3. Describe your organizational philosophy/approach to client services.

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1 ORGANIZATION AND HISTORY This information will help you get a feel for the service provider as an organization. What type of structure and operation do they have in place? How do they operate compared with your current provider and others you are evaluating? Are they used to working with companies like yours (similar plan type, size, etc.)? 1. Please provide the name(s), title(s), address(es), telephone and fax number(s) of the individual(s) responsible for responding to this request. Ralph Lindblom, Consultant Ingham Group Dadeland Centre 9155 S. Dadeland Blvd., Suite 1512 Miami, Florida Voice: (305) Fax: (305) rlindblom@ingham.com Web: 2. Provide a brief overview of your company and history of your organization including an organizational chart. Please describe any parent/subsidiary/affiliate relationships. Ingham Group is comprised of three separate companies. Ingham & Company is the parent company, Ingham/Russell Investment Advisors Inc. and Ingham Financial Corporation are wholly owned subsidiaries each doing business as Ingham Group. Since 1972 we have administered over 7000 plans in 40 states. Our staff of highly qualified professionals provides timely, innovative plan design, installation, administration and termination services using a multi-disciplinary approach. The well-balanced staff includes an ERISA attorney, a CPA, actuaries, data processing, graphics and administrative staff members. We are a full service employee benefit consulting firm providing total turnkey consulting and administrative services using daily valuation and voice response. Through our strategic alliances with fund managers and trust companies, we provide our clients with access to more than 500 mutual fund families and over 10,000 funds. All administrative and consulting functions including trading, IRS Form 5500 Series, testing, prototype plan documents, preparation of participant statements, valuations, secure web site, participant call service center and voice response are provided on our premises. It is important to note that many mutual funds, banks, insurance companies and brokerage firms provide retirement plan services as a by product of their core businesses, as a means to accumulate assets under management. Our core business is retirement plan services. 3. Describe your organizational philosophy/approach to client services. Our mission statement, Efficient Professionals Providing Quality Financial Services to Valued Clients, describes our vision of the client service relationship. Our proprietary, secure, transaction oriented, fully integrated bilingual (English and Spanish) web site and voice response L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 1 -

2 system provides the user-friendly, self-service approach our clients want for their participants, while simultaneously reducing the burden on the human resources staff. It is our goal to be responsive, accurate and user friendly. We strive to hire experienced and talented professionals and continually upgrade our hardware and software capabilities to improve client service. 4. Are you currently participating in any alliances or joint marketing efforts? If so, please describe in detail. Ingham Group is a member of the Fidelity Institutional Brokerage Group Third Party Administrator Retirement Network, and a Preferred TPA for Charles Schwab, Oppenheimer, Conseco, AIM, Wachovia Securities and the Northwestern Mutual Financial Network. Additionally we are a member of the American Funds Plan Connect Program and one of the select few sophisticated Investment Advisors nationwide permitted to distribute the mutli-asset, multistyle, multi-manager methodology of the Frank Russell Investment Management Company. 5. What is the average number of clients managed by the plan administrator or team leader? The average Daily Valuation administrator handles an account load of plans depending on the plan size and the experience of the administrator. 6. What type of training is required for new employees before they work on client plans? Our plan administrators are required to have a college education and at least 2-3 years of hands on experience. We encourage all personnel to further their knowledge by sponsoring them to sit for the various American Society of Pension Actuaries (ASPA) exams. We also teach in-house the curriculum for (ASPA) courses. Administrators are also required to attend various ALI-ABA and American Academy of Actuaries satellite broadcasts. 7. How many of your employees work on defined contribution plans? Provide breakdown by functional area. We currently have 45 employees of which 39 work on DC plans. Operations: 11, Consulting: 6, Administration: 16 Plan Documents: 2, Client Service: 5, Office Staff: 5 8. What are your client retention statistics for each of the last four years? Client Retention Statistics for Defined Contribution Plans Plans at Beg. of year: New Plans: Lost Plans: Plan Termination: L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 2 -

3 Company Mergers: Business Bankruptcy: Transfer to New Record keeper: -0- <1> <2> 11 1 Plans at end of Year: *as of 12/31/ For those who left, what percentage left due to issues pertaining to services provided by your organization? We seldom lose clients due to issues pertaining to service. The clients move because they think they are getting something equivalent for less. 10. What is the average client relationship duration? The average client relationship duration is 10 years. 11. Indicate how many years your company has been active in the defined contribution business, i.e., 401(k), profit sharing, etc. (Indicate the period of time for each service, if different, such as investment management for X years, record keeping for Y years, trustee services for Z years). Ingham Group has been active in the defined contribution business since We began offering daily valuation and investment advisory services in Indicate the total value of assets for which you provide record keeping services. We provide record keeping services for plans which hold in aggregate over $750 million as of 12/31/ How many defined contribution plans do you currently administer in the following categories: Number of Employees Daily Valuation Other Valuations (Monthly/Quarterly) Under Over Total Information as of 12/31/2004 L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 3 -

4 14. Please provide a breakdown of the number of plans you service by plan type as a percentage of your total business: Plan Type - Percentage of Total Number of Plans (as of 12/31/2004) Type Full Service Investment Only Administration Only Profit Sharing 2.5% 0.0% 31.8% 401(k) 20.4% 0.0% 13.4% Money Purchase 1.6% 0.0% 8.5% Thrift-Savings 0.0% 0.0% 0.0% Combination 0.0% 0.0% 0.0% 403(b) 0.2% 0.2% 0.0% % 0.0% 0.0% Other 1.3% 1.8% 18.3% Total 26.0% 2.0% 72.0% 15. Please provide a percentage breakdown of your primary sources of revenue. Type of Business (as of 12/31/2004) Percentage of Revenue Daily Valuation Administration 33% Daily Valuation Investment Related Fees 45% Total Daily Valuation Fees 68% Balance Forward Administration 23% Individualized and Trustee Directed Investment Related Fees 9% 16. What is the total number of participants in all defined contribution plans currently being administered by your organization? The total number of participants in all defined contribution plans is approximately 40,000 as of 12/31/2004. CLIENT SERVICE/QUALITY ASSURANCE These questions will help you evaluate the company s commitment to service standards and quality in service delivery. 1. Please describe the team that would deal directly with us during the transition and on an ongoing basis. Indicate staff size, experience and turnover rates. Each client is assigned a consultant who will oversee all phases of the client relationship. The consultant is also responsible for strategic issues such as plan design and interpretation. All consultants at Ingham Group have at least 16 years of experience in the employee benefits field. During the transition phase, the consultant will coordinate the transfer of data and funds through the Manager of Operations. Once the data and funds have been successfully transferred, the client is assigned to an administrator who is responsible for day-to-day processing of contributions and L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 4 -

5 distributions, participant interface, compliance testing and preparation of government forms. Our administrators typically have at least five years of experience. In addition, each client is assigned to an assistant administrator who works with the administrator. Turnover among the consultants and administrators is exceptionally low. Our administrative staff has an average tenure of over 8 years. Lastly each participant has access to our Client Service Center Monday through Friday business hours (E.T.), staffed with 5 benefit and investment professionals. 2. Describe the training program for your staff. We provide individualized training depending on the employee s existing skill levels. We have on staff an ERISA attorney who keeps the staff informed of changes in the law and regulatory environment as they occur. Our staff also attends continuing education classes offered by Pension Publications of Denver, the American Society of Pension Actuaries (ASPA) and the American Law Institute-American Bar Association (ALI-ABA), among others. We also teach inhouse the curriculum for (ASPA) courses. Administrators are also required to attend various Aliaba and American Academy of Actuaries satellite Broadcasts. Consultants are required to attend the Fiduciary Analytics course and become designated as Accredited Investment Fiduciaries. 3. Describe the training provided to us. Ingham Group will provide each client with an Employer Maintenance Handbook for Daily Valuation. The Handbook contains instructions and all forms necessary for making contributions to the plan, processing loans, hardship withdrawals and distributions to plan participants, providing quarterly census information, enrolling participants, designating beneficiaries and communicating with Ingham Group. A representative of Ingham Group will meet with the client to explain each form and how to use it. We also have data processing specialists available to discuss the electronic transmission of data via , web site or disk. 4. Describe your organization s commitment to quality. Our greatest demonstration of our commitment to quality is the level of professional credentials and experience of our staff. Our staff routinely attends continuing education courses offered for accounting, legal, investment and actuarial professionals. We have been told by several of our vendors that Ingham Group is leading the rest of the country in terms of our technological developments and electronic linkages. 5. Describe your procedures for monitoring. a. client satisfaction We feel that the best measure of client satisfaction is retention and referral business. Happily, we have very low turnover; in fact the plans we lose are typically due to plan termination or merger. We have grown our business almost exclusively on the referrals from satisfied clients and local professionals. Since we charge no back-end load or exit fee, we must perform or clients will go elsewhere. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 5 -

6 b. participant satisfaction We believe the true client in a participant-directed retirement plan is the participant. Our experience shows us a relatively high participation rate and positive feedback from participants directly. If we are not servicing the participant we would receive more critical feedback and experience higher client turnover. Participant requests, comments and complaints are monitored daily through the Participant Service Center. Details related to these requests, comments and complaints are recorded and communicated to the president, vice-president, consultants, and administrators. 6. Do you guarantee service performance? If so, please describe. We are open to guaranteeing service performance although it has not been an area of concern among our clients to date. Untimeliness or inaccuracy of client provided data typically causes delays. 7. What checks and balances do you have in place to assure plan administration integrity and accuracy including participant account data? Our administrators' review all data submitted by the plan sponsor to check for reasonableness. For example, if a participant has a date of birth, date of hire or salary that looks out of line with that which would be expected, we verify the data with the plan sponsor. We also verify salary deferral amounts prior to the time funds are wired to ensure the amount of money wired is equal to the amount of money withheld from employees pay. We reconcile the record keeping system to the fund manager on a daily basis. Each client is assigned an administrator and consultant to provide checks and balances and who review all testing, reports and statements prior to distribution. 8. Describe your service standards. Ingham Group has three primary areas of service for which we set standards: (1) investment of contributions, (2) compliance with all legal and regulatory timing requirements and (3) providing plan trustees and participants with accurate information in the timeliest manner possible. Within each of these categories are tasks which have their own standards. Following are the goals set by Ingham Group for completion of each of these tasks: Investment of Contributions Change of Investment Elections Realignment of Account Balances 401(k) and (m) Projections Final 401(k) and (m) Testing Cross-tested Contribution Projections Same day received if received by deadline Same day received if received by deadline Same day received if received by deadline 2 months prior to plan year end 2 ½ months after plan year end First quarter of the plan year L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 6 -

7 Final Profit Sharing and Money Purchase Allocations 3 months after plan year end if data received on time. IRS Forms 1099 and 1096 January 31 Quarterly participant statements 15 th business days following quarter end Plan allocation reports 15 th business days following quarter end Monthly portfolio analyses 15 th of month following month end IRS Forms months after plan year end We are always aware of and strive to meet the standards set for each activity. However, from time to time these standards cannot be met, usually for reasons beyond our control. For example, if we have not received a breakdown of a contribution, we are unable to invest contributions the same day. In such a case, the contribution would remain in the money market until we are able to reconcile the breakdown and the cash. For another example, we may not be able to process investment election changes or realignment requests the same day during times of peak market activity. In these cases, requests are processed as soon as administratively practicable, as disclosed on our enrollment form and web site. There are certain standards, however, where there is no margin for lateness, as in the case of IRS filings. RECORD KEEPING/ADMINISTRATION This section helps provide a detailed understanding of the provider s record keeping capabilities and how they will administer your plan. This is an especially important section if your reason for changing providers is a lack of capability in this area. 1. Describe in detail how your system allocates earnings. Earnings are comprised of several components that include such items as changes in market value, dividends and capital gains. Both dividends and capital gains produce transactions which are posted to the participant s account according to the participant s basis on the date the fund issued the earning (ex-date). Once these transactions are posted, we reconcile the account with the investment house data. Changes in market value are updated daily. 2. Describe in detail how your system processes contributions. Prior to the transfer of contributions to the funding institution, the plan sponsor will fax an Advice of Investment Remittance form to Ingham Group, and a breakdown of the participant and source detail of the money being sent for investment. Also available via the Relius web site is the Data Validation Center where investment detail and/or census data can be submitted. When the information on the Advice of Investment Remittance and detail are reconciled, Ingham Group will notify the plan sponsor to transfer the funds. Funds are typically wire transferred directly to the funding institution, although they may be sent by check or by ACH. Once the funds are received by the funding institution, Ingham Group will advise the institution how the money should be invested based upon current investment elections. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 7 -

8 3. Describe in detail how your system processes. a. in-service withdrawals In-service withdrawals are processed as follows: The employer will forward a Request for Distribution Package to Ingham Group. The Request for Distribution Package is used to request an in-service distribution from employer contributions or from salary deferrals provided the plan provides for such distributions. Receipt of a Request for Distribution Package will cause Ingham Group to prepare a Notice of Entitlement to Plan Benefits and a Distribution Election Form which will be sent directly to the plan participant or to the employer, as noted on the original Request. The Distribution Election Form is then completed by the participant (and spouse, if applicable), reviewed for completeness by the employer and returned to Ingham Group. Once Ingham Group receives the completed form, assets in the participant s account will be liquidated in an amount sufficient to satisfy the request. Depending on investment choices, this process takes between 2 and 10 business days. The proceeds of the sale will then be sent to the plan trustee who will be notified by Ingham Group of when and how much to expect for each recipient. The trustee will make the distribution from the proceeds. b. hardship withdrawals The participant must complete a Request for Hardship Distribution form and submit the form and supporting documentation to the plan sponsor for approval.. In the case of a hardship distribution, the participant will provide the employer with proof of the hardship. For example, if the hardship distribution is for medical expenses, the participant would provide invoices for medical services. If the hardship is to purchase a primary residence, the participant would provide a fully executed contract for the purchase of a home. Upon approval of the plan sponsor, a copy of the Request for Hardship Distribution is sent to Ingham Group for processing. Ingham Group will then liquidate assets for the funding of the hardship distribution as soon as practicable. Once liquid, funds are transferred for distribution to the participant by the trustee. 4. Describe in detail how your system processes. a. lump-sum distributions b. systematic payments/installments c. annuities d. rollovers to another plan or an IRA In order to begin the distribution process, the employer will submit a Request for Distribution Package form to Ingham Group. Daily, Ingham Group will prepare a Distribution Election Form and Notice of Entitlement of Plan Benefits form for each participant who s Request for Distribution Package was received. These forms will then be sent directly to the participant or to the employer, as noted on the Request for Distribution Package form. The Distribution Election Form is then completed by the participant (and spouse, if applicable), reviewed for completeness by the employer and returned to Ingham Group. Once Ingham Group receives the completed form, assets in the participant s account will be liquidated. Depending on investment choices, this process takes between 2 and 10 business days. The proceeds of the sale L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 8 -

9 will then be sent to the plan trustee who will be notified by Ingham Group of when and how much to expect for each recipient. The trustee will make the distribution from the proceeds. From the proceeds, the trustee will a. pay 80% to the participant and 20% to the IRS, in the case of a lump sum distribution b/c. purchase an annuity contract from an insurance company to satisfy any benefit payable in the form of installments or an annuity. Ingham Group can assist the trustee in the annuity purchase if the employer so desires. d. pay 100% to the IRA custodian or plan trustee, in the case of a rollover to an IRA or another plan. 5. Describe in detail how your system processes Required Minimum Distributions. Participants are contacted prior to the end of the year in which they attain 70½ to determine whether they wish to take their first distribution in the year they attain age 70½ or by the following April 1. They also must confirm their beneficiary and elect whether life expectancies will be recalculated (if the plan so provides). Once these decisions are made by the participant, Ingham Group will liquidate sufficient assets from the participant s account to satifsy the required minimum distribution and forward the money to the trustee for distribution to the participant. 6. Describe in detail how your system processes transfers/exchanges (including frequency/limitations). Are confirmations sent? Account transfers are initiated by participants through mail, fax, the voice response unit or the Ingham Group transactional web site. The transfer is aggregated with all other trades for the plan for the day and submitted to the fund house for execution. The sale of funds occurs on day one; on day two when Ingham Group knows how much cash was raised by the sale of the funds, purchase orders are submitted to the fund house. Ingham Group reconciles the record keeping to the fund house records daily. A participant may transfer his or her account balance once each day. There are no transaction costs associated with account transfers. Confirmation of the aggregate trade will be sent from the fund house to the plan trustee. Confirmation of the participant s trade will be sent from Ingham Group to the participant s home. 7. What methods of reallocation (percent and/or dollar) do you handle? Electronic transaction processing by the participant is done by entering the desired new ending percentage. Other types of reallocation (e.g. $ to $, % to %, and $ to %) are also supported by our web site. We prefer to process electronically. Our web site also provides a participant the opportunity to establish a recurring rebalancing on a user defined frequency. 8. Can employer and employee contributions be tracked separately? Both are tracked seperately and shown in the Sources column of the participant statement. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc - 9 -

10 9. Describe in detail your system s vesting capability. Our system accomodates any vesting schedule called for in the plan document. Each investment source can have a different vesting schedule. 10. Describe in detail how your system handles Federal and State tax reporting. Federal and state tax reporting will depend on whether the plan has individual trustees, or an institutional trustee. In the case of individual trustees: the Ingham Group record keeping system stores the data for each distribution made from the plan. Data includes the plan name, Federal trust identification number, participant name, social security number, address, total amount paid, the taxable amount, any Federal and/or state tax necessary and the distribution tax code. During January of the year following the year of distribution, Ingham Group will prepare the IRS Forms 1099-R and 945. All record keeping data is reconciled to the trustee s records before printing. A package is prepared for the employer including all form originals and copies necessary for federal and state filing. If the trustee is an institution, the institution will take responsibility for the preparation and submission of the Forms 1099-R and Describe in detail how you administer Qualified Domestic Relations Orders (QDRO). Each domestic relations order which grants plan benefits to an alternate payee is checked against the requirements of Code Section 414(p) to determine whether it is a Qualified Domestic Relations Order (QDRO) which can be honored by the plan administrator. The order must clearly state who to pay, how much to pay, how to pay, when to pay and the plan to which it applies. If it appears clear that the order is a QDRO, Ingham Group will recommend that the plan administrator accept the order. If it is not clear, Ingham Group will recommend that the plan administrator consult with counsel. If the plan administrator accepts the QDRO, the plan is then checked to determine whether an alternate payee may receive an immediate distribution or whether the distribution must be delayed until some later date. Both the participant and alternate payee are notified of the plan administrator s decision with respect to the order s qualified status and the timing of the payment of benefits. Ingham Group will then set up the alternate payee as a new participant on the record keeping system. This creates a place for the QDRO settlement to be transferred and maintained. 12. What checks and balances do you have in place to assure transactional integrity? There are several events that create transactions, including; plan sponsor initiated (contributions); participant initiated (re-allocation); investment advisor initiated (re-balancing, fees) and fund initiated (dividends, capital gains, splits). All money entering the plan is checked by the plan administrator prior to being forwarded to trading. Once transactions are posted they are reconciled with the investment house daily. We also submit our data to an independent accounting firm to test our controls and procedures. The results are recorded in our annual SAS 70 audit report. 13. Do you provide an administration manual? The Employer Maintenance Handbook for Daily Valuation is supplied to all plan sponsors at no additional cost. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

11 14. Do you prepare 1099R tax forms and filings? IRS Forms 1099-R and 945 are prepared at the request of the plan sponsor. 15. Will you record keep non-proprietary investment vehicles? Ingham Group will record keep non-proprietary investment vehicles. Our only requirement is that the investment vehicle be able to meet our electronic data transfer requirements and can be traded on our trading platforms. 16. What other administrative services do you provide? The following is a consolidated list of sevices we provide. RECORD KEEPING SERVICES: Maintain participants' accounts Provide asset allocation models Track participants' investment elections Reconcile and value plan assets daily Allocate earnings, losses, forfeitures, contributions and distributions Process investment of contributions monthly Provide daily access to account balances via voice response system and interactive web site Administer loans Process participant distributions Prepare quarterly participant statements Prepare quarterly allocation report ADMINISTRATIVE SERVICES: Consult on plan design and administration Prepare IRS Form 5500 Annual Information Return Prepare Summary Annual Report Determine eligibility to participate and vesting Perform IRC 401(k) projections as needed during the plan year Perform IRC Section 401(k) salary deferral nondiscrimination test (final) Perform IRC Section 401(m) matching contribution nondiscrimination test Perform IRC Section 401(a)(4) general test for cross-tested plans Perform IRC Section 410(b) minimum coverage test Monitor IRC Section 415(c) limit on annual additions Monitor IRC Section 416 top-heavy requirements Monitor IRC Section 402(g) limit on salary deferrals Monitor IRC Section 404 deductibility limit Monitor IRC Section 401(a)(9) minimum required (age 70 1/2) distributions Provide profit sharing contribution projections and solutions Allocate annual profit sharing contributions Determine and allocate annual matching contributions L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

12 Provide basic audit package for plans with 100 or more participants Prepare IRS Forms 1099, 1096, 945 and 945-A, as needed Review qualified domestic relations orders DOCUMENT SERVICES: Prepare sample Corporate Minutes Prepare prototype plan document Prepare summary plan description Prepare plan amendments and summary of material modification, as needed Submit non-standardized prototype plan document to IRS for approval Obtain fiduciary bonding Obtain Federal trust identification number for plan Provide Employer Maintenance Handbook INVESTMENT EDUCATION SERVICES: 404(c) Conduct enrollment meetings/english/spanish/creole/one on Ones Provide enrollment materials/english /Spanish/Creole Purchase shares of the mutual funds, consistent with elections made by plan participants Assist in use of Life Stages Retirement Planning Savings and Investment Education Software TRUSTEE AND CHECK-WRITING SERVICES A variety of trust services are available through our alliances with Reliance Trust Company and Charles Schwab Trust Company. Provide check-writing services Provide directed-trustee services Provide Custody Services COMPANY STOCK (IF APPLICABLE) 1. Do you utilize unit or share accounting for a company stock fund? We utilize share accounting, since this method provides the best reconciliation method between the record keeping system and the brokerage statements. 2. Explain your unit and/or share accounting methodology. The use of company stock in a participant directed plan creates several rather complicated transactions that usually raise many questions from plan sponsors and/or auditors. Company stock, as any other real equity, is only traded in whole shares (mutual funds trade in fractional shares). The record keeping system mandates that all real equities be coupled with a dollar par fund known as a stock liquidity fund (SLF). The SLF is the actual investment election of the participant. Periodically, (we suggest not more frequently than quarterly) the cash accumulated in the SLF is used to buy the company stock through the participating broker. The sale process creates another complicated set of transactions, since once again only whole shares can actually be traded on the market even though participants rarely hold even whole share balances. The participant s vested interest in company stock will be paid either: in cash, or in-kind for the whole shares and cash for L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

13 the fractional shares. The cash to redeem the participant s fractional shares comes from plan provided cash and the fractional shares will be transferred to a fictitious participant called the stock management account. 3. What is the typical charge for commissions? This depends on the level of trading of the stock in general. We prefer that the plan sponsor handle the brokerage commissions directly as a plan expense and not as part of the transaction. 4. What are your trust related services (such as proxy, custody)? We offer trust services through strategic alliances with Reliance Trust Company and the Charles Schwab Trust Company. They will determine on a case-by-case basis whether they will handle your company stock. If they are unable to accommodate your company stock we suggest the plan act as its own trustee/custodian. 5. Describe the process involved in distributing company stock in-kind. The participant s will be issued a stock certificate in the nearest, lower whole share amount. Any fractional shares will be paid as cash. 6. Explain additional concerns we may need to consider regarding company stock as an investment option. We do not recommend the use of company stock as a normal investment election in a participant directed retirement plan due to the complications of explaining the stock liquidity fund (SLF) and stock management account, whole share trading and brokerage commissions. Company stock can work in a plan if its use is restricted to company match and/or profit sharing contributions and as the only investment choice in these sources. 7. Will you allow us to select our own broker to handle stock trades? Currently we support stock trades through Schwab s PCRA Account or Fidelity Investments Self- Directed Brokerage. If you have another broker he must be able to communicate trade settlement, account positions and prices to us electronically on a daily basis in the correct format. REGULATORY SERVICES With constant changes in legislation and regulation affecting retirement plans, it is important that the provider have the ability to assure that your plan is in compliance with all relevant Internal Revenue Service and Department of Labor regulations. 1. Describe your capabilities for the following: a. Discrimination Testing: ADP/ACP L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

14 Prior to the end of the plan year, Ingham Group will complete a projection to determine whether a plan is expected to pass the ADP and ACP tests. If it appears from the project that the plan will not the pass the tests, Ingham Group offers advice as to how salary deferrals should be modified by the highly compensated group to avoid a failure. After final compensation and salary deferral information is received, Ingham Group will perform the final tests within 2 ½ month of plan year end. If, in spite of best efforts to correct before year-end, the plan does not pass the tests, Ingham Group offers alternative methods to correct the failure. b. IRC 415(c) limitations (100%/$41,000 limits) Our software will track salary deferrals, employer contributions and forfeiture allocations to assure that aggregate contributions do not exceed the lesser of 100% of compensation or $41,000 (or the plan limit as adjusted by IRS), for any employee for any limitation year. c. Monitoring of elective deferrals (402(g)) We monitor employee deferrals to ensure that they do not exceed the Code Section 402(g) limits for any calendar year. d. Top-heavy testing (416(c)) Ingham Group tests for top-heaviness annually. Our consultants can assist with a plan design, which can mitigate the effect of top-heaviness. e. Participation testing (401(a)(26) Participation testing is no longer required for defined contribution plans. Annual testing is part of our service for defined benefit plans. 2. How do you address violations for any of the testing covered in question 1? With respect to a violation of the ADP/ACP tests, Ingham Group will advise the plan sponsor how much must be returned to highly compensated employees and, if applicable, how much the match must be reduced in order to pass the tests. Alternatively, we advise how much qualified nonelective contribution must be made by the plan sponsor on behalf of the non-highly compensated employees to pass the tests. 415 violation amounts typically are returned to the employee from salary deferrals. In the case of a plan that does not provide for salary deferrals, 415 violations are held in suspense and allocated in following years. 402(g) violations are returned to the employee. Proper plan design can mitigate the effect of top-heaviness. With respect to any remaining liability, Ingham Group will calculate and allocate the required contribution. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

15 3. Can you assist us in the following areas of plan documentation design? If so how? a. Customized plan document b. Prototype plan document c. Customized SPD d. Prototype SPD e. Qualification submission Ingham Group offers an IRS approved regional prototype plan, standardized or non-standardized. In the case of a non-standardized plan, our services include the complete IRS Form 5307 application for determination letter. The terms of the plan can be customized to the Plan Sponsor s particular requirements as the document is designed for maximum flexibility. We also provide the summary plan description and will assist the plan sponsor in obtaining fiduciary bonding and a trust identification number. Ingham Group is also able and willing to administer an individually designed plan document if a plan sponsor prefers to use a document prepared by counsel. 4. Describe the type of legal support you provide. Ingham Group has on staff an ERISA attorney who assists the consultants and administrators in issues of plan interpretation and application of the law. Our attorney is also available to the Plan Sponsor s counsel for consultation at any time. 5. Do you provide either or both of the following: a. Information to complete Form 5500 b. A signature-ready 5500 We provide signature-ready IRS Forms 5500 as part of our basic service. 6. What fiduciary responsibility does your organization assume? Ingham Group may accept fiduciary status as a registered investment advisor to the plan. Our role with respect to the individual participants is to offer investment education, but not investment advice. The distinction between investment advice and investment education is an important one. Pursuant to D.O.L. regulations, we stand in the shoes of the plan sponsor and any advice we give is deemed to be that of the sponsor. Since our goal is to reduce fiduciary liability, we do not want to expose plan sponsors to that situation. Therefore, we give investment advice to the plan sponsor, but give investment education to plan participants. 7. How will you ensure that our plan remains in compliance? If a plan sponsor uses the Ingham Group regional prototype plan, Ingham Group will ensure that the plan document is up-to-date at all times. In the case of an individually designed plan drafted by the Plan Sponsor s counsel, we will coordinate any required amendments through him or her. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

16 With respect to annual administration, we perform all required compliance testing, as noted above, and we will advise the plan sponsor of any violations and the applicable remedies. We have on staff an ERISA attorney who keeps our employees aware of changes in the laws and regulations as they occur and is available to our administrators for consultation on document interpretation and administrative issues as they arise. Ingham Group invites all employees to attend the American Law Institute - American Bar Association (ALI-ABA) telecasts on ERISA-related topics which take place approximately every other month. Through the education of our employees, we ensure that our plans are administered in compliance with regulations. 8. How do you ensure that your record keeping system is in compliance with all regulations? Our in-house ERISA counsel anticipates updates to our software as legislative and regulatory changes become effective. The software used most extensively for compliance is provided by Relius. 9. Describe any past or pending litigation, within the last 5 years, relating to the services you are proposing. We have not had any litigation within the last five years. LOANS (IF APPLICABLE) Most 401(k) plans have a loan feature and, on average, 20 percent of participants have a loan outstanding. As a result, loan servicing capabilities are important. 1. Describe in detail your loan processing capabilities. To initiate the loan process, a participant will complete a Participant Loan Application form and submit it to the employer. Electronic loan applications via the web are also available. The employer will forward the completed application to Ingham Group. Upon receipt of a properly completed loan application form, Ingham Group will proceed with the liquidation of assets to fund the loan. Simultaneously, Ingham Group will prepare and send to the Employer an amortization schedule. The cash raised from the sale of assets will be sent directly from the funding institution to the trustee. Once the cash to fund the loan is received by the trustee, the trustee should complete the loan documents (sample forms are provided in the Employer Handbook for Daily Valuation which is provided to each employer by Ingham Group) including the promissory note, truth in lending disclosure and withholding authorization and have them signed by the participant. The trustee will then disburse the loan proceeds. Loan repayments are usually made through payroll deduction. Once each month, Ingham Group will provide the employer with a list of all scheduled repayments that are due. This list will show the participant s name, social security number, loan identification number and principal and interest due. The list should be used by the employer to reconcile the cash transferred for investment as well as to indicate any deviant payments. Loan repayments, including both principal and interest, will be invested in accordance with the participant s current investment elections. 2. Describe the flexibility in your loan repayment processing (i.e., additional payments, multiple loans, and missed payments). L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

17 Payments in excess of the amortization schedule values or additional payments will first be applied to the scheduled interest with the difference applied to the current payment due principal; the loan will not be re-amortized. The effect of excess payments will be to shorten the term of the loan. Payments of less than the amortization schedule values will first be applied to the scheduled interest with the difference, if any, applied to the current payment due principal; the loan will not be re-amortized. The effect of under-payments or missed payments will be to create a balloon payment at the end of the loan. Underpayments for loans may result in unfavorable tax reporting. Our system will accommodate any number of loans per participant that the plan sponsor authorizes. Each is tracked separately. 3. How do you handle delinquent and/or defaulted loans? Quarterly, a report to the plan sponsor will notify them of the status of each loan. If a loan is delinquent, it is the trustee s responsibility to make collection attempts. Ingham Group will also prepare a warning notification letter to each effected participant to notify the participant of the delinquency and to contact us for assistance on fixing the default. If a loan is declared in default by the trustee, the action taken by Ingham Group will depend on the provisions of the plan and the nature of the account balance which secures the loan. If the loan is secured with 401(k) salary deferrals or money purchase assets, then there will be a deemed distribution for tax purposes only. That is, the participant will receive an IRS Form 1099 for the value of the unpaid loan, but there will be no offset against his account until a distributable event occurs, such as termination of employment. If the loan is secured with profit sharing assets, then the terms of the plan will govern whether it is treated as an actual distribution or a deemed distribution. 4. What responsibility do we retain for initial and ongoing loan servicing? The employer is responsible for submitting a completed loan application to Ingham Group, preparing and maintaining the promissory note, truth-in-lending disclosure and payroll deduction authorization, and collecting the loan payments and remitting them to Ingham Group with the appropriate detail. 5. Describe any other features and/or limitations of the loan system not detailed above (i.e., loan modeling, amortization scheduling, etc.). Loan modeling is available through Ingham Group s transactional web site. By signing on to our secure web site, a participant may obtain the amount of his or her loan availability and request calculation of the monthly payment that would be due for various loan amounts based upon various interest rates and terms. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

18 REPORTING Responses to questions in this section will help you determine how well the provider is able to assist both you and your employees in evaluating and monitoring the plan's performance. 1. Describe the standard package that you would provide us (provide samples). Ingham Group provides the following reports: Participant Level An enrollment kit which includes an investment primer, risk tolerance questionnaire, enrollment forms and a tool for determining how much a participant should save in order to ensure sufficient money for retirement. Prospectuses are available via the web. Quarterly cash basis statements showing source balances, fund balances, vested balances, investment elections, last price for the period and ending units owned. Fund information includes beginning balance, contributions, withdrawals, forfeitures, loan principal payments (if applicable), loan interest payments (if applicable), transfer, earnings, ending balance, ending units and last price. A newsletter accompanies the quarterly statements. Confirmation of account realignment or investment election changes are mailed to the participant s home. Plan Sponsor and/or Trustee Level Monthly cash basis report which includes schedules for account reconciliation, asset summary, contributions, income on investments, plan disbursements, other transactions and detail of assets. Quarterly census report including a complete list of all current employees plus any former employees with balances and/or plan activity. Data includes dates of service, birth termination and rehire; key and Highly compensated employee designations; life-to-date vested years. Quarterly cash basis plan allocation report showing beginning balance, contributions, withdrawals, forfeitures, loan principal payments (if applicable), loan interest payments (if applicable), transfers, earnings and ending balances. Copies of each quarterly participant statement. Available in hard copy or CD. If the plan allows for loans, a listing of all loans showing the last payment, loan balance, principal and interest as of the end of the reporting period. Copies of all compliance tests including the ADP/ACP tests (projected and final), IRC Section 415 contributions limitations test, coverage test and top-heavy test. Signature-ready Forms 5500 and audit package (for plans with more than 100 participants) L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

19 Auditor Level Annual plan allocation report, cash basis, with breakdown of earnings into capital gains, dividends, fees and unrealized gains/losses. Annual plan allocation report, accrual basis, with breakdown of earnings into capital gains, dividends, fees and unrealized gains/losses. Schedules for account reconciliation, asset summary, account reconciliation (market and cost), account reconciliation by fund, contributions, income on investments, security sales and realized gain/loss, calculation of unrealized gain/loss, plan disbursements, security purchases, other transactions and detail of assets. Reconciliation of plan allocation report to the last fund manager s statement for the year on a cash basis. Transaction based statements can be prepared on either a cash or accrual basis to satisfy spot checks of participant transactions as required by the auditor. Portfolio Management reports on a cash basis, annual reports showing holding, transactions, realized and unrealized gains/losses. These reports are similar to the plan allocation reports, but are produced from investment house data, rather than record keeping data. 2. Describe any customized or ad hoc reporting capabilities. We currently offer participant level information to participants via the Internet. Our web site also has plan summary information, transaction history, and individual rates of return. Relius, our record keeping system will allow inquiry access to plan sponsors via the web. Information is available in the areas of: plan information; participant information; transaction detail information; voice response interface information; and asset holdings information. To successfully use this interface requires training as the system is rather comprehensive, contains information at a detailed level and is code driven in many cases. 3. Describe your standard participant level statements and documents (provide samples). Participants receive a breakdown of contribution by various sources, vesting, and period-to-date activity by fund. This information is also available to them on our secure website and the voice response unit. 4. Describe your customization capabilities for participant level statements. Feedback from our clients indicate that our standard reports present the information in a simple, easy to read format. Custom reports (within system limitations) are available at an additional charge. 5. Can reports/statements be produced on other media? Please describe. All reports can be produced in hard copy (typical) or electronically (diskette, , CD, web site). If electronic method were selected, the plan sponsor would then assume the function of printing and distributing the reports. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc

20 6. What is the standard timeframe for providing each report after the reporting period ends? Monthly reports to the plan trustees are mailed within 15 business days of month end. Quarterly reports are mailed within 15 business days of quarter end. 7. Are there any other reporting capabilities within your system not covered above? In addition to the reports discussed elsewhere in this proposal, Ingham Group will provide a yearend accounting summary to be provided for plans requiring auditor s reports. VOICE RESPONSE SYSTEM (VRS), WEB RESPONSE SYSTEM AND PARTICIPANT ACCESS Since the VRS and Web Site will be your employee's primary link to the service provider, it is crucial to understand the features and capabilities of the system. 1. Describe the services available through your voice response system and web response system. Access to our Voice Response System (Funds Line) is available 24 hours a day, 7 days a week. Participants can access account balances, vested balances, and the latest asset price; transfer between funds; obtain loan balances and availability and obtain hardship withdrawal availability. By choosing 0 between the hours of 8:30-5:00 M-TH and 8:30-4:00 F EST you may speak with a live operator. Please try our Funds Line demo by calling (800) (use Social Security Number , and PIN 1111.) Access to our bilingual (English/Spanish) Web Response System (Funds Line) is available 24 hours a day, 7 days a week Here participants can access account balances, vested balances, the latest asset price, transfer between funds, request forms, obtain loan balances and availability along with hardship withdrawal availability. By accessing Funds Line a plan participant may view and print account information, a prospectus and mutual fund performance data or even model a loan if their plan permits. Please visit our web site at: Click on demo. 2. How are participant-initiated transactions processed through the VRS and Web? Are confirmations sent? The transaction data entered by the participant is conveyed electronically to operations when the system is refreshed daily. Changes to a participant s investment elections and realignment of a participant s account will be completed as soon as administratively possible after receipt of instructions. However, occasionally for reasons such as power interruption, phone line interference, satellite failure, or user error, instructions sent via Funds Line do not transmit properly. Written confirmations are sent to each participant of all investment election changes and realignments. It is the participant s responsibility to check Funds Line, Confirmations and/or Quarterly Statements to make sure the instructions are properly implemented. If the implementation is not correct, the participant must contact Ingham Group and Ingham Group will make any necessary changes. Ingham Group will not, however, calculate or restore to the participant s account earnings as though the original transaction transpired when intended. We issue confirmations for all participant initiated transactions directly to the participant. The mutual fund company will issue a confirmation to the plan sponsor. L:\Data-BF\PROPOSAL\SPARK 2004\RevisedRFP doc