The Principal Select Savings Plan is a defined contribution 401(k) plan established in 1985, available to employees and certain affiliates of Principal Life Insurance Company. The plan is sponsored by Principal Financial Group, Inc. (PFG) and administered by the Benefit Plans Administration Committee (BPAC). Key features include:
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Description and Contributions: The plan allows participants to contribute up to 8% of eligible pay, with the company matching 75% of contributions. Participants have immediate eligibility with 100% vesting after three years. Forfeitures occur upon termination, and employer contributions were reduced by $2,492,445 in 2025 due to forfeitures.
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Participant Loans: The plan offers loans to active participants at a rate 2% higher than the Federal Reserve Bank Prime Loan rate, with existing loan rates varying based on approval dates.
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Plan Termination: The company has the right to terminate the plan at any time, though no intent has been expressed. Upon termination, participants become fully vested.
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Accounting Policies: The plan uses U.S. GAAP for accounting, with investments valued at fair value. Key policies include:
- Investments are stated at fair value, with separate accounts and CITs reported at net asset value (NAV).
- Level 1 assets include the PFG ESOP and SDBA; Level 2 assets include separate accounts and CITs; Level 3 assets include the deferred income annuity and guaranteed interest accounts.
- The PSSVSA, previously an MTIA, is valued at contract value and provides stable returns.
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Fair Value Measurements: Fair value estimates are made at specific points in time, with Level 3 assets (deferred income annuity and guaranteed interest accounts) reflecting significant unobservable inputs. The reconciliation of Level 3 fair values shows adjustments due to changes in market interest rates and other factors.
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Interest in PSSVSA: The PSSVSA, which invests in Morley Stable Income Bond Funds and PLASA, is valued at contract value. The plan has an undivided interest in the PSSVSA, which aims to preserve capital and provide liquidity for benefit payments.
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Related Party Transactions: Principal Life provides recordkeeping services and guarantees participant balances for a fee paid by participants. The ESOP received $4,618,730 in dividends from PFG in 2025.
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Form 5500 Reconciliation: The financial statements reconcile to the Form 5500, with differences primarily due to reporting requirements for benefit-responsive contracts at contract value versus fair value.
The plan maintains tax-exempt status under Section 401(a) of the Internal Revenue Code, with no uncertain tax positions recognized as of December 31, 2025.
