Can AIG Valic charge a fee for a Rollover into a similar account with a different firm?

I worked in a school district and setup a 403b with AIG Valic. I am trying to roll that money into a rollover IRA with Fidelity. After talking to Valic, they have stated that they can do the transfer, but they will need to charge me a 5% fee because I have made a contribution within the last 5 years. Is this legal? Can they charge me 5% of the value of the money that I put in myself?