1. For plan sponsor use only

2. SAVING : INVESTING : PLANNING For plan sponsor use only ADVANTAGE October 4, 2010 RRISD 457(b) & 403(b) Retirement Plans

3. For plan sponsor use only Who can participate in RRISD 403(b) or 457(b) plans? All Round Rock Employees No Exceptions 3

4. For plan sponsor use only Round Rock ISD employees have a special opportunity – 403(b) or 457(b) >Convenient and smart way to prepare for retirement >Tax-advantaged plans − Contribute money through pretax payroll deduction − Lowers your taxable income − Might reduce current income taxes >You decide how to invest contributions >Taxes on your account’s earnings are deferred until withdrawal − Can accelerate account growth − Taxes must be paid at withdrawal, and federal withdrawal restrictions apply. You might incur a 10% federal tax penalty if you withdraw funds from your 403(b) account before age 59½. 4

5. For plan sponsor use only Important IRS Timelines >59 ½ - Early Distribution >70 ½ - RMD

6. For plan sponsor use only Employee benefits of a 457(b) & 403(b) tax-qualified accounts >Investment flexibility >Tax-free loan provisions >Easy access or convenience >Go to RRISD Website 6

7. For plan sponsor use only How to enroll in RRISD Retirement Plans? Go to RRISD Website 403(b) – 32 Approved Providers 457(b) – VALIC is RRISD’s Exclusive Provider

8. For plan sponsor use only

9. RRISD 403(b) & 457(b) >Key Features/Benefits − Accepts External Rollovers − Voluntary − No Open Enrollment − Contributions – Monthly − Pre-Tax − Grows Tax Deferred

10. For plan sponsor use only You can participate in the 403(b)/457(b) plans >Each plan was established to encourage long-term savings − Vesting — The ownership of money in your account. You are always 100% vested in: Your own contributions Rollover contributions Earnings generated by contributions − Account statement — Active participants receive a quarterly report from your plan provider that documents account activity like contributions and transfers among investment options − Account consolidation —Transferring vested balances from other retirement plans can simplify personal finances Promotes suitable diversification among investments Could improve consistency with investment preferences Important—determine if your other provider’s plan imposes surrender fees 10

11. For plan sponsor use only Reduce current taxes while you save >Convenient and smart way to prepare for retirement >Tax-advantaged plan − Contribute money through pretax payroll reduction − Lowers your taxable income − Might reduce current income taxes >You decide how to invest contributions >Taxes on your account’s earnings are deferred until withdrawal − Can accelerate account growth 11

12. For plan sponsor use only RRISD >Comparison: Effect on Paycheck Without Deferred Contribution With Deferred Contribution Monthly Gross Income Deferred Contribution $500.00 $0.00 $500.00 ($25.00) Taxable Income Income Taxes Due $500.00 $125.00 $475.00 $118.75 Net Income $375.00 Difference $356.25 $18.75 Contribution of $25 only costs individual $18.75 Assumption: Individual is in the 25% tax bracket.

13. For plan sponsor use only How much can you save tax deferred? 457(b) OR 403(b) at RRISD > 100% of includible compensation up to $16,500 in 2010 > Age-based catch-up contribution - Up to $5,500 in 2010 - For participants age 50 or older

14. For plan sponsor use only Why should I invest in the RRISD 403(b) or 457(b) Retirement Plans? >Monthly pretax contributions of $100 could grow to more than $95,000 in 25 years! − But your out-of-pocket cost could be just $75 each month Monthly Contribution Reduce current tax withholding by Your out-of-pocket cost Account Value 5 years15 years25 years $25.00$6.25$18.75$1,850$8,710$23,930 $50.00$12.50$37.50$3,698$17,420$47,870 $75.00$18.75$56.25$5,550$26,120$71,800 $100.00$25.00$75.00$7,395$34,830$95,700 Assumptions: (1) 8% Growth (2) 25% tax bracket

15. For plan sponsor use only Enrolling in the RRISD plan is simple >Go to the RRISD Website >457(b) OR 403(b) − Just decide your monthly contribution and your portfolio allocation. − Minimum contribution - $25 monthly 15

16. For plan sponsor use only RRISD 457(b) or 403(b) withdrawal provisions > You can withdraw your vested account balance in the following circumstances: − Retirement or separation from service − Your death − Unforeseeable emergencies − RMD

17. For plan sponsor use only $18,128 $24,170 $57,266 $76,352 $141,760 $189,009 This chart compares the hypothetical results of contributing (1) $100 each month to a taxable account and (2) $136.99 (since contributions are pretax) to a tax-qualified retirement investment plan. The chart assumes a 25% federal marginal income tax rate and an 8% annual rate of return. Fees and charges, if applicable, are not reflected in this example and would reduce the amount shown. Income taxes are payable upon withdrawal. Federal restrictions and tax penalties may apply to early withdrawals. This information is hypothetical and only an example. It does not reflect the return of any investment and is not a guarantee of future income. 17 The advantages of a tax-deferred retirement plan

18. For plan sponsor use only Loan provisions >Participants can access their funds, tax-free, through loans (based on employer plan provisions) >Loans must be repaid in five years (10 years or more for loans to purchase a permanent residence) >Defaulted loan amounts will be taxed as ordinary income 18

19. For plan sponsor use only Rollover provisions >Direct rollovers to or from other tax-qualified plans or an IRA are not taxed >Indirect rollovers are subject to 20% federal withholding − Rollover must be completed within 60 days − Participant must repay the 20% withholding from other funds to avoid taxation on the amount withheld − Withdrawals from money rolled in from non-457(b) plans may be subject to 10% federal early withdrawal penalty if withdrawn from the 457(b) plan prior to attainment of age 59 1/2. 19

20. For plan sponsor use only 20 Do my investments support all my life goals? Managing investments in retirement >Cash >Bonds >Stocks >Mutual funds >CD’s >Money Markets

21. For plan sponsor use only Diversification >Stocks >Bonds >Cash

22. For plan sponsor use only 22 Time horizon >Liquidity >Distribution method >Certainty of time to distribution >Capital preservation or spend down

23. For plan sponsor use only 23 Neither asset allocation nor diversification ensure a profit or protect against market loss. Source: Markowitz, H. The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91. Strategic asset allocation

24. For plan sponsor use only Investment Tools >Reallocation >Rebalance >Suitability Factors − Risk − Time Horizon − Age − Investment Experience

25. For plan sponsor use only RRISD Retirement Fair Monday October 18, 2010 All approved vendors will be present

26. For plan sponsor use only

27. 27 Action items Next Steps Determine risk tolerance and time horizon Develop an investment strategy Review annually RRISD Retirement Fair >Monday- 10/18/2010

28. For plan sponsor use only

29. Questions and Answers

30. For plan sponsor use only Securities and investment advisory services are offered by VALIC Financial Advisors, Inc., member FINRA and an SEC-registered investment advisor. 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. Copyright © The Variable Annuity Life Insurance Company. All rights reserved. VC 13847 (12/2009) J75837 ER

31. SAVING : INVESTING : PLANNING For plan sponsor use only THANK YOU RRISD 403(b) & 457(b) Retirement Plans