Text Size A A A

Glossary of Financial Terms

This section contains a condensed listing of words and phrases that are commonly used in retirement planning.

Glossary: 1 - 10

401(a), 403(a) Plans:Retirement plans sponsored by a business or organization for its employees. Contributions are generally pretax and the earnings grow tax deferred. In most cases, income taxes are payable upon withdrawal. Federal restrictions and a 10% federal tax penalty can apply to withdrawals taken prior to age 59½.

401(k) Plan:A defined contribution plan generally offered by a for-profit business to its employees that allows employees to set aside tax-deferred contributions for retirement purposes. Some governmental entities may also have grandfathered 401(k) plans. In some cases, employers will match their employees’ contributions to a certain percentage or dollar amount. In most cases, income taxes are payable upon withdrawal. Federal restrictions and a 10% federal tax penalty can apply to withdrawals taken prior to age 59½.

403(b) Plan:A tax-deferred defined contribution plan for employees of public schools and certain tax-exempt organizations. Contributions are generally pretax and the earnings grow tax deferred. In some cases, employers will match their employees’ contributions up to a certain percentage or dollar amount. In most cases, income taxes are payable upon withdrawal. Federal restrictions and a 10% federal tax penalty can apply to withdrawals taken prior to age 59½.

457(b) Governmental Plan:A tax-deferred, defined compensation plan for employees of state and local government institutions, including public school teachers. Income taxes are payable upon withdrawal. Federal restrictions can apply to withdrawals prior to age 70½.

1035 Exchange:A nontaxable transfer of funds from one annuity to another as provided under section 1035(a) of the Internal Revenue Code.

valic_print Print valic_email E-mail

Copyright © The Variable Annuity Life Insurance Company. All rights reserved.
Prospectuses & Reports | Terms of Use | Privacy | Business Continuity Last Updated Date January 19, 2011

Important Notice about Purchasing an 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.

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

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

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. 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.