IRA Features and Benefits

Traditional IRA: Features and Benefits

While there are several types of traditional IRAs available, they all offer tax-deferred advantages for your retirement. This means that when you invest in an IRA you do not pay taxes until you withdraw funds from your account.

As a personal retirement savings arrangement, an IRA can be funded with a specified dollar amount each year. As of 2008, you may contribute a maximum of $5,000 to your IRA account. If you are age 50 or over, you are allowed to make an additional $1,000 “catch up” contribution.

Additionally, IRAs offer flexibility in investment selection. You can select the type of investment option suited to your needs, such as securities, bonds, annuities or money market instruments. This allows you to take into consideration your risk tolerance, time horizon and other personal factors that influence your investment decisions.

Common Features and Benefits of Traditional IRAs:

• Provide tax-deferred growth: you pay taxes upon withdrawal

• Allow compounded growth: you have more money working for you

• Promote personal savings: you can contribute a specified dollar amount each year

• Offer investment style flexibility: you select the investment option suited to your needs

Are contributions tax-deductable?

Your contributions to a traditional IRA may be fully tax deductible if your adjusted gross income (AGI) is within a certain limit. If your spouse participates in an employer-sponsored retirement plan, you may still qualify for a tax deduction. However, your contributions may be partially deductible if your household AGI exceeds the specified limit. If you participate in your employer-sponsored retirement plan and your income exceeds the limit for deductibility, you may contribute to a nondeductible IRA. This allows you to supplement your retirement savings with a program that offers the advantage of tax-deferred growth.

You are subject to required minimum distribution rules under federal law. This means you are required to begin receiving income from your IRA at age 70½, otherwise you will be subject to penalties.

Traditional IRA Disclaimer

Since all financial investments carry a risk, you should choose the type that makes you feel the most comfortable. An investment’s volatility should correspond to your risk tolerance—how much change in your investment’s value you are willing to accept.

When investing in a mutual fund IRA, the principal amount and return on investment will fluctuate. This means that an investor's shares when redeemed may be worth more or less than the original cost. Past investment performance is not a guarantee of future return.

Important Notice about Purchasing a VALIC Annuity From Us

To help the government fight the funding of terrorism and money-laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who purchases certain annuity products. What this means for you: When you purchase certain annuity products from us, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may ask to see your driver's license or other identifying documents.

Annuities and insurance products are offered by The Variable Annuity Life Insurance Company (VALIC), AIG Annuity Insurance Company, AIG-affiliated insurance companies or other approved companies. Each underwriting company is financially responsible for its own insurance products.

Securities and investment advisory services are offered by AIG Retirement Advisors, Inc., member FINRA, SIPC and an SEC-registered investment advisor.

AIG Retirement is the marketing name for the group of companies comprising AIG Retirement Advisors, Inc.; AIG Retirement Services Company; and The Variable Annuity Life Insurance Company (VALIC); each of which is a subsidiary of American International Group, Inc.

This information 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. For legal or tax advice concerning your situation, consult your attorney or professional tax advisor.