Principal Introduces New Individual 401(k)

The Principal Financial Group has introduced a new registered Individual 401(k) plan, offered through independent financial professionals, that it says combines the benefits of investment options from Principal Funds and trust services from Principal Trust Company.

According to a press release, the Individual 401(k) plan is specifically designed to give sole proprietors and their business partners an easy and effective way to save for retirement without the administrative burden or expense of a traditional 401(k). The Individual 401(k) plan gives sole proprietors access to a slate of retirement plan investment options and services comparable to those available in traditional 401(k) plans.

Program Features

Principal Trust Company serves as the directed trustee over the plan, coordinating the preparation of required plan compliance tests as well as Form 5500-EZ, if needed.

Other program features include:

  • quarterly investment statements;
  • tax form preparation;
  • completion of required deferral and contribution limit testing;
  • recordkeeping of contributions,
  • distributions and loan payments;
  • notice and calculation of required minimum distributions; and
  • toll-free customer service support.

The program also offers time-based and risk-based investment options, as well as plan loans.

Target Audience

Doug Grove, vice president – national sales director, Retirement and Investor Services says individuals who earn compensation on IRS Form 1099 may be ideal candidates for the Individual 401(k) plan, such as real estate agents, sales representatives and consultants. Participants can contribute up to $45,000 (depending on income) in 2007 ($50,000 if age 50 or older). The contribution can be adjusted from year to year to meet the participants’ needs. The plan also may include spouses who work in the business.