This report is intended for use by the management of the Variable Annuity Life Insurance Company ("VALIC") and its subsidiaries.
VALIC Retirement Services Company ("VRSCO") and VALIC Financial Advisors, Inc. ("VFA"), its user entities, and the independent
auditors of its user entities, and is not intended and should not be used by anyone other than these specified parties.
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Remittances and instructions are received daily and monitored to ensure they are invested effective the business
day of receipt if received in good order prior to the close of the New York Stock Exchange
(3.1)
. Good order means
that all required information and/or documentation has been supplied (including vendor allocations for each
participant) and that the funds are properly authorized and balance to the remittance file. If the remittances are
not in good order, the plan sponsor will be notified. Remittances will not be posted to participant accounts until
good order is achieved. Record keeping system prevents remittances that do not balance with their instructions
from processing in the record keeping system
(3.5)
. Inventories of outstanding remittances are monitored
and signed off by management weekly using the Outstanding Remittance Tracking, outstanding deposits, and
outstanding money in header record keeping system reports
(3.4)
.
Common Remitter
When selecting the web-based common remitter service, VRSCO is responsible for processing payroll remittances
to all participating plan sponsor's vendors. Plan sponsors transmit files through a secured upload facility or through
an encrypted FTP and remit funds payable to VRSCO. Upon receipt of the funds, the funding will be updated so
that the remittances can be automatically or manually matched to the remittance files for processing. For common
remitter, the total amount of the remittance file is matched to the amount of funding. Approval is required prior to
the release of remittances for processing. Remittances are systematically designed to only process with matching
amounts in funding and remittance file. The funding is matched automatically if there is one instructions file per
deposit. The funding is matched manually if there is more than one deposit for an instructions file.
If the funding does not match the remittance file, an exception report of unmatched items is generated. The
exception report is reviewed and the plan sponsor notified within one business day to either manually reconcile the
exceptions or return the funds as requested by the plan sponsor. All the auto-match and manual-match items are
automatically sent to the approval queue. The approval queue is monitored five times a day (8:30 a.m., 10:00 a.m.,
11:00 a.m., 12:15 p.m., 1:15 p.m.) and, if no issues found, they are approved to release the remittances. The funds
will automatically allocate among the plan sponsor's vendors based on the participant directed vendor allocations
stored in the remittance processing module. At the same time, an email is systematically sent to each vendor
informing them that their remittance report is ready for download or FTP pickup.
Provided that VRSCO receives good order remittance files and a matching wire transfer by 10 a.m. CST, VRSCO
will forward funds to the participating vendors as follows:
>
>
For those vendors that accept electronic funds transfers, wires will be initiated the same business day.
>
>
For those vendors not able to accept electronic funds transfers and as agreed to by VRSCO, VRSCO will
manually produce and mail checks within two business days.
In good order instructions and funds received after 10 a.m. CST will be processed by VRSCO the following
business day. If a file and funds are received in good order prior to 1:15 p.m. CST in the approval queue, the funds
will be processed; however, there is no guarantee that wires will be sent to the vendor the same day. Policies and
procedures are maintained to ensure processing of items. Management reviews a report daily to ensure Common
Remitter remittances are processed
(3.14)
.
III. Description of the VALIC Defined Contribution Plan Administration System