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Plan Types Roth Individual Retirement Account (IRA) 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. Eligible investors? Taxpayers (with earned income) of any age. Eligibility is phased out for taxpayers with adjusted gross income (AGI) between $99,000 - $114,000 (single) and $156,000 - $166,000 (married, filing jointly). Tax features? After five years, investor pays no income taxes on interest and earnings if qualifying distribution: The investor has reached age 59½, or The money is paid to a beneficiary after the investor's death, or The investor becomes fully disabled, or The money is used for a home purchase no more often than once every two years (lifetime cumulative withdrawals not to exceed $10,000). Contribution deductibility? No. Contribution limits (combined with traditional IRA)? Up to $4,000 (or 100% of compensation, if less) per person in 2007, depending on AGI ($4,000 to each of two accounts if married, filing jointly). An individual age 50 or over may contribute up to an additional $1,000 (2007). Permitted investments? A broad range of investment alternatives, including annuity contracts and mutual funds. Access to account? Unlimited. However, there is a minimum five-year holding period to qualify for income-tax-free withdrawal of earnings and interest. Early withdrawal tax penalties? A 10% federal tax penalty applies to non-qualifying distributions, to the extent the distribution is taxable, unless an exception applies. Exceptions include: Distributions after the investor reaches age 59½, Disability, Death (for beneficiaries), Qualifying higher-education and medical expenses, A first-time home purchase ($10,000 cumulative lifetime limit), or Substantially equal periodic payments over the investor's life expectancy or the joint life expectancy of the investor and his/her beneficiary. No penalty tax applies to conversion of a regular IRA to a Roth IRA. However, once an amount has been converted, that amount is subject to the 10% federal income tax penalty if distributed from the Roth IRA within five years of the conversion, unless an exception applies (see exceptions above). Loan provisions? None. Rollovers? Rollovers can be made to another Roth IRA. Assignability or transferability? None. Distribution requirements? None during owner's lifetime; minimum distribution rules apply to beneficiary after owner's death. #40199