CSD-RT RFP Recordkeeping_Administration Services Response 3-

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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The asset purchases and/or redemptions are made resulting from contributions/payments, disbursements, or other

changes. During nightly processing, the net cash received or disbursed from each variable account is calculated.

The result of this nightly processing from the record keeping systems will determine the amount of retirement plan

receipts to invest in the variable accounts. Management reviews and authorizes the daily investment transactions

sent to each respective fund manager. The daily investment transactions are the result of the previous day’s annuity

and group mutual fund remittances/payments, withdrawals, surrenders, loan activity, charges, and TOV transactions

captured from a record keeping system daily report. Verification of the correct processing by the respective fund

manager is made by reconciling the shares outstanding in the UVT System to the mutual fund reported shares

outstanding via the NSCC Position Report, DST Vision, fax, email or by telephone. Reconciliations are independently

reviewed and approved

(9.1)

. Once verified, discrepancies are resolved with the fund manager on a daily basis.

For the annuity products, a unit value is calculated by the UVT system. For the group mutual funds, UVT receives

a daily net asset value (NAV) from each mutual fund which is sent to the record keeping system. A reconciliation

occurs for annuity and group mutual funds investment holdings recorded in the trading applications (UVT) to the

record keeping system on a daily basis

(9.2)

Cash movement is reconciled on a daily basis by comparing the expected cash movement from the trade tickets to

the actual cash movement reported by Treasury (OLE Reports)

(9.3)

The daily transfer agent activity is processed, reviewed, and reconciled in theVPATransfer Agent Instance of UVT.Wires

are generated based on the trade activity receivedwhich are sent to State Street Bank for net redemption trades and to

AIGTreasury for net purchases. Share balance confirmations are sent from the Transfer Agent Instance of UVT to each

of the entities offeringVALIC funds. The transfer agent process reconciles the share balance, NAV, and dividends

(9.4)

All day wire activity for the trades is extracted fromUVT to create the RemoteWire Upload which is reviewed and

approved to initiate the cash movement for the daily trade activity. The daily purchase or redemption of the trading

activity including total outstanding share balances is derived from the daily wire activity and sent electronically to the

fund companies to ensure that UVT and the fund companies remain in balance

(9.7)

Income Collection and Asset Valuation

Income collection and asset valuation focuses on the calculation and recording of interest and dividend income

earned on assets that have been invested. For group annuity products, variable funds are valued daily utilizing the

unit value method of accounting.

The record keeping system automatically allocates participant transactions to the investment vehicles in accordance

with participant instructions and adjusts the number of units or shares held for variable or mutual fund investments,

or the value of the fixed account, as appropriate.

For the annuity product, unit values are calculated to reflect changes in investment values and earnings, as provided

by fundmanagers, less applicable daily contract charges. Changes in unit values as a result of market- valued net

investment performance are applied to participant account balances to determine investment value change. Validation

of asset valuation is performed by reconciling the calculated change in reported NAV to the actual reported change

in NAV and the percentage change in unit value from the NAVs of the underlying investment vehicles to help prevent

or detect errors in the unit value calculations

(10.1)

. Validation of asset valuation is performed for groupmutual funds

by comparing the share values received from the NSCC to share values received by the vendor VMS

(10.2)

. The

completion of daily reconciliation for annuities is recorded on the Unit Value Report ReviewChecklist and on the Unit

Value Reasonableness Test. The completion of the daily reconciliation for groupmutual funds is recorded on the Share

Value Pricing ReviewChecklist. An independent review of the reconciliations is required

(9.5, 10.3)

III. Description of the VALIC Defined Contribution Plan Administration System