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Plan Types 403(b) Plan This information is general in nature and may be subject to change. Neither AIG VALIC nor any of its agents give legal or tax advice. Applicable laws and regulations are complex and subject to change. For legal or tax advice concerning your situation, you should consult your attorney or tax advisor. Type of employer? Internal Revenue Code (IRC) Section 501(c)(3) organization or public educational organization only. ERISA-covered? Yes, unless governmental or nonelecting church organization, or unless the employer has limited control over plan. ERISA imposes specific requirements including annual reports to the IRS; written plan document; summary plan descriptions for participants; joint and survivor benefits; spousal consent; and fiduciary obligations. Initial filing with the IRS? No. Filing fees? No. Annual reporting to IRS? Yes, if plan is subject to ERISA. Nondiscrimination coverage rules? Yes, except for "true" churches. Generally, the right to make salary deferrals must be universally available. Nonelective employee contributions in non-governmental plans must be subject to coverage and nondiscrimination tests. Matching contributions are subject to Actual Contribution Percentage (ACP) test. Trustee required? No. Plan-to-plan transfers? Between 403(b) plans. Rollovers? To 403(b), 401(k) or governmental 457(b) plan or to an IRA. Permitted investments? Annuity contracts, custodial accounts (with mutual funds), life insurance (infrequent), or retirement income account (churches) only. Loan provisions? Yes, if permitted by plan or contract. Subject to IRC and/or ERISA limitations. Eligibility requirements? Elective deferrals — "universal availability" for all employees; exceptions include employees normally working less than 20 hours per week or employer may require a $200 annual minimum. Employer matching contributions — subject to IRC and ERISA rules, including later of one "year of service" or age 21, unless plan offers immediate vesting, then later of two years of service or age 21. Eligibility for annual employer contributions? According to years-of-service definition (but could be separate hours requirement or last-day-of-plan-year requirement) in the plan, subject to limitations. Annual matching employer contribution? Flexible; amount stated in plan document. Maximum tax deduction? Not applicable, as only tax-exempt entities can sponsor. Maximum employer and employee contributions? Combined employer and employee contributions may not exceed 100% of the employee's compensation up to a maximum of $45,000 (indexed for 2007). Maximum employee contributions? Each eligible employee may contribute up to $15,500 in 2007. Elective deferral cap expansion? Yes (if eligible), up to $3,000 annually, with a lifetime maximum of $15,000; eligibility based on years of service, type of employer and prior contribution history. Elective deferral changes? Can stop elective deferrals at any time; other changes as often as plan or employer permits. Age based catch-up contributions? Employees age 50 or older may contribute an additional $5,000 in 2007. Vesting? Employee contributions are vested 100% immediately. Employer matching contributions are vested according to employer's vesting schedule as permitted by IRC and, if applicable, ERISA. Integration with Social Security? No. Distributions to employee? Determined by plan provisions, including the employee's vesting percentage, and applicable tax laws. However, minimum distributions are generally required at age 70½ or retirement, whichever is later. Employee pre-tax contributions cannot be distributed prior to age 59½, death, disability, retirement, separation from service, or hardship. #40199