Hartford Retirement Services, LLC. Recordkeeper Plus. Form 5500 Schedule C. Reporting Package

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1 Hartford Retirement Services, LLC Recordkeeper Plus Form 5500 Schedule C Reporting Package

2 Table of Contents 2009 Schedule C Reporting: Introduction...3 COMPENSATION THAT MAY BE REPORTABLE ON THE SCHEDULE C...4 Schedule C Information: Direct Expenses...4 Schedule C Information: Other Product Vendors...4 Mesirow Financial...5 Reliance Trust Company...5 Charles Schwab & Co. Inc....6 SEI Trust Company...6 GPC Securities, Inc....6 Schedule C Information: Indirect Compensation (Including Eligible Indirect Compensation)...7 Fees Received by HRS from Plan Investments...7 Investment Fees....7 Broker Commission....7 Third Party Administrator (TPA) Compensation....7 Float Compensation....9 SUPPLEMENTAL INFORMATION...9 SCHEDULE C, PART I...9 LINE 1: INFORMATION ON PERSONS RECEIVING ONLY ELIGIBLE INDIRECT COMPENSATION...9 LINE 2: INFORMATION ON OTHER SERVICE PROVIDERS RECEIVING DIRECT OR INDIRECT COMPENSATION...10 Reporting Threshold...10 Reporting Year...10 Reporting Formula...10 LINE 3: SERVICE PROVIDER INFORMATION PLAN YEAR GOOD FAITH EFFORTS...11 GLOSSARY...12 LIST OF SERVICE CODES

3 2009 Schedule C Reporting: Introduction The plan year 2009 Form 5500 Schedule C was subject to significant revision under the revised rules published in the Federal Register on November 16, 2007, as reflected in the 2009 Form 5500 Instructions, with additional guidance in the form of FAQs and Supplemental FAQs about the 2009 Form 5500 Schedule C published on the Department of Labor s Employee Benefits Security Administration s website (the Schedule C Rules ). Under the Schedule C Rules, the plan administrator is required to report on the Schedule C information about direct and indirect compensation received in connection with services rendered to the plan or a person s position with the plan. This reporting is intended to assist the plan administrator with its ongoing obligation to monitor service provider arrangements with the plan, including efforts to identify conflicts of interest. The changes to the Schedule C of Form 5500 for 2009 are new and within the industry there continues to be uncertainty about the reporting requirements. We, Hartford Retirement Services, LLC and its affiliates ( HRS or Hartford ), have made a good faith effort to make any necessary recordkeeping, information system and procedure changes for 2009 Form 5500 Schedule C reporting in a timely fashion. The information included in this document reflects these good faith efforts. Despite these good faith efforts, some of the necessary recordkeeping and information system changes to capture and report all of the new information required for Schedule C have not been completed. This document is intended to assist you in completing the Schedule C by identifying different types of compensation paid with respect to the Hartford product and providing or directing you to more information about that compensation. This document consists of two sections: (1) Compensation that may be reportable on the Schedule C. The following pages outline the types of compensation and provide information about, or refer to, specific sections of other documents where such compensation is disclosed. Where you are referred to another document, Hartford is relying on the alternative reporting option to provide you with the necessary information. The Plan Administrator, however, and not Hartford Retirement Services, LLC, should make the ultimate determination as to what is and is not reportable on the Schedule C. Generally, the compensation is expressed as a rate. In general, in order to arrive at a dollar amount, the rate must be applied against total assets to which it applies. Thus, much of the compensation information being provided can be expressed in the form of a formula. (2) Supplemental Information. This section provides more general information to help you understand the Schedule C rules. Under the new Schedule C reporting regime, you may receive information on the same compensation from other service providers as is described here. For example, it is our understanding that Charles Schwab & Co., Inc. intends to provide a separate disclosure of its compensation with respect to any self-directed brokerage accounts in your plan. You may also receive information about compensation not paid in connection with Hartford s product. Please contact your Hartford Service Team should you require additional information regarding the compensation paid to or by Hartford with respect to your plan. One final and important note: Information provided in this document and related materials we provide are not intended to be and shall not be deemed tax advice, tax form preparation services, legal advice or accounting or other professional services. We strongly encourage you to review all Schedule C and other Form 5500 materials with experienced benefits counsel and other professionals. 3

4 COMPENSATION THAT MAY BE REPORTABLE ON THE SCHEDULE C Schedule C Information: Direct Expenses Fees deducted are shown on the Plan Trust Report and Fee Report. These fees might include, but not be limited to, fees paid to Hartford Retirement Services, LLC ( HRS ), Employer Identification Number , such as: Installation Charges Ongoing annual maintenance fees Loan set-up and loan maintenance fees Transaction fees for distributions, etc. Per participant fees $1,000 HRS fee for Trustee services $10 per participant fee for Morningstar Managed by You Advice Service (if used by your plan) A Hartford fee of $100 for access to self-directed brokerage account service Fees for employer stock services or other unitized investments Fees for certain additional annual compliance testing, reporting, plan document and other services Fees from Plan Reimbursement Accounts Please refer to your semiannual billing statement, if any, for an itemized list of certain of these amounts. Direct fees will also include any fees deducted from plan assets at your direction to pay persons other than HRS and might include the following: Fees deducted from plan assets at your direction payable to your plan s third party administrator, if your plan is serviced by a TPA, or Other plan service providers such as the plan s auditor, lawyer or other professionals. This amount could also include amounts deducted from plan assets to reimburse the plan fiduciary or plan sponsor at your direction. Schedule C Information: Other Product Vendors Your HRS retirement plan product may include services provided by the following vendors: Mesirow Financial Investment Services Inc. (Employer Identification Number ). Morningstar Associates, LLC (Employer Identification Number ) HRS pays indirect compensation to these vendors, in the form of flat annual fees and/or fees based on a percentage of assets. The compensation paid to these vendors is neither charged against the plan's investment returns nor is it "commissions and other transaction based fees, finders fees, float revenue, soft dollars and other non-monetary compensation." Additional information about these services is included in the Plan Establishment Booklets and/ or Administrative Services Agreement. Please note that not all products include services from the vendors identified in this document. Please contact your Hartford Service Team with any questions about the services included in your Hartford product. 4

5 Mesirow Financial (Please note that this is a restatement of disclosure and information currently provided in the Plan Sponsor Plan Establishment Booklet Investment Supplement documents and/or Administrative Services Agreement and, if you have elected Mesirow Financial s services, your agreement with Mesirow Financial.) Mesirow Financial is not affiliated with us or any of our affiliates. Mesirow Financial provides consulting and other services to us, for delivery to Plan Sponsors and Plan participants, with respect to various matters, including the development of the Elite Lists, certain asset allocation model portfolios, and certain other services that we provide. We pay Mesirow Financial compensation for these services, in addition to any compensation you may pay Mesirow Financial under your agreement with Mesirow Financial, if applicable, or that may be paid to Mesirow Financial under similar agreements with other plans. (We pay Mesirow Financial an annual flat fee in addition to an asset-based fee, on a tiered scale based on assets from 2.50 basis points to 0.5 basis points for the Fiduciary Assure service. These fees are neither charged against the plan's investment returns nor "commissions and other transaction based fees, finders fees, float revenue, soft dollars and other non-monetary compensation.") Mesirow Financial or its affiliates also place property or casualty insurance, and have placed annuities or life insurance issued by us or our affiliates. In some cases Mesirow Financial or its affiliates may be compensated for such placement by us or our affiliates; in other cases, Mesirow Financial or its affiliates may be compensated by the purchaser. We are not acting as an investment adviser to you or the plan in respect to the services provided by Mesirow Financial. We provide certain administrative and other services to facilitate the services provided by Mesirow Financial. However, we have no authority, responsibility or discretion with respect to the determination of the investment options under the Plan and we are not authorized to provide any investment advice to a Plan sponsor or Plan participant in connection with the services provided by Mesirow Financial. We also pay Mesirow Financial an annual flat fee for their consulting associated with the asset allocation program. Reliance Trust Company (Please note that this is a restatement of disclosure and information currently provided in the Plan Sponsor Plan Establishment Booklet and/or Administrative Services Agreement.) The Recordkeeper has entered into an agreement with RTC (Reliance Trust Company, EIN ) pursuant to which RTC provides custodial or trustee services to plans, plan sponsors and other organizations and entities providing services or assistance to plans and/ or plan sponsors (the Service Agreement ) as part of bundled services arrangements for the plans. RTC and the Recordkeeper are not affiliated. Under the Service Agreement, the Recordkeeper pays fees to RTC. Such fees payable to RTC under the Service Agreement are generally calculated as a basis point percentage of asset value and may range from 0.5 basis points up to 5 basis points of asset value depending on the type of custodial or trustee service provided to the plan. Additional transaction fees may also be payable to RTC. Such fees, which may be modified or supplemented as agreed by the parties to the Service Agreement, will be directly billed on a quarterly basis to the Recordkeeper or its affiliate. The fee schedule for the custody, trust or other agreement between RTC and the Employer (which is included in Exhibit B of the Employer Agreement) may provide for another schedule of compensation. Custody Services. HRS pays Reliance Trust Company an asset-based fee of.50 basis points for custody services RTC provides to HRS customers. 5

6 Compensation related to employer stock and other outside fund unitization services. HRS pays Reliance Trust Company for unitization services it provides for employer stock or other outside funds in connection with its custodial services. More specifically, HRS pays flat and asset-based fees on assets invested in the employer stock or other outside fund as well as transaction fees equal to $75 per in-kind distribution and $250 per in-kind contribution. Charles Schwab & Co. Inc. If your plan includes the Charles Schwab & Co. Inc. (Employer Identification Number ) Personal Choice Retirement Account ( PCRA ), Charles Schwab pays HRS compensation quarterly, called plan expense payments, based on a percentage of total revenue Schwab earns on each participant s brokerage account. The percentage of total revenue is determined based on each participant s account balance and ranges from 0% to 15%. Total revenue is defined as the total of the following: a) All transaction fees and commissions Schwab receives on account of trades of securities; b) OneSource payments Schwab receives from registered investment companies or their sponsors with respect to assets invested in Schwab s Mutual OneSource program (see the Schwab disclosure for details); and c) Fees derived by Schwab from assets invested in Schwab proprietary mutual funds. It is our understanding that Schwab is issuing a separate disclosure directly to Plan Sponsors using its PCRA service that provides more detail about indirect and direct fees it charges or pays. SEI Trust Company. Fees related to the plan s investment in the Fixed Fund are described in Attachment A: Form 5500 Schedule C Fee/ Compensation Disclosure Chart that is available on Plan Access, the HRS website for Plan Sponsors. SEI also pays revenues to HRS as described in the Fixed Fund Application and Investors Guide. A copy of this is available upon request. GPC Securities, Inc. (Please note that this is a restatement of disclosure and information currently provided in the Plan Sponsor Plan Establishment Booklet and/or Administrative Services Agreement.) GPC Securities, Inc. ( GPC ) (Employer Identification Number ) is a registered broker-dealer and the broker of record for purposes of executing mutual fund purchases, exchanges, and redemptions on behalf of a Plan. GPC provides transaction processing services (i.e., purchases, exchanges, and redemptions) for all Mutual Funds and Collective Investment Trusts held by the Plan. In order to authorize GPC to execute these transactions on behalf of the Plan, the Employer and Trustee(s) will enter into an agreement to establish a securities account (the Account ) with GPC. GPC has entered into selling and/or administrative agreements with distributors of Mutual Funds and Collective Investment Trusts and is designated as broker of record on the Omnibus Accounts established with these securities transfer agents. GPC will receive service fees, processing fees and distribution fees from the Mutual Funds and Collective Investment Trusts held in the Account. Pursuant to a Mutual Fund Services Agreement, GPC pays the service fees and processing fees it receives to the Recordkeeper (Hartford Retirement Services, LLC), and pays the distribution fees it receives to the Recordkeeper Broker-Dealer Affiliate (Hartford Securities Distribution Company, Inc.). Further details about the range of these payments are provided by GPC in the Fund Fee Disclosure Notice. The Recordkeeper Broker-Dealer Affiliate will pay equalized compensation, to the extent reasonably practical, to the Plan s broker-dealer for each Mutual Fund (excluding index funds and any other passively managed funds) offered within each Investment Menu. The Recordkeeper Broker- Dealer Affiliate will pay the Recordkeeper distribution fees attributable to amounts permitted under the service component of a 12b-1 plan from the Mutual Funds only to the extent such distribution fees exceed the payments that the Recordkeeper Broker-Dealer Affiliate makes to the Plan s broker-dealer. The Employer may find additional information about equalized compensation in Exhibit C, Broker-Dealer Compensation Schedule, as amended from time to time. The Employer may also request information about 6

7 the distribution fees retained by the Recordkeeper, if any, with respect to the Plan s investment in Mutual Funds or in writing or by use of the Recordkeeper s toll-free number. For the transaction processing services which GPC provides to the Recordkeeper under the Mutual Fund Services Agreement, GPC bills the Recordkeeper directly and the Recordkeeper pays GPC a fee equal to the product of 0.045% (four and one-half basis points) annually on Plan assets invested in the Mutual Funds and the Collective Investment Trusts held in the Account. The Employer s cost for GPC s services is included in the Plan s recordkeeping fees which may be found in Exhibit B, Fee Schedule. Further details about the Mutual Fund Services Agreement are provided by GPC in the Fund Fee Disclosure Notice when the account is established. Recordkeeper provides additional payments to GPC for plans with over 16 fund investments. These payments range between $150 and $250 per plan. Schedule C Information: Indirect Compensation (Including Eligible Indirect Compensation) The following indirect compensation (including eligible indirect compensation) was paid in 2009: Fees Received by HRS from Plan Investments. As described above and in more detail in your Plan Establishment Booklet, your plan invests through GPC Securities, Inc., a registered broker-dealer company, directly in mutual fund and collective investment trustbased funds. HRS receives fees from those underlying funds. To view the current rates of these fees, please request a Custom Investment Performance Report from your Client Service Team. Please see the section titled Receipt of Administrative Service Fees in Exhibit A of your Plan Establishment Booklet for a description of the fees paid by GPC to HRS. There are also special revenue sharing arrangements for Hartford mutual funds and MFS mutual funds that are separate from the arrangements for other fund investments, however. These revenue arrangements are explained in the Plan Establishment Booklet under the section entitled, Receipt of Administrative Service Fees. Investment Fees. Investment fees (e.g., a mutual fund s total annual expenses) and related fees, including redemption fees, are deducted from the mutual funds and collective investment trust funds in which your plan invests and are described in the prospectuses or other applicable disclosure documents. The rates of these fees can also be viewed on Plan Access. Broker Commission. The aggregate commission paid by HRS to the plan s broker during the 2009 plan year depends upon the Investment Menu chosen by the Plan and is disclosed in the Plan Establishment Booklet Exhibit C, Broker- Dealer Compensation Schedule and under Broker-Dealer Compensation Schedule. The actual dollars paid for the plan year is also available in a report that you can request from your HRS client service team entitled Brokerage Commissions. Reportable nonmonetary compensation paid to some broker dealers and other financial intermediaries is disclosed in the Additional Compensation section of the Plan Establishment Booklet. Third Party Administrator (TPA) Compensation. (Please note that this is a restatement of disclosure and information currently provided in the Plan Sponsor Plan Establishment Booklet and/or Administrative Services Agreement) Retention Payments. Payments for Plans purchasing a retirement plan product after January 1, 2009: If your Plan purchased its retirement plan product after January 1, 2009, and your Service Provider is approved by us as a Qualified Select TPA, we will make ongoing quarterly payments to your Service Provider of an annual amount equal 7

8 to 0.03% of the aggregate value of your Plan s mutual fund and collective fund assets each year. We will call these payments retention payments. Examples: Plan Asset Value Annual Retention Payment $5,000,000 $1,500 $7,000,000 $2,100 $12,000,000 $3,600 Payments for Plans that purchased retirement plan product before January 1, 2009: We also make ongoing payments to Service Providers with respect to plans that purchased their retirement plan product before January 1, 2009 and selected Investment Menu #1 or Investment Menu #2. For plans that selected Investment Menu #1, we make ongoing quarterly payments to these Service Providers of an annual amount equal to 0.10% of the aggregate value of a plan s mutual fund assets each year. For plans that selected Investment Menu #2, we make ongoing quarterly payments to these Service Providers of an annual amount equal to 0.05% of the aggregate value of a plan s mutual fund assets each year. Finally, the Recordkeeper may, from time to time, pay fees to the Plan s Service Provider, which payments relate to the Plan s use of the Recordkeeping System for its recordkeeping services. These payments reflect the value of administrative services the Service Provider provides to the Recordkeeper by it submission of data in a manner that facilitates the processing of transactions on the Recordkeeping System in accordance with the recordkeeping services listed in Exhibit A of the Employer Agreement. These fees are for administrative services only, and do not constitute payment in any manner for investment advisory, transfer agency or distribution services. The Recordkeeper may calculate these administrative service fees either as a percentage of aggregate Plan assets maintained by the Service Provider on the Recordkeeping System, as a flat dollar amount for each Plan set up by the Service Provider on the Recordkeeping System during the calendar year, or as a combination thereof. To the extent the Recordkeeper pays any such fees, solely the Recordkeeper determines the method and rate of the fees and the Service Provider that is paid. For plans selecting Investment Menus 1 or 2, the Recordkeeper will generally pay the Service Provider 0.10% of the value of the Mutual Fund shares in the Plan selected from Investment Menu 1 and 0.05% of the value of the Mutual Fund shares in the Plan selected from Investment Menu 2. The Recordkeeper pays these amounts from fees received indirectly from the Mutual Funds as described in the section Transaction Processing for Custody Services for Mutual Funds and Collective Investment Trusts in Exhibit A of the Recordkeeper Plan Establishment Booklet. The Recordkeeper will retain these amounts if the Service Provider is the Employer or if the Service Provider refuses to accept such payments. The payment for services provided by the Service Provider is calculated on the value of the Mutual Fund shares in the Plan and is subject to the limitations in the Service Provider Agreement regarding minimum account or payment requirements and to the same exclusions listed in Exhibit C that are applicable to equalized compensation paid to brokerdealers. Certain Qualified Select TPAs also received retention payments of.03% of the aggregate value of the Plan s mutual fund and collective fund assets, paid quarterly by HRS for Plans that purchased an HRS retirement plan product after January 1, For Plans that purchased HRS retirement plan products before January 1, 2009 and elected Investment #1 or #2, quarterly payments of 0.10% and 0.05% (respectively) of the aggregate value of a plan s mutual fund assets each year are paid by HRS. If your plan is serviced by a TPA, compensation paid by HRS to TPAs is disclosed in the Plan Establishment Booklet in the Additional Compensation Paid by Hartford Retirement Services, LLC (the Recordkeeper,, we, or us ) to Pension Consultants and Third Party Administrators ( TPAs ) under the PASSport Program section of the Plan Establishment Booklet. 8

9 Float Compensation. The Reliance Trust Company Custodial Agreement/ Trust Agreement Float Disclosure is available in the Plan Establishment Booklet in the section entitled, Reliance Trust Company Custodial Agreement/ Trust Agreement Float Disclosure. The rate was 1% of the average daily balance in SUPPLEMENTAL INFORMATION This section is intended to provide a brief summary of the methodology used for fee and expense reporting that is based on the revision of the annual information returns/reports, Part I of the Form 5500 Schedule C, effective for 2009 plan years. However, it is not a substitute for the Form 5500 Schedule C Instructions and the guidance issued by the Department of Labor ( DOL ) in 2008 in the form of Questions and Answers in FAQs About the 2009 Form 5500 Schedule C, or the DOL s additional guidance in the form of Questions and Answers issued in 2009, entitled Supplemental FAQs About the 2009 Form 5500 Schedule C. Those materials, along with the Schedule C form and instructions, are the official instructions and commentary on the plan administrator and services provider responsibilities and should be the primary reference materials that are used by Plan Administrators. You can download the FAQ information from the EBSA website at and the 2009 official instructions and Schedule C form at The information in the following sections is provided as a brief guideline to the Schedule C that has been prepared for your plan. You may wish to refer to the Glossary as you read through these sections. Also refer to the Schedule C information provided to you by Hartford, in the foregoing sections. SCHEDULE C, PART I LINE 1: INFORMATION ON PERSONS RECEIVING ONLY ELIGIBLE INDIRECT COMPENSATION Purpose: This section provides a list of persons who provided disclosures for service providers who have received only eligible indirect compensation. The name and Employer Identification Number ( EIN ) or address of a person that has provided the required disclosures to qualify the compensation as eligible indirect compensation must be listed. In general, if sufficient disclosure has been made to the Plan Sponsor about certain types of fees and revenue sharing arrangements that constitute eligible indirect compensation, the reporting on Line 1 of the person who made the disclosure fulfills the Schedule C reporting requirement. Checking the Yes box indicates that a person has been excluded from the remainder of the Part 1 Questions because the plan received the required disclosures. Please review the Glossary for the definition of eligible indirect compensation and a description of the written materials that constitute the required disclosures. Please note that according to the FAQs About the 2009 Form 5500 Schedule C, Q&A18-20, any person can provide the required disclosure, and if more than one person provides it, only one has to be listed. In other words, the disclosure does not necessarily have to be provided by the service provider that furnished the services, and that entity that is listed in Line 1 may not be the only entity that furnished the disclosure. 9

10 LINE 2: INFORMATION ON OTHER SERVICE PROVIDERS RECEIVING DIRECT OR INDIRECT COMPENSATION Purpose: This section provides a list of those persons who received $5,000 or more in total direct and indirect compensation in connection with services rendered to the plan or their position with the plan during the plan year, except for persons who received only eligible indirect compensation and for which Line 1 was completed. Direct and indirect compensation are explained in the Glossary. The service entities are listed in descending order of compensation and using the following elements: a. Name and EIN or address of the entity b. Service codes (which define the services performed by the entity; these are listed at the end of this package) c. Relationship to the employer, employee organization, or person known to be a party in interest d. Direct compensation paid, but if none, 0 is entered e. Answer to the question of whether the listed service provider entity received any indirect compensation f. Answer to the question of whether any of the indirect compensation included eligible indirect compensation for which the plan received the required disclosures g. The total indirect compensation received by the service provider entity excluding any eligible indirect compensation for which f was answered Yes h. Whether the service provider provided a formula instead of an amount or estimate. If a formula was provided, the Yes box will be checked and the formula has been provided in the Disclosure section Reporting Threshold. Please note that if a key service provider is reporting its compensation by formula, the amount is presumed to meet the $5,000 threshold. In the case of nonkey service providers which are using formulas, either the $5,000 threshold is assumed to be met or an estimate of the fee has been made to determine whether it has reached the reporting threshold. This is in accordance with Q&A26 of the FAQs About the 2009 Form 5500 Schedule C. Reporting Year. Please note that although direct compensation paid by the plan is reported on a plan year basis, indirect compensation or the formula used to calculate it can be based on the service provider s fiscal or other reporting year that ends within the plan year. The selected method is to be used consistently every year. Reporting Formula. If a formula is used to report an indirect fee that is not eligible indirect compensation, this will be indicated in Element (h) and no amount will be entered for the service provider in Element (g). The formula will be included in an attachment labeled, Schedule C, Line 2(h) formula description. This is explained in Q&A25 of the FAQs About the 2009 Form 5500 Schedule C. LINE 3: SERVICE PROVIDER INFORMATION Purpose: This section lists the name of certain categories of service providers that have already been listed in Section 2 and who have received ineligible indirect compensation, which is defined in the Glossary. 10

11 There are 8 categories of service providers subject to this reporting, where applicable: (1) fiduciary; (2) contract administrator; (3) consulting; (4) custodial; (5) investment advisory; (6) investment management; (7) broker; and (8) recordkeeping services. For each of these service providers who have received indirect compensation of at least $1000 from another specific source, or for which the plan sponsor was given a formula or other description of the method used to determine the indirect compensation (rather than the amount or estimated amount of the indirect compensation), this section must include information about the sources of this indirect compensation, including the type of services provided by the source, the amount of compensation, and the name and EIN of the source. In most cases, the elements of Question 3 are similar to those of Question 2. However, if item 3(c), Enter amount of indirect compensation, is zero ( 0 ), this means that the Plan Sponsor received information about the service provider s compensation from the source of that compensation in the form of a formula (rather than a hard dollar figure or estimate). In that case, the formula must be entered in Element (e). Element (d) lists the name and EIN (or address) of the indirect compensation. When a formula is used to report ineligible indirect compensation, no amount is added into Element (c) for that service provider and a description of the formula must be included in Element (e). This is explained in Q&A25 of the FAQs About the 2009 Form 5500 Schedule C, see also the Q&A24 for more information about the use of a formula PLAN YEAR GOOD FAITH EFFORTS In light of the significant changes to the Form 5500 Schedule C, the Department of Labor has indicated that, in order to furnish their employee benefit plan clients information necessary to comply with the new Schedule C annual reporting requirements, certain service providers may have to modify their current recordkeeping and information management systems and that it may be difficult for some service providers to make those adjustments sufficiently in advance so that their systems will be fully operational to provide 2009 plan year Schedule C related data. The Department has decided that, with respect to those employee benefit plans which are dependent on service providers for information necessary to complete the Schedule C, the plan administrator will not be required for 2009 plan year reports to list a service provider on line 4 of the Schedule C as failing to provide information necessary to complete the Schedule C if the plan administrator receives from the service provider a statement that (i) the service provider made a good faith effort to make any necessary recordkeeping and information system changes in a timely fashion, and (ii) despite such efforts, the service provider was unable to complete the changes for the 2009 plan year. The Introduction, found on pages 4 and 5, contains Hartford s statement to this effect. See Q&A40 of the FAQs About the 2009 Form 5500 Schedule C. The Department has also indicated that it expects the service provider will provide the information on its reportable compensation that it was able to collect, which Hartford is providing in this document and the preliminary Schedules A and C. The Department also expects that plan administrators who receive such statements from service providers will communicate with the service provider regarding the statement and the steps the service provider is taking to be able to provide the necessary information in connection with future Schedule Cs the plan is required to file. See Q&A10 of the Supplemental FAQs About the 2009 Form 5500 Schedule C. 11

12 GLOSSARY Brokerage Windows Plans that allow participants in self-directed accounts to invest through brokerage accounts have a fairly limited reporting requirement. Reporting must include direct and indirect compensation received by the broker(s) and the brokerage window providers: fees for transactions such as purchases, sales or exchanges, and any other plan related fees. Brokerage companies that have provided brokerage windows to HRS customers will furnish to each Plan Sponsor information for Schedule C reporting purposes. Bundled Service Arrangements A bundled service arrangement includes any service arrangements where the plan hires one company to provide a range of services either directly from the company, through affiliates or subcontractors, or through a combination, which are priced to the plan as a single package rather than on a service-by-service basis. A bundled service arrangement would also include an investment transaction in which the plan receives a range of services either directly from the investment provider, through affiliates or subcontractors, or through a combination. Direct payments by the plan to the bundled service provider should be reported as direct compensation to the bundled service provider. Such direct payments by the plan do not need to be allocated among affiliates or subcontractors and also reported as indirect compensation received by the affiliates or subcontractor is set on a per transaction basis, e.g. brokerage fees and commissions. Nonetheless, fees charged to the plan s investment and reflected in the net value of the investment, such as management fees paid by mutual funds to their investment advisors, float revenue, commissions (including soft dollars ), finder s fees, 12b-1 distribution fees, account maintenance fees, and shareholder servicing fees, must be treated as separate compensation by the person receiving the fee for purposes of Schedule C reporting. For each person who is a fiduciary to the plan or provides one or more of the following services to the plan contract administrator, consulting, investment advisory (plan or participants), investment management, securities brokerage, or recordkeeping commissions and other transaction based fees, finder s fees, float revenue, soft dollar and other non-monetary compensation, would also be required to be treated as separate compensation even if those fees were paid from mutual fund management fees or other fees charged to the plan s investment and reflected in the net value of the investment. Other revenue sharing payments among members of a bundled service arrangement do not need to be allocated among affiliates or subcontractors in determining whether the affiliate or subcontractor must be separately identified on line 2 of the Schedule C. For purposes of this reporting, an affiliate of a person includes any person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the person applying principles consistent with the regulations prescribed under Section 414(c) of the Internal Revenue Code. Eligible Indirect Compensation This is compensation that is fees or expense reimbursement payments charged to investment funds and reflected in the value of the investment or return on investment, finders fees, soft dollar revenue, float revenue, and brokerage commissions or other transaction-based fees for transactions or services involving the plan that were not paid directly by the plan sponsor or the plan. However, in order to be eligible indirect compensation, the plan sponsor must have received written materials that disclosed and described the following: 12

13 1. the existence of the indirect compensation 2. the services provided for the indirect compensation, or the purpose for the payment 3. the amount (or estimate) of the compensation or a description of the formula used to calculate or determine it 4. the identity of the party or parties paying and receiving the compensation An example of Eligible Indirect Compensation ( EIC ) is float income whose disclosures satisfy the alternative reporting option. Estimates, Formulas, and Hard Dollars Plan administrators may generally meet the requirements for Schedule C reporting by providing either actual dollar amounts, estimates, or formulas. Service providers that provide an estimate of their indirect compensation may use any reasonable method for developing an estimate, as long as the method is disclosed with the estimate. Also, if the service provider is a contract administrator, or performs consulting, investment advisory (plan or participants), investment management, securities brokerage, or recordkeeping services, each source from whom the service provider received indirect compensation of at least $1000 or was provided a formula or other description of the method used to determine the indirect compensation rather than an amount or estimated amount, must be listed on Item 3 of the Schedule C. A description of the formula is also required to be entered on that line. Line 2 has similar requirements when a formula is used instead of a hard dollar or estimate, except that the formula must be described on a separate attachment rather than on the Schedule C line itself. For more information, see above descriptions of Line 2 and Line 3. Excludible Non-Monetary Compensation In general, indirect compensation includes compensation that is not in the form of money. However, certain types of non-monetary compensation may be excluded. These exclusions include the following: Nonmonetary compensation of insubstantial value (such as gifts or meals of insubstantial value) which is tax deductible by the person providing the gift or meal and which would not be taxable income to the recipient. The gift or gratuity must be valued at less than $50, and the aggregate value of gifts from one source in a calendar year must be less than $100, but gifts with a value of less than $10 do not need to be counted toward the $100 limit. If the $100 aggregate value limit is exceeded, then the value of all the gifts will be reportable. Gifts received by one person from multiple employees of one entity must be treated as originating from a single source when calculating whether the $100 threshold applies. But gifts received from one person by multiple employees of one entity can be treated as separate compensation when calculating the $50 and $100 thresholds. Indirect Compensation This is compensation received from sources other than directly from the plan or plan sponsor. The compensation must have been received in connection with services rendered to the plan during the plan year or in connection with the person s position with the plan. For this purpose, compensation is considered to have been received in connection with the person s position in the plan or for services rendered to the plan if the person s eligibility for payment or the amount of payments is based, in whole or in part, on services that were rendered to the plan or on a transaction, or series of transactions, with the plan. Examples of reportable indirect compensation include fees and expense reimbursement payments received by a person from mutual funds, bank commingled trusts, insurance company pooled separate accounts, and other separately managed accounts and pooled investment funds in which the plan invests that are charged against the fund or account and reflected in the value of the plan s investment (such as management fees 13

14 paid by a mutual fund to its investment advisor, sub-transfer agency fees, shareholder servicing fees, account maintenance fees, and 12b-1 distribution fees). Other examples include finder s fees, float revenue, brokerage commissions (regardless of whether the broker is granted discretion), research or other products or services, other than execution, received from a broker-dealer or other third party in connection with securities transactions (soft dollars), and other transaction based fees received in connection with transactions or services involving the plan whether or not they are capitalized as investment costs. Key Service Provider. Key service providers are those service providers who are fiduciaries, or who provide contract administrator, consulting, custodial, investment advisory, investment management, broker, or recordkeeping services. LIST OF SERVICE CODES THIS IS THE LIST OF SERVICE CODES USED IN THE SCHEDULE C, ON LINE 2(B) AND LINE 3(B): 10 Accounting (including auditing) 11 Actuarial 12 Claims processing 13 Contract Administrator 14 Plan Administrator 15 Recordkeeping and information management (computing, tabulating, data processing, etc.) 16 Consulting (general) 17 Consulting (pension) 18 Custodial (other than securities) 19 Custodial (securities) 20 Trustee (individual) 21 Trustee (bank, trust company or similar financial institution 22 Insurance agents and brokers 23 Insurance services 24 Trustee (discretionary) 25 Trustee (directed) 26 Investment advisory (participants) 27 Investment advisory (plan) 28 Investment management 29 Legal 14

15 30 Employee (plan) 31 Named fiduciary 32 Real estate brokerage 33 Securities brokerage 34 Valuation (appraisals, etc.) 35 Employee (plan sponsor) 36 Copying and duplicating 37 Participant loan processing 38 Participant communication 39 Investment company/ mutual fund 40 Foreign entity 49 Other services 50 Direct payments from the plan 51 Investment management fees paid directly by plan 52 Investment management fees paid indirectly by plan (e.g., mutual fund investment adviser management fees) 53 Insurance brokerage commissions and fees 54 Sales loads (front end and deferred) 55 Other commissions 56 Non-monetary compensation 57 Redemption fees 58 Product termination fees (surrender charges, etc.) 59 Shareholder servicing fees 60 Sub-transfer agency fees 61 Finders fees/ placement fees 62 Float revenue 63 Distribution (12b-1) fees 64 Recordkeeping fees 15

16 65 Account maintenance fees 66 Insurance mortality and expense charge 67 Other insurance wrap fees 68 Soft dollar commissions 69 Insurance brokerage commissions and fees 70 Consulting fees 71 Securities brokerage commissions and fees 72 Other investment fees and expenses 73 Other insurance fees and expenses S-RKP5500-RPT-t 6-10 RPS EX 16