Principal 401k Review: Is it the right option?

By Altay Gursel | July 5, 2020
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All to know about Principal 401k

Before an exploration of the Principal 401k plan, a general overview of the company is first in place here. Principal Financial Group Inc. is a 140-year-old financial company defined with essential services bordering around retirement, investments, and insurance.

The FORTUNE 500® company holds a high-ranking position with its leading service of providing the best retirement plan for people far and near.

Principal 401k

Again, their tailor-made insurance and investment services for clients make them stand out from other financial service companies. Their client base includes employers, individuals, providers, and institutional investors.

With over 135 years of operating all over the world, Principal has grown, evolved and stood the test of time and trust. They are located in 25 nations and territories around the world. Principal also has a network of over 17,000 financial professionals working with them across the globe and 33 million customers.

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And guess what? They have assets of $735.3 billion from their customers worldwide. They have generated revenue of $16.2 billion, as in December 2019.

This implies you can trust them to manage your money as well. Principal, some time back, acquired the $1.2 billion worth Institutional Retirement & Trust Business from Wells Fargo. This acquisition accessed Principal to more mid-sized employers all over the globe.

One unique feature of the company is an expertise that cuts across diverse financial solution systems. Therefore, Principal can play the role of a brokerage company that serves as the middleman between buyers and sellers of financial assets.

Current Leadership of PFG

PFG Inc., being an international organization, boasts of several efficient and effective leaders who have steered the ship of the company for a while now. These leaders include:

  • Dan Houston, 57 – Chairman, President, & Chief Executive Officer
  • Deanna D. Strable-Soethout, 50 – Chief Financial Officer & Executive Vice President
  • Jon N. Couture, 53 – Senior Vice President & Chief Human Resources Officer
  • Kamal Bhatia – President & CEO-Principal Funds
  • Pedro Esteban Borda – COO & Senior Vice President International
  • Julia M. Lawler, 59 – Chief Risk Officer & Executive Vice President
  • Elizabeth B. Happe – Chief Compliance Officer & Senior Vice President
  • Timothy M. Dunbar, 62 – President, Global Asset Management

NOW, WHAT DOES PRINCIPAL FINANCIAL GROUP (PFG) DO?

Retirement. Investments. Insurance.

In simple terms, these three vital words define what Principal Financial Group Inc. does. As they work hand in hand with plan sponsors, advisors and TPAs, they come up with solutions for different aspects of your retirement, investment, and insurance program.

All these are put in place being aware of each person’s individual need.

Principal 401k Retirement Plan

As earlier noted, retirement plans are one of the three central hubs of services that Principal Financial Group Inc offers. These retirement plans include 401(k), 403(b), 401(a), ESOP, KSOP, and other types. Perhaps, one of the most subscribed retirement plans is 401(k).

What does Principal 401(k) Plan Entail?

Principal 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. The employer can match the contributions of the employee to a specific limit.

Principal 401 (k) plan makes the process of saving for retirement very easy. The program engages periodic automatic payroll deductions from your paycheck that help you make saving a habit.

Rewarding Stealthily

401 (k) is about long-term savings and growth potential. Its general idea is to allow you to save in trickles and then reap a river in the long run. The higher the amount you save, the higher the growth over time. So, a few extra dollars would eventually add up at the end of the day.

Contribution Limit

Now, to add an amount to your savings, Principal 401 (k) allows you to make contributions up to $19,500 annually. If you are 50 and above, you can choose to add $6,000 more and do so till you are 70 and a half years old. When you are 55, you can withdraw, but some specific circumstances must have surfaced. However, when you are 60, you can easily remove your money.

Plan Security

Your Principal 401 (k) plan is secure, irrespective of the state of your company. If the company becomes bankrupt, your money does not go down with it.

Why? Insurance.

Insurance is the service of ensuring security for your retirement savings. You get to keep the retirement money safe by insuring it. There are many plans under this.

Tax Benefits

Principal 401 (k) plan ensures that you enjoy a lot of tax advantages. How does this work? Usually, contributions to your organization’s plan come out of your paycheck (i.e. on a pre-tax basis). This ultimately reduces your taxable income.

Reduced taxable income implies tax benefits, and the more you contribute, the more the advantages. Now, notice. Contributing more is a stone killing two birds. Extra contributions reduce your taxable income. They also add up significantly as time flies by.

Flexibility of Service

The 401 (k) retirement plan is flexible and quite enjoyable. PFG allows you to roll over your 401 (k) retirement plan into another one if you desire. Beautifully, there is also the Principal Total Retirement Suite which encompasses different retirement plans.

The suite helps you to select the most suitable from them all, even integrating them into one, if required.

Customer Service

You can reach out to Principal through the mobile number [800-952-3343 ext. 22681] to get started on their service. You can also reach out to them through the 42 institutional-quality managers or the mobile application.

Retirement Plan Loan

In case of overwhelming debt and you need to shed the weight, Principal allows you to borrow from your account in 401 (k) plan.

However, they advise against your doing so. Resorting to the retirement plan savings will have adverse effects on the long-term accumulation that the savings were initially set out to attain. The massive compounding buildups that ordinarily would make the savings bloom would be missed out on.

For example, $20,000 in a 401(k) account at an average 7% rate could triple in 20 years. That would not be possible if you make withdrawals from the account today.

Fees and Responsibilities

In terms of expenses for the Principal Financial services, there are several. These include front end (A), level (B), and deferred (C) loads, expense ratios.

There is also the 12b-1 plus tax penalty implication if you choose to withdraw your 401 (k) before you reach the apt age. There are others as well, especially for early withdrawals from the retirement loans such as interest paid to yourself based on loan interest rates over time and so forth.

What makes Principal 401k ideal for you?

International Awards and Recognition

Principal Financial Group Inc. has enjoyed a wealth of honors, right from inception and even in recent times.

These awards include the following: being recognized as one of America’s Most Responsible Companies 2020, according to a Newsweek and Statista Review of 2000 public companies, No. 198 out of 300 companies listed, (June 2019); being ranked No. 37 on Forbes and JUST Capital’s list of America’s Most JUST Companies, (November 2019); and being recognized by Barron’s as a 2020 Top 100 Most Sustainable Company in America, (February 2020).

The list is endless. With these notable awards, the service is guaranteed.

The Quality Promise

If they don’t provide quality service to you in a competent, capable and effective manner, they will either fix the problem or waive the fee for that service.

Wow! This solemn promise ensures that the Principal always delivers maximum quality services to their clients. Trustworthy hands are required to carry out dealings with money meant for others.

Customized Services & Flexibility

Different players come to sit and discuss on the best 401 (k) plan to implement for you that would fit in best to your personal investment goals. Principal with sponsors, advisors and TPAs come together to review your goals and agree on solutions that would best fit into your plans.

Easy integration is introduced with payroll providers to initiate a seamless savings transaction. This is too good to resist.

Client Education

Another outstanding feature of the Principal services is the fact that they conduct education, sensitization and engagements of participants to drive better outcomes.

Workplace Excellence

In February 2019, PFG was recognized as one of 100 companies to be named one of the World’s Most Ethical Companies by the Ethisphere Institute.

Ethisphere is an institute which recognizes organizations that have had a material impact on the way business is conducted by fostering a culture of ethics and transparency at every level of the company.

This is the ninth year Ethisphere has recognized Principal. Again, Pensions & Investments, in December 2019, declared Principal Financial Group Inc. as one of the Best Places to Work in Money Management for the 8th consecutive year. This is huge!

If I were you, I would not look further as regards where to invest my money and secure my future.

Experience

With over 135 years of expertise as a Financial Service Provider, Principal’s experience in the business is dependable.

That gives them the leverage of being trustworthy. Furthermore, the evolving nature of the company and how it has adapted to the current and trending needs of the customers place them as a remarkable company to consult for financial solutions.

This attribute of being rich in experience sets them apart.

Closing Remarks

The world is changing, even the financial world. Some changes are sustainable; some are not. To opt for safe and sustainable ones, the smart customer would pick the company that offers the best financial solutions.

The smart customer will choose the company that can adapt to his needs and goals, as well as stands the test of time. If this description aligns with your thoughts, Principal Financial Services is highly recommended for you. PFG is indeed your place of peace and security.

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