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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For group mutual funds on the record keeping system, share values are collected from the NSCC, reconciled to

confirmations received by VMS or from the fund companies directly and then uploaded to the UVT System.

Dividend payment schedules are monitored to confirm recording of distributions by fund managers

(9.6, 10.4)

. As

part of the nightly unit value calculation and share value collection processes, reported dividend and capital gain

information is entered on ex-date into the UVT System. Daily, a staff accountant reconciles the shares outstanding

in the record keeping system to the UVT System and then 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)

. Discrepancies are resolved with the fund manager on a daily basis.

In support of the group mutual fund product, pricing information is received for each mutual fund through various

sources. These include direct files received from the NSCC, from the third-party vendor VMS and also confirmed

by fax and email from the fund companies. The share values, periodic dividend, daily accrual dividend and short

and long term capital gain rates are uploaded directly into the record keeping system.

For the annuity fixed interest investment options, interest is calculated by the record keeping systembased on the

parameters in the plan sponsor’s contract. The VALIC portfolio interest crediting policy is designed tominimize

earnings fluctuations in a changing interest rate environment. The VALIC interest crediting methodology consists of:

Setting new interest rates monthly for the new deposits in that quarter. This rate is credited for the remainder

of the first calendar year, with the intent of crediting the same rate for one additional calendar year.

Setting a general “pool” rate at the beginning of the year for older deposits exceeding two calendar years.

All deposits and transfers to Fixed Account Plus with effective dates during a month will receive the monthly

declared rate until that rate is changed and VALIC declares a new interest rate at the beginning of each month.

VALIC guarantees that all deposits and interest in accounts during that month will earn that month’s interest

rate for a specified period.

Access controls prevent unauthorized individuals from accessing or changing the monthly interest rates for the

fixed accounts.

The values of the annuity fixed account are maintained by the record keeping system. Transactions affecting

fixed reserves are recorded on the record keeping system and in the VALIC general ledger. Account values are

reviewed monthly for reasonableness by Finance. A roll-forward is performed on the total fixed account values on

a monthly basis

(10.5)

. Account values from the record keeping system are reconciled to the VALIC general ledger

on a monthly basis. The interest credited is reviewed monthly for reasonableness and compared to an expected

interest calculation. If discrepancies in the interest credited exist, both Finance and Actuary research them in order

to resolve the problem and any reporting adjustments are made as necessary. The Interest Crediting Committee

reviews and approves the interest crediting rates monthly

(10.6)

III. Description of the VALIC Defined Contribution Plan Administration System