are always 100% vested in the value of your own contributions and your rollover contributions (if any) to the RE 401(k). You become 100% vested in the value of the Company matching contributions after completing three years of vesting service*. You also become 100% vested in the value of the Company matching contributions if you attain age 65, become permanently disabled or die while in active service with the Company.

*Employees hired prior to January 1, 2004 become 100% vested in the Company matching contributions after the completion of one year of vesting service.

SERVICE

Service is important because it is used to determine whether you are vested (vesting service) in Company matching contributions as well as the level of matching contributions (matching contribution service) under the enhanced matching contribution formula. In general, service refers to your period of employment as an employee of Reed Elsevier Inc. or one of the Reed Elsevier Inc. affiliated companies.

A year of vesting service and matching contribution service is based upon each 12-month period of employment between your date of hire and your Separation from Service date. Your Separation from Service date is the earlier of the date you quit, retire, are discharged or die, or the first anniversary of the first day you were absent from the Company for any other reason, such as sickness, layoff or leave of absence. Matching contribution service, however, does not include periods during which you are not eligible for Plan participation (such as periods following termination of employment).

Service is also important in determining Plan eligibility for part-time employees. If you are or have been a part-time employee, a year of eligibility service with respect to periods prior to January 1, 2004 is the 12-month period beginning with your date of hire if you complete at least 1,000 hours of service during that period. If you have fewer than 1,000 hours of service during this first 12-month period, you will need at least 1,000 hours of service in a calendar year to be credited with a year of eligibility service. An hour of service is each hour you are paid (or entitled to be paid) by the Company for: your work; vacation, holidays, illness, incapacity, disability, layoff, jury duty, military duty and approved leaves of absence, but only for up to 501 hours for any period in which you are not working; and back pay that is awarded to you or agreed to by the Company.

If you became an employee of Reed Elsevier Inc. or one of its affiliated companies as a result of a merger or acquisition, the applicable acquisition agreement or action by the Reed Elsevier Inc. Board of Directors, if any, will govern the crediting of your service. Years of matching contribution service for purposes determine credits for legacy ChoicePoint employees includes only service since the later of September 19, 2008 (the date ChoicePoint was acquired by Reed Elsevier), or date of hire.

ADMINSTRATIVE FEES

Administrative fees cover the cost of operating the Plan, including recordkeeping and trustee expenses, the Plan website and Information Line, participant communications and outside legal advice, among other operational functions.

Plan administrative fees are charged against participant accounts on a monthly basis in the amount of $4.00 each month.

(16)

RE 401(k)

INVESTMENT OPTIONS

The RE 401(k) Plan offers you four different ways to invest your retirement savings depending on your level of investment experience and how hands-on you want to be in managing your money.

Here’s a look at your four investment tiers, listed in order from most hands-off to most hands-on:

TIER ONE - Target Retirement Date Funds

The ten target retirement date funds are managed by BlackRock, one of the world’s preeminent investment managers. Each target retirement date fund is a broadly diversified mix of passively managed funds across multiple asset classes that seeks to maximize total return with a risk level that is considered appropriate for the specific time horizon indicated by the target year in the fund’s name. Every year, the fund’s asset mix is adjusted to gradually get more conservative — generally by a reduction in stocks and a corresponding increase in bonds — as the target year approaches.

You can choose from ten target retirement date funds:

• BlackRock LifePath Index Retirement Fund - For participants who are close to or already retired.

• BlackRock LifePath Index 2015 Fund - For participants who expect to retire between 2013 and 2017.

TIER TWO - Low-cost index funds

Index funds are designed to simply mirror, as closely as possible, the performance of broad market indexes and offer broad diversification within an asset class. Together, these four funds provide you a simple, low-cost and efficient way to build a diversified portfolio across the major stock and bond asset classes.

You can choose from four low-cost index funds:

• BlackRock US Debt Bonds Index Fund - Seeks to match the performance of the Barclays Capital Aggregate Bond Index by investing in a diversified sample of the bonds that make up the index.

• BlackRock Russell 1000 Index Fund - Seeks to match the performance of the Russell 1000® Index by investing in stocks that make up the index.

• BlackRock Russell 2000 Index Fund - Seeks to match the performance of the Russell 2000® Index by investing in a diversified sample of the stocks that make up the index.

(17)

• BlackRock MSCI ACWI ex-US Index Fund - Seeks to match the performance of the MSCI ACWI ex-US Index by investing in stocks that make up the index.

TIER THREE - Actively-managed funds

The portfolio managers of actively-managed funds attempt to outperform market indexes by actively researching and then buying and selling individual securities. These funds may or may not outperform their respective market indexes.

You can choose from eight actively-managed funds, listed below in order from lowest to highest risk:

• BlackRock Money Market Fund - Seeks to provide interest income and stability by investing in high quality, short-term debt issues known as money market instruments, including those issued by the US government and its agencies, corporations and banks, among others. • PIMCO Global Bond Fund - Seeks maximum total return consistent with preservation of capital and prudent investment management. Invests in both US and non-US high quality intermediate-term bonds.

• Domini Social Equity Fund - Seeks long-term total return by investing in mid-cap and large cap US companies that meet Domini Social Investments’ social and environmental

standards.

• Wellington Opportunistic Core Fund - Seeks to provide long-term total return in excess of the Russell 1000 Index the by investing in high-quality, established companies of all sizes with good balance sheets, strong management teams, and market leadership in their industry. • DFA US Small Cap Portfolio - Seeks long-term capital appreciation by investing in a broad

cross-section of US small companies with market capitalizations within the smallest 10% of the total US market universe.

• American Funds New Perspective Fund - Seeks long-term growth of capital. Future income is a secondary objective. The fund invests in blue chip companies in the United States and abroad, emphasizing multinational or global companies and focusing on opportunities generated by changes in global trade patterns and economic and political relationships. • Thornburg International Equity Fund - Seeks long-term capital appreciation by investing in

non-US equities of all types. The portfolio is diversified to include basic value stocks, stocks of companies with consistent earnings characteristics and stocks of emerging franchises. • Templeton International Smaller Companies Fund - Seeks long-term growth of capital. The

fund normally invests at least 80% of net assets in equity securities of smaller companies located outside the US, including emerging markets. It invests in companies that have a market capitalization of $2 billion or less at the time of initial purchase.

TIER FOUR - Self-Managed Account (SMA)

If you are an experienced investor who is comfortable researching and selecting your own investments, the Self-Managed Account (SMA) gives you access to bonds, ETFs, and publicly-traded stocks on major U.S. exchanges along with thousands of mutual funds.

The SMA works just like a discount brokerage account. It is being offered by State Street Global Markets, a wholly owned subsidiary of State Street Bank and Trust Company (SSB).

(18)

Risks of the Self-Managed Account

All investments in the Self-Managed Account are made upon your direction and at your own risk. State Street Bank, State Street Global Markets, Reed Elsevier Inc. and its affiliates cannot give you financial or investment advice concerning your selections.

The Self-Managed Account requires knowledge of the securities markets and a willingness to take more direct responsibility for your investments, including any risk of negative results.

Securities purchased through the Self-Managed Account, including mutual funds, are not bank deposits and are not insured by the FDIC, State Street Bank, or SSBSI. Funds and other investments can fluctuate in value and the price at which you redeem or sell the investment may be more or less than the price that you paid.

Opening a Self-Managed Account

To open a Self-Managed Account please log on to the website or call the RE 401(k) Information Line for an application form. An initial minimum transfer of $1,750 into the SMA is required. You can transfer up to a maximum of 95% of your vested RE 401(k) account value, excluding the value of your Roth 401(k) after-tax contributions.

Transferring Money into the Self-Managed Account

You may transfer money only from your RE 401(k) Core Investment Funds into your SMA. You may not transfer more than 95% of your RE 401(K) Core Investment Funds, excluding the value of your Roth 401(k) after-tax. After the initial transfer, the minimum transfer amount is $500. You have the option of specifying those Core Investment Funds from which you want to transfer money. In order to transfer funds from your Core Investment Funds to your SMA, you must first call the RE 401(k) Information Line at 1-800-448-5189.

Placing Transactions within Your SMA

After your SMA has been opened and your transferred money has been invested in the SSgA Money Market Fund, you may place stock or mutual fund trades by:

logging on to www.fiibg.com/my/citistreet

calling State Street Global Markets directly at 1-866-548-5595

calling the RE 401(k) Information Line at 1-800-448-5189 and selecting the SMA option. You will receive a separate Brokerage User ID and PIN which you will need for all SMA transactions.

SMA - Commissions and Fees

When you purchase and sell stocks, bonds and mutual funds within your SMA, you will incur a commission charge or a service fee (unless you are purchasing no-load, no-transaction-fee funds). These fees are either added to or subtracted from the funds that you are investing in within the SMA and will be shown on your trade confirmation. For more detailed information about SMA commissions and fees, please refer to the SMA brochure or call the RE 401(k) Information Line.

The Self-Managed Account is not for everyone because of the risk factors involved with investing on your own. Please make sure you carefully review the material and understand the many provisions of the SMA. All of your questions should be resolved before you open a Self-Managed Account.

(19)

For the current fund line-up, or if you have any questions about the investment funds in the Plan, please review the Fund Fact Sheets, Fund Matrix and the prospectus(es) or call the RE 401(k) Information Line. There are certain investment management fees associated with the above investment options. The fees vary by fund and change from time to time. A current fee schedule can be obtained at the website or through the Information Line.

ING ADVISOR SERVICE

The ING Advisor Service offers you access to account management and personalized objective investment advice that can assist you in making investment decisions, determining savings goals, or simply starting a savings strategy.

Through the ING Advisor Service, powered by Financial Engines®, you’ll receive: • Expert, professional retirement planning advice

• Personalized reports • Ongoing support

• Optional account management

There are two ways to access the ING Advisor Service:

The Personal Online Advisorprovides 24/7 access to the Financial Engines® retirement planning software.

After connecting to the Online Advisor through the RE 401(k) website, you can follow the simple instructions at your own pace. You will be prompted to enter information such as retirement age and savings, including investments outside the plan. The advisor software will display your retirement forecast and provide investment and savings recommendations that can help you meet your financial goals. Use interactive tools to see how changes to risk, contributions or retirement age can affect your financial outlook. When you find a strategy you like, access the Advice Action Kit for instructions to make changes to your plan account.

If you have questions about the advice you receive, you can call an Investment Advisor at 1-800-448-5189.

Personal Online Advisor Fee

There is no fee for this tool.

The Professional Account Manager offers access to ING Financial Advisors who will provide a comprehensive retirement plan and ongoing management for your RE 401(k) account. Your Advisor will help you set retirement goals, assess your progress toward those goals, and suggest changes designed to improve the chances of meeting those goals. Your Advisor can manage your contributions, rebalance your account, keep your portfolio allocation updated and make risk adjustments over time as your retirement age nears.

The Professional Account Manager will provide you with these additional features:

Progress Reports – a quarterly report will be mailed to you that keeps you informed about your

Forecast.

Automatic Reoptimization – your allocations will be continually monitored and your investments

will change to stay in line with what is happening in the market.

Personal Proposals – provides you with a summary of your discussion with your ING Financial

Advisor, and includes recommendations on improving your retirement strategy.

Periodic Reviews – schedule a meeting anytime by phone to review your account with your ING

Financial Advisor by calling the RE 401(k) Information Line at 1-800-448-5189.

(20)

CounselorSM professional designations.

Professional Account Manager Fee

Your initial advice consultation is free. If you decide to enroll in the Professional Account Manager program, you will be charged an additional annual fee of 0.35% of your entire RE 401(k) account balance ($35 per year for every $10,000 of account value up to $50,000, with a tiered structure as balances increase). This fee will be charged in monthly installments of 0.0292% per month (equal to $2.92 per month for every $10,000 of account value), deducted from your account balance and listed on your account statement.

Tier Balance Monthly Fee Annualized Fee First $50,000 0.0292% 0.35% Next $50,000 0.0250% 0.30% Next $50,000 0.0208% 0.25% Over $150,000 0.0125% 0.15%

This fee is in addition to the normal expense ratio assessed to each fund you are invested in. Please refer to the fund’s prospectus for each fund’s expense ratio.

Remember, there is no obligation to join the Professional Account Manager program when you call. You can decide whether to use the advice you receive, and can start or stop the service at any time.

To learn more about the ING Advisor Service, call the RE 401(k) Information Line at 1-800-448-5189, Monday to Friday, 8:00 a.m. to 6:00 p.m., EST (except stock market holidays) and ask to speak with a ING Financial Advisor or review the ING Advisor Service fact sheet available on the RE 401(k) website.

ERISA SECTION 404(c) COMPLIANCE

The Plan is a self-directed account plan intended to comply with section 404(c) of ERISA. Although the Plan’s fiduciaries are responsible for selecting the investment funds and other investments which will be offered to you as investment options under the Plan, only you will be responsible for deciding how to invest your account among these investment options and for the investment results of your choices. Neither Reed Elsevier Inc. nor its affiliates, the Plan Administrator or the Trustee has an obligation to provide you with investment advice or to reimburse you for any investment loss which may occur as a result of your investment decisions. Accordingly, you should review carefully all investment information before making an investment decision. There is no guarantee that all investment categories available under the Plan will either retain your account’s original values or appreciate in value.

Upon request, you are entitled to receive the following information:

• a description of the annual operating expenses of each designated investment option (e.g., investment management fees, administrative fees and transaction costs) that reduce the rate of return to you, and the aggregate amount of such expenses expressed as a percentage of average net assets of the designated investment option;

• copies of prospectuses, financial statements and reports, and any other materials relating to the investment options available under the Plan, to the extent such information is provided to the Plan;

• a list of the assets comprising the portfolio of each designated investment option and the value of each such asset (or the proportion of the option that it comprises);

(21)

• information concerning the value of shares or units in the designated investment options available to you under the Plan, as well as the past and current investment performance of such options, determined, net of expenses, on a reasonable and consistent basis; and • information concerning the value of shares or units in the designated investment options

held in your Plan Account.

To receive any of the information listed above, call the RE 401(k) Information Line at

(22)

CHANGING YOUR INVESTMENTS

Once you choose your initial investment options, you may change your Fund elections within the RE 401(k) Core Investment Funds as often as you wish without having to pay any "per-transaction" fee. You may:

• Change the investment of your future contributions, or

• Transfer your existing investments account balances to other investments*, or • Do both.

Changes to the investment of future contributions are made effective as of the first payroll contribution date that is administratively feasible. When you move all or a portion of your current account balances out of your current option(s) and invest them in one or more of the other options, you are making an “exchange.” Your exchanges from one investment option to another can be in dollar amounts or percentages. Exchanges will be processed on the same day if made before 4:00 pm Eastern Time any business day. Any requests received after that time will receive the next business day's closing price. These transactions can be made on the website or by calling the RE 401(k) Information Line.

*Certain funds are subject to Trading Restrictions.

TRADING RESTRICTIONS

Trading restrictions are designed to discourage market timing (“short-term trading”), which can hurt a fund’s long-term investors by increasing transaction costs and interfering with the

manager’s investment strategy, thereby lowering returns. These restrictions are set by individual fund managers, not the plan.

The American Funds New Perspective Fund has trading restrictions.

Trading restrictions reject your transactions if you transfer money out of the fund and then try to transfer money back into the fund before satisfying the waiting period required by the fund manager. The chart below outlines the details:

Effective date

Fund name Restricted transfer out/in amount

Waiting period

Applies to the following transactions

4-3-06 American Funds New Perspective Fund*

$5,000 30 days Transfers, automatic

rebalancing and reallocations

With this restriction, if you sell fund shares that exceed $5,000, you cannot buy back into that same fund with a share purchase of greater than $5,000 for a period of 30 calendar days.

(23)

LOANS

From time to time, you may need part of your RE 401(k) Account. One way to access your funds is through the Plan’s Loan provision. Loans are repaid through payroll deduction and go directly back to your RE 401(k) Account.

LOAN INFORMATION – MAJOR FEATURES

Maximum Number of Outstanding Loans 2* (including any loans in default)

Loan Application Fee $50

Maximum Repayment Period:

Standard Loan 60 months

Primary Residence Loan 120 months

Minimum Loan Amount $1,000

Maximum Loan Amount

50% of your vested account balance that is invested in the Core and/or Target Retirement Date Funds – Maximum amount is $50,000 reduced by the highest outstanding loan balance during the past 12 months. Loans are not permitted from your Roth 401(k) after-tax contributions account, but they do count for purposes of determining the maximum loan you are permitted to take from the plan.

TYPES OF LOANS

The following types of loans are available through the RE 401(k):

•

Standard Loan - A standard loan may be issued to you for any reason. It must be repaid over a period of 12, 24, 36, 48 or 60 months.

•

Primary Residence Loan - This type of loan may be repaid over 12-month periods ranging from 72 months to 120 months. An application for a loan to purchase a primary residence loan must be accompanied by supporting documentation.

You may fully repay any loan after it has been in effect for at least 3 months. Partial repayments are not permitted.

If, through disability or other authorized leave of absence, you cease to receive regular payroll checks while you have one or more loans outstanding, you must continue periodic payments by submitting a check each month to cover the monthly payment.

INTEREST CHARGES

The interest charge and the principal repayment will be deducted from your regular salary each pay period. The interest rate applicable to a loan is the prime rate as printed in the Wall Street Journal on the last business day of the month prior to the month in which the loan is approved. The interest rate will be fixed as of the first of each month. It will apply to all loans that are approved during the month. The interest rate in effect at the beginning of a loan will remain in effect until the loan is completely paid off. Interest on your loan is not deductible on your federal income tax return, and the amount you borrow is not taxable income to you as long as you pay it back on time.

(24)

REQUESTING A LOAN

You can model a loan, request loan information and/or a residential loan application by logging on to the website or by calling the Information Line at 1-800-448-5189. Standard loans are issued without application forms and do not require documentation. For a residential loan application, you also can go directly to the Plan Forms section on the website.

Log on to the website or call the RE 401(k) Information Line to initiate a loan. You can reach a Customer Service Representative who will inform you of the various loan opportunities and assist you with the application by calling the RE 401(k) Information Line.

Your loan check will be mailed to you within five business days of your request (or upon approval, if for a primary residence loan).

HOW LOAN MONEY COMES OUT OF YOUR ACCOUNT

When you take a loan, the money you borrow comes from your RE 401(k) Accounts in this order: 1. Your Company matching account;

2. Your before-tax contributions account; 3. Your Rollover contributions account; and 4. Your traditional after-tax contributions account.

Please note: Loans are not permitted from Roth 401(k) after-tax contributions, but Roth 401(k)

after-tax contributions do count towards the amount available for loans.

Your loan money is taken proportionately from all of your investment options in the above accounts. Taking money out of your accounts in this order leaves as much money in your RE 401(k) accounts as possible that you can access through an In-service Withdrawal.

Loans may not be taken against funds from your Self-Managed Account (SMA). If you wish to include your SMA balance as part of your loan availability amount you must first liquidate these holdings and then transfer the funds into your RE 401(k) Core Investment Funds.

A $50.00 loan transaction fee will be deducted from your account for each loan you take out.

HOW YOUR LOAN PAYMENTS ARE INVESTED

As you pay back your loan, your payments are deposited in the RE 401(k) accounts from which you borrowed the money, in the following order:

1. Your traditional after-tax contributions account; 2. Your Rollover contributions account;

3. Your before-tax contributions account; and 4. Your Company matching account.

This is the exact opposite of how your loan money came out of your accounts. Repaying the loan in reverse order means your accounts are replenished to first restore funds that are available for withdrawal while you are employed.

Your loan payments are automatically invested in the same investment options as the account to which your payroll contributions are made. If you are not currently contributing to the RE 401(k), your loan payments are invested based on the most recent investment elections on file.

If you change your investment options for your future contributions while you are paying back a loan, your future loan payments will be invested according to your new investment options.

(25)

INTERNAL REVENUE SERVICE RULES

Because the IRS allows tax-qualified plans like RE 401(k) to help you prepare for retirement, there are some restrictions on access to your account. As long as you are employed by any of the Reed Elsevier affiliates (whether or not the affiliate participates in the RE 401(k)), and on a US payroll, you can continue to pay off your outstanding loan balance(s) through payroll deductions.

You must repay any loan other than a Primary Residence loan within 60 months. If you do not, additional interest will be due and the outstanding balance will be treated as a distribution. The distribution will be subject to income taxation (and a 10% penalty tax if you are less than age 59½).

• Additional interest will be due on any missed or delinquent payments.

• If you do not pay off your loan on a timely basis, your loan will be defaulted and additional interest will accrue on the defaulted amount. You will be considered to have received a distribution from the Plan in the amount of the unpaid balance of your loan (the additional interest in arrears will not be taxable). An IRS Form 1099-R will be issued to you and this distribution will be subject to income taxation (and a 10% penalty tax if you are less than age 59½).

• In addition, the amount of any balance on a defaulted loan will continue to be treated as an outstanding loan and will reduce the maximum loan available to you.

PAYING BACK A LOAN UPON TERMINATION

If your employment with Reed Elsevier Inc. and all of its affiliates terminates, and you have an outstanding loan balance, you have the option to either:

• Pay off your loan(s) in full; or

• Repay your loan(s) via monthly loan repayments (this option is only available if your

account balance is greater than $5,000). Your loan(s) will be re-amortized to reflect

monthly payments for the term of the loan(s) and you will receive a confirmation statement from ING outlining your new repayment schedule.

If you do not initiate a payment of your outstanding loan balance by the month end following sixty days from the date shown on your Termination Notice from ING, it will be

discharged and treated as a distribution from the plan. A 1099R for the taxable amount will be mailed to your address on file.

Information about paying off an outstanding loan balance can be obtained by calling the RE 401(k) Information Line at 1-800-448-5189.

(26)

IN-SERVICE WITHRAWALS

There are two types of withdrawals; “Non-Hardship Withdrawals” and “Hardship Withdrawals”. Both types of withdrawals are subject to certain restrictions and are limited by IRS rules.

NON-HARDSHIP WITHDRAWALS

You may make non-hardship withdrawals on the following:

• If you are age 59 ½ or older – the entire vested value of your RE 401(k) account.

• If you are under age 59 ½ - Traditional after-tax contributions and Rollover contributions, as well as any gains on those contributions.

You can request a non-hardship withdrawal by going to the website or using the RE 401(k) Information Line. You will be mailed a check from your RE 401(k) account within several days of the time you apply for the withdrawal through the website or the RE 401(k) Information Line. Please see the Special Tax Rules section for important tax information about non-hardship withdrawals.

HARDSHIP WITHDRAWALS

Hardship withdrawals are available only for the following immediate and necessary financial needs:

• Tax deductible (catastrophic) medical expenses incurred by you, your spouse, or your dependents;

• Post-secondary school tuition, related education fees and room and board expenses payments for the next 12 months for you and your dependents;

• The purchase of your primary residence excluding mortgage payments; • The prevention of foreclosure on or eviction from your primary residence;

• Payments for burial or funeral expenses for your parent, spouse, children or other dependents;

• Deductible expenses for the repair of damage to your principal residence; and • To pay taxes on the hardship distribution.

Listed below are the IRS rules that govern the issuance of hardship withdrawals. A hardship withdrawal may only be made if you have exhausted the loan request provisions of the RE 401(k) and have received all non-hardship withdrawals from the Plan, and the amount necessary to satisfy the hardship is not reasonably available from other financial resources.

• The hardship withdrawal may only be made from your before-tax contributions. Matching contributions and earnings on before-tax contributions are not eligible for a hardship withdrawal.

• Once the hardship withdrawal is made, your before-tax and after-tax contributions to the RE 401(k) and all other deferred compensation plans (other than contributions to any health or welfare benefit plan, including a health and welfare plan that is part of a cafeteria plan within the meaning of Section 125 of the Internal Revenue Code) or stock option or stock purchase plan or similar plans maintained by Reed Elsevier Inc. will be suspended for 6 months. Roth 401(k) after-tax contributions are available for Hardships and age 59 ½ withdrawals and must be requested separately from non Roth In-Service Withdrawals. If you make a Roth 401(k) after-tax withdrawal from your account after you have attained age 59 ½ and your Roth 401(k) after-tax contributions were invested for at least a 5 taxable-year period, your withdrawal will be considered qualified and your earnings will be tax free. Roth 401(k) after-tax withdrawals made before age 59 ½ and prior to maintaining the account for at least 5 years are subject to a 10% penalty plus regular income taxes on the earnings portion of the withdrawal.

(27)

You can determine what portion of your RE 401(k) account would be available for a hardship withdrawal and request an application form by logging on to the website or calling the RE 401(k) Information Line.

Please see the Special Tax Rules section for important tax information on hardship withdrawals.

In-service Withdrawals can only be deducted from your RE 401(K) Core Investment Funds. Funds are distributed pro-rata based on the balance in each Fund. If you wish to withdraw money from your Self-Managed Account, you must first liquidate all or a portion of your holdings in the SMA and reinvest them in the Core Investment Funds.

(28)

PAYMENTS FROM RE 401(k)

Your entire vested account balance is available to you as a final distribution: • if you leave Reed Elsevier Inc. and its affiliates;

• retire;

• become totally disabled and qualify for Company Long-Term Disability benefits; or • upon your death.

PAYMENTS AT TERMINATION

Final distributions must be made from the RE 401(k) Core and Target Retirement Date Investments. They may not be made directly from the Self-Managed Account. If you wish to take a final distribution, you must liquidate 100% of your SMA and then transfer the funds into the RE 401(k) Core Investment Funds.

Account Balances > $5,000

If your vested account balance is more than $5,000, you have several choices regarding the money in your account. You may:

• Defer the balance to be paid out later (but no later than April 1 following the calendar year you reach age 70 ½ or date of termination, if later);

• Roll over the balance to another qualified plan or an IRA;

If you are a participant in the Reed Elsevier US Retirement Plan (the Pension Plan) and will commence distribution of your benefit in the Pension Plan, you can roll over the vested balance (excluding any after-tax

or Roth contributions) into the Pension Plan to add to your Pension Plan annuity.

• Take all or a portion of your account in cash (called a Lump Sum Distribution of a Partial Lump Sum Distribution). In certain instances, a 10% penalty tax is payable in addition to ordinary income taxes. Please see Special Tax Rules section. If you don’t make an election, your vested account balance will automatically be deferred.

Account Balances < $5,000

If your vested account balance is $5,000 or less when you leave the Company you can request a direct rollover to an IRA or another qualified plan or take a Lump Sum Distribution subject to the same tax penalties as above.

Automatic IRA Rollover

If your total account balance exceeds $1,000, but is not more than $5,000, and you do not elect a form of payment within 60 days after termination from the Company, your account balance will automatically be rolled over to an IRA with Citibank. The Citibank IRA will be invested in an Insured Money Market Account (or IMMA), which is FDIC-insured. Currently, there are no rollover fees or annual maintenance fees charged by Citibank. Account balances of $1,000 or less will automatically be paid out as lump-sum distributions with the appropriate required tax withholding.

(29)

PAYMENTS UPON DEATH

Your account balance will be distributed to your beneficiary or estate no later than December 31 of the year following the calendar year of your death.

If you are married at the time of your death, your beneficiary is automatically your spouse unless your spouse consented in writing, as witnessed by a Notary Public, to your election of another beneficiary or your estate.

If you are not married and are not survived by a beneficiary you have designated, your Plan benefits will be paid to your estate.

HOW FINAL DISTRIBUTIONS ARE PROCESSED

Final distributions are valued and processed as soon as administratively practicable, but no less often as once monthly. To initiate a final distribution you may log on to the website or call the RE 401(k) Information Line.

(30)

SPECIAL TAX RULES

The Plan is designed to be a qualified profit-sharing plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Trust established under the Plan is intended to be exempt under Section 501(a) of the Code. The Plan incorporates a qualified "cash or deferred" arrangement, which is intended to satisfy additional qualification requirements under Section 401(k) of the Code and which permits employees to elect either to have their employer contribute, as before-tax contributions, a portion of their salaries to the Plan on their behalf through the salary deferral feature of the Plan, to have their employer contribute a portion of their salaries to the Plan as after-tax contributions or to have their salaries paid to them directly in cash without any such deduction. Under the salary deferral feature of the Plan, an employee's current compensation is reduced by the amount of the contributions the employer makes to the Plan on behalf of the employee on a salary deferral basis. Reed Elsevier has obtained from the Internal Revenue Service (the "IRS") a favorable determination that the Plan and the Trust, as adopted, meet the requirements of the Code. The principal Federal income tax consequences, under present laws and regulations, of participation in such a qualified plan are as follows:

Contributions and Investment Earnings

Before-tax Contributions – A participant's before-tax contributions made by the Company to the Plan at the direction of the participant pursuant to the salary deferral feature of the Plan are considered employer contributions for Federal income tax purposes. The maximum aggregate before-tax contributions permitted to be made by a participant during 2011 is $16,500, subject to reduction with respect to highly-compensated employees, as described above, and is subject to adjustment each year by law. In addition, a participant who will have attained age 50 by the end of a year will be permitted to contribute a special catch-up contribution for the year if the participant has otherwise contributed the maximum before-tax contribution permitted for the year. In 2011, an additional catch-up contribution of $5,500 is permitted. After 2011, the amount of before-tax and catch-up contributions will be indexed for inflation.

A participant will not be subject to Federal income tax on before-tax contributions until they are distributed from the Plan. The Company is entitled to a corporate tax deduction for before-tax contributions to the Plan.

After-tax Contributions – After-tax contributions are contributed by the participant, who has already paid tax on the amount contributed. Any withdrawal from the after-tax contributions account made after 1986 will be treated for Federal income tax purposes as a partial return of contributions and a partial distribution of earnings, if any. Any amounts distributed as earnings on after-tax contributions will be subject to tax (including an additional 10% early withdrawal tax, if applicable).

Roth 401(k) After-tax Contributions – Roth 401(k) after-tax contributions are contributed by the participant on an after-tax basis. Roth contributions are subject to the IRS before-tax contribution limits, so the maximum amount for Roth contributions and/or before-tax contributions combined is $16,500 for 2011 (with an additional $5,500 in catch-up contributions for those ages 50 and older). The investment earnings on Roth contributions grow tax-free, and qualified withdrawals (ones that are made when you are age 59 ½ or older and have remained invested for at least a 5-taxable-year period) are completely tax-free. Withdrawals made before age 59 ½ are subject to a 10% penalty, plus regular income taxes on the earnings portion of the withdrawal.

Company Matching Contributions – Company matching contributions to the Plan are not subject to Federal income tax until distributed to the participant or his or her beneficiary. The Company is entitled to a corporate tax deduction for Company matching contributions to the Plan.

US Salary Investment Plan Summary Plan Description

Reed Elsevier Inc.