OPPORTUNITYRoth 403(b) accountsMore savings opportunities for your retirement

SAVING : INVESTING : PLANNING

> Choose between pretax deferrals, after-tax “Roth” contributions or a combination of both

> Total elective deferral (both pretax and post-tax) cannot exceed:– $16,500 in 2010

– $22,000 if age 50 or older

– 403(b) cap-expansion deferral, up to $3,000, if eligible

Understanding the Roth account

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Understanding the Roth account (continued)

> Optional feature of your existing 403(b) program

> Does NOT include employer contributions

> It is NOT a Roth IRA– Has no effect on Roth IRAs

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Traditional RothPretax

contributionsPretax

contributions

Tax-deferredearnings

Tax-deferredearnings

Taxablewithdrawals

Taxablewithdrawals

After-taxcontributions

After-taxcontributions

Tax-deferred earnings

Tax-deferred earnings

Tax-free withdrawals*

Tax-free withdrawals*

* If withdrawn after five years AND either disability, death or attaining age 59½

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Roth account distribution features

Qualified distributions are tax-free> Five-year aging period

AND

– Age 59½

– Death or disability

> Portable to Roth IRAs and other Roth accounts

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Start your five-year clock!

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Roth five-year clock starts …

> First year you contribute to a

– Roth account in your plan

OR– Roth account in a prior employer’s

403(b) plan, if rolled directlyinto your plan

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Example

> First Roth contribution 3/1/2010

> Attains age 59½ in 2013

> Five-year clock ends 12/31/2014

* Plus possible 10% federal penalty tax if withdrawn prior to age 59½

WithdrawalsEarnings taxable if withdrawn* tax free2010 2011 2012 2013 2014 2015 2016

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Roth basics

> Separate five-year clock for Roth accountsand Roth IRAs

> Not subject to Adjusted Gross Income(AGI) limits

> Requires separate recordkeeping accounts

> Subject to age 70½ Required Minimum Distributions (RMD)

> No conversions available

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Which option is best?

Traditional if: Roth if:

Tax rate is expected tobe lower in retirement

Tax rate is expected tobe lower in retirement

Tax rate is expected tobe higher in retirementTax rate is expected tobe higher in retirement

Pay taxes later Pay taxes now

QuestionsWill your tax bracket rise or fall?

Will Congress raise tax rates in the future?

Are there other pros/cons to consider?

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Roth accounts will appeal to those who:

> Can’t contribute to a Roth IRA due to AGI limits

> Are young and in low tax brackets

> Are well-off but view tax hikes as inevitable

> Want tax diversity/flexibility in retirement

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Roth accounts will appeal to those who:

> Hope to avoid increasing taxes on Social Security, under current law, if distributions are tax-free

> Want to avoid forced distributions at age 70½ by rolling over to a Roth IRA

> Want to maximize assets left for heirs

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Roth account helps avoid tax on Social Security benefits under current law

Social Security benefits are taxed if> Other income plus half of

Social Security benefits exceeds$25,000 (single) or $32,000 (joint)

Other income> Includes traditional 403(b)/401(k) withdrawals> Also includes tax-exempt interest

(such as from municipal bonds)> Does NOT include Roth account withdrawals

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* The Roth 403(b) account and a Roth IRA have separate and distinct five-year aging periods (or clocks).

Next steps

> Decide if a Roth account is advantageous to you, and/or if it meets your planning objectives

> Complete new Salary Reduction Agreement and/or application

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Copyright © The Variable Annuity Life Insurance Company. All rights reserved.VALIC.comVC 18230 (12/2009) J75868 EE

Annuity contracts are issued by The Variable Annuity Life Insurance Company. Annuities and mutual funds offered by VALIC are distributed by its affiliate, American General Distributors, Inc., 2929 Allen Parkway, Houston, Texas 77019, member FINRA.

The information in this presentation is general in nature and may be subject to change. Neither VALIC nor its financial advisors or other representatives give legal or tax advice. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. For legal or tax advice concerning your situation, consult your attorney or professional tax advisor.

VALIC represents The Variable Annuity Life Insurance Company and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company.

THANK YOURoth 403(b) accountsMore savings opportunities for your retirement

SAVING : INVESTING : PLANNING