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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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As mutual fund loan payments are made, principal and interest will be credited to the account. If a participant
takes a full distribution, the loan balance is offset and becomes a taxable event. If a participant dies, the loan is
deemed distributed and a tax form is issued to the estate of the participant.
Loans may be repaid in full at any time. If the loan is repaid in full before the end of the loan term, loan interest due
is prorated. IRS regulations require that payments be made at least quarterly. If payment is postmarked more than
30 days after the payment due date for the mutual fund product or received and applied to the account more than
90 days after the payment due date for the annuity product and mutual fund product, the loan is considered in
default and the remaining amount will be immediately due. The loan will be immediately defaulted and reported on
Form 1099R as a taxable distribution for federal tax purposes.
Bank-rejected checks or individual ACHs for loan payments are reversed out of the record keeping system
from each participant's affected account
(3.13)
. For plan sponsor ACH rejects, the plan sponsor is contacted to
resubmit the ACH. Quarterly reconciliations are performed and reviewed/approved by management to ensure
that all bank balances are reported accurately. Separate general ledger accounts are established for each bank
account. Cash account reconciliations are prepared and completed according to the AIG corporate account
reconciliation policy
(3.6)
.
Plan Administrator (Plan Sponsor) Directed Transfers
Plan sponsors may elect to transfer existing plan assets in addition to current remittances as plan sponsor
directed transfers. The transfer of existing assets requires significant planning prior to transfer. This often includes
coordination amongst the VALIC Advisor, Institutional Services, and other operations business units. VALIC follows
the appropriate Internal Revenue Code, Department of Labor (DOL), and Plan Document provisions with regard to
the transfer. In certain circumstances, VALICmay engage the plan sponsor in the participant notification process.
Processing instructions are provided in electronic format by the plan sponsor or other third party and must balance
to the assets transferred for the transfer to be executed.
III. Description of the VALIC Defined Contribution Plan Administration System