UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 11-K
 
(Mark One)
 
x	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
 
For the fiscal year ended: December 31, 2020
 
OR
 
¨ 	TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
 
For the transition period from ____________ to _____________
 
Commission file number: 1-16725
 
The Principal Select Savings Plan for Employees
(Full title of the plan)
 
Principal Financial Group, Inc.
 
(Name of Issuer of the securities held pursuant to the plan)
 
711 High Street
Des Moines, Iowa 50392
(Address of principal executive offices) (Zip Code)

 

 

 
Report of Independent Registered Public Accounting Firm
 
To the Plan participants and the Benefit Plans Administration Committee
Principal Financial Group, Inc.
 
Opinion on the Financial Statements
 
We have audited the accompanying statements of net assets available for benefits of The Principal Select Savings Plan for Employees (the Plan) as of December 31, 2020 and 2019, and the related statement of changes in net assets available for benefits for the year ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2020 and 2019, and the changes in its net assets available for benefits for the year ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
 
Basis for Opinion
 
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
Supplemental Schedule
 
The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2020, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
 
We have served as the Plan’s auditor since at least 2001, but we are unable to determine the specific year.
 
/s/ Ernst & Young LLP
 
Des Moines, Iowa
 
June 23, 2021

2

The Principal Select Savings Plan for Employees
 
Statements of Net Assets Available for Benefits
 
 	 	December 31,	 	
 	 	2020	 	 	2019	 	
Assets	 	 	 	 	 	 	 	 	
Investments at fair value:	 	 	 	 	 	 	 	 	
Unallocated investment options:	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	2,379,704	 	 	$	2,144,958	 	
Guaranteed interest accounts	 	 	29,901,810	 	 	 	30,880,909	 	
Separate accounts	 	 	2,136,550,326	 	 	 	1,978,759,839	 	
Principal Financial Group, Inc. Employee Stock	 	 	 	 	 	 	 	 	
Ownership Plan	 	 	96,493,917	 	 	 	100,996,238	 	
Collective investment trusts	 	 	833,940,817	 	 	 	696,680,506	 	
Self-directed brokerage account	 	 	4,163,091	 	 	 	2,910,426	 	
Total invested assets at fair value	 	 	3,103,429,665	 	 	 	2,812,372,876	 	
Plan interest in Master Trust Investment Account	 	 	 	 	 	 	 	 	
at contract value	 	 	200,870,948	 	 	 	128,164,442	 	
Total investments	 	 	3,304,300,613	 	 	 	2,940,537,318	 	
 	 	 	 	 	 	 	 	 	
Receivables:	 	 	 	 	 	 	 	 	
Contributions receivable from employer	 	 	2,478,479	 	 	 	2,129,152	 	
Contributions receivable from participants	 	 	755	 	 	 	1,164	 	
Notes receivable from participants	 	 	18,885,249	 	 	 	19,632,765	 	
Other receivables	 	 	9,204	 	 	 	—	 	
Total receivables	 	 	21,373,687	 	 	 	21,763,081	 	
Net assets available for benefits	 	$	3,325,674,300	 	 	$	2,962,300,399	 	
 
See accompanying notes.
 
3

The Principal Select Savings Plan for Employees
 
Statement of Changes in Net Assets Available for Benefits
 
 	 	For the	 	
 	 	year ended	 	
 	 	December 31,	 	
 	 	2020	 	
Additions	 	 	 	 	
Investment income:	 	 	 	 	
Interest	 	$	343,435	 	
Dividends	 	 	4,489,298	 	
Net appreciation of investments	 	 	397,903,079	 	
Interest in Master Trust Investment Account	 	 	3,297,620	 	
Total investment gain	 	 	406,033,432	 	
 	 	 	 	 	
Interest income on notes receivable from participants	 	 	1,201,328	 	
 	 	 	 	 	
Contributions:	 	 	 	 	
Employer	 	 	53,722,787	 	
Participants	 	 	115,733,105	 	
Total contributions	 	 	169,455,892	 	
Total additions	 	 	576,690,652	 	
 	 	 	 	 	
Deductions	 	 	 	 	
Benefits paid to participants	 	 	209,354,072	 	
Transfers to affiliated plans, net	 	 	2,334,457	 	
Administrative expenses	 	 	1,628,222	 	
Total deductions	 	 	213,316,751	 	
Net increase	 	 	363,373,901	 	
 	 	 	 	 	
Net assets available for benefits at beginning of year	 	 	2,962,300,399	 	
Net assets available for benefits at end of year	 	$	3,325,674,300	 	
 
See accompanying notes.
 
4

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements
 
December 31, 2020
 
1. Significant Accounting Policies
 
Basis of Accounting
 
The accounting records of The Principal Select Savings Plan for Employees (the Plan) are maintained on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP).
 
Valuation of Investments and Income Recognition
 
Investments held by the Plan are stated at fair value, which is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (an exit price). See Note 4 for further discussion and disclosures related to fair value measurements.
 
Interest income is recorded as earned. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
 
Notes Receivable From Participants
 
The notes receivable from participants are reported at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when earned.
 
Payment of Benefits
 
Benefits are recorded when paid.
 
Risks and Uncertainties
 
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market volatility, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.

5

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
1. Significant Accounting Policies (continued)
 
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes and supplemental schedule. Actual results could differ from those estimates.
 
Recent Accounting Pronouncement
 
In August 2018, the Financial Accounting Standards Board issued authoritative guidance on fair value measurement disclosures under ASC Topic 820. This guidance was adopted retrospectively in 2020 and did not have a material impact on the Plan’s financial statements.
 
2. Description of the Plan
 
The Plan is a defined contribution 401(k) plan that was established January 1, 1985. The Plan is available to employees and field managers of Principal Life Insurance Company (Principal Life) and its subsidiaries or affiliates (the Company) who meet eligibility requirements. The Plan Sponsor is Principal Financial Group, Inc. (PFG), the ultimate parent of Principal Life.
 
Information about the Plan, including eligibility, and benefit provisions is contained in the Summary Plan Description. Copies of the Summary Plan Description are available from Principal Life’s Human Resources Benefits Department or the Company’s intranet. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
 
The Plan Administrator is responsible for the control and administration of the Plan. The Plan Administrator is the Benefit Plans Administration Committee (BPAC). For the purposes of investment and protection of Plan assets, the named fiduciary of the Plan is the Benefit Plans Investment Committee. The Plan is funded through a trust fund that holds group annuity contracts issued by Principal Life and collective investment trusts (CITs) issued by Principal Global Investors Trust Company (PGITC), an indirect wholly owned affiliate of PFG. The PFG Employee Stock Ownership Plan (ESOP), which consists of common stock of PFG, is held in a separate trust. The Trustees of the Trust that hold the group annuity contracts and CITs are employees of Principal Life. Bankers Trust is the Trustee of the Trust that holds PFG common stock in the ESOP. Delaware Charter Guarantee & Trust Company, doing business as Principal Trust Company, an affiliate of PFG, is the Directed Trustee of the self-directed brokerage account (SDBA). Principal Life is the recordkeeper of the Plan.
 
6

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
2. Description of the Plan (continued)
 
Contributions
 
On January 1, 2006, the Company made several changes to the retirement program. Participants who were age 47 or older with at least ten years of service on December 31, 2005, could elect to retain the prior benefit provisions under the qualified defined benefit retirement plan and the Plan and forgo receipt of the additional benefits offered by amendments to the Plan. The participants who elected to retain the prior benefit provisions are referred to as “Grandfathered Choice Participants.”
 
Matching contributions for participants other than Grandfathered Choice Participants were increased from 50% to 75% of deferrals, with the maximum matching deferral increasing from 6% to 8% of eligible pay-period compensation.
 
Participant Accounts
 
Each participant’s account is credited with the participant’s contributions and the Company’s matching contributions. The participant’s account also receives an allocation of plan earnings and administrative expenses. Plan earnings are allocated based on the participant’s share of net earnings or losses of their respective elected investment options. Allocations of administrative expenses are based on the participant’s account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
 
Vesting
 
Participants are eligible for immediate entry into the Plan with vesting at 100% after three years. The funds accumulate along with interest and investment return and are available for withdrawal by participants at retirement, termination, or when certain withdrawal specifications are met. The participants may also obtain loans of their vested accrued benefit, subject to certain limitations described in the governing document (the Plan Document). The federal and state income taxes of the participant are deferred (except in the case of Roth deferrals) on the contributions until the funds are withdrawn from the Plan.
 
Forfeitures
 
Upon termination of employment, participants forfeit their non-vested balances. Forfeited amounts are used to reduce Company contributions. As of December 31, 2020 and 2019, forfeited non-vested account balances totaled $17,042 and $20,531, respectively. In 2020 and 2019, employer contributions were reduced by $1,282,024 and $1,226,854, respectively, from forfeited non-vested accounts.

7

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
2. Description of the Plan (continued)
 
Participant Loans
 
The Plan provides for loans to active participants, which are considered a participant-directed investment of his/her account. The loan is a Plan asset, but only the borrowing participant’s account shares in the interest paid on the loan or bears any expense or loss incurred because of the loan. The rate of interest is 2% higher than the Federal Reserve “Bank Prime Loan” rate at the time of the loan. The rate is set the day a loan is approved. Loans merged into the Plan come with existing rates at the time of the merger.
 
The loan rates were as follows:
 
Participant Loan Dates	 	Rates	 	
January 1, 2013 to December 16, 2015	 	 	5.25	%	
December 17, 2015 to December 14, 2016	 	 	5.50	%	
December 15, 2016 to March 21, 2017	 	 	5.75	%	
March 22, 2017 to June 20, 2017	 	 	6.00	%	
June 21, 2017 to December 19, 2017	 	 	6.25	%	
December 20, 2017 to March 27, 2018	 	 	6.50	%	
March 28, 2018 to June 19, 2018	 	 	6.75	%	
June 20, 2018 to October 2, 2018	 	 	7.00	%	
October 3, 2018 to December 25, 2018	 	 	7.25	%	
December 26, 2018 to August 6, 2019	 	 	7.50	%	
August 7, 2019 to September 24, 2019	 	 	7.25	%	
September 25, 2019 to November 5, 2019	 	 	7.00	%	
November 6, 2019 to March 3, 2020	 	 	6.75	%	
March 4, 2020 to March 10, 2020	 	 	6.68	%	
March 11, 2020 to March 17, 2020	 	 	6.25	%	
March 18, 2020 to March 24, 2020	 	 	5.82	%	
March 25, 2020 to December 31, 2020	 	 	5.25	%	
 
Plan Termination
 
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event the Plan terminates, affected participants will become fully vested in their accounts.
 
8

 
The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
3. Income Tax Status
 
The Plan has received a determination letter from the Internal Revenue Service (the IRS) dated October 12, 2017, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended and restated. The Plan and the Trust are required to operate in conformity with the terms of the Plan Document and the Code to maintain the tax-exempt status of the Trust. BPAC and the Company believe the Plan is being operated in compliance with the applicable requirements of the Code and therefore, believe the related Trust is tax-exempt.
 
U.S. GAAP requires plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. BPAC relies on the representations of the corporate tax department regarding the tax positions taken by the Plan and has concluded that as of December 31, 2020, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions.
 
The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
 
4. Fair Value of Financial Instruments (excluding interest in Master Trust Investment Account)
 
Valuation Hierarchy
 
Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels.
 
	•	Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets. The Plan’s Level 1 assets include the Principal Financial Group, Inc. ESOP and the SDBA.	
 
	•	Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly. The Plan’s Level 2 assets include separate accounts and CITs and are reflected at the net asset value (NAV).	
 
	•	Level 3 – Fair values are based on significant unobservable inputs for the asset. The Plan’s Level 3 assets include the deferred income annuity and guaranteed interest accounts.	
 
There were no transfers between levels during 2020 and 2019.
 
9

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
4. Fair Value of Financial Instruments (excluding interest in Master Trust Investment Account) (continued)
 
Determination of Fair Value
 
The following discussion describes the valuation methodologies used for assets measured at fair value on a recurring basis. The techniques utilized in estimating the fair values of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions based on the fair value information of financial instruments presented below.
 
Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. There were no significant changes to the valuation processes during 2020 or 2019.
 
The unallocated investment options consist of a deferred income annuity, guaranteed interest accounts under a guaranteed benefit policy (as defined in section 401(b) of ERISA), and separate accounts (as defined in ERISA section 3(17)) of Principal Life. The deferred income annuity and guaranteed interest accounts are reported at fair value while the separate accounts are reported at NAV as determined by Principal Life. These unallocated investment options are non-benefit-responsive.
 
Deferred Income Annuity
 
The deferred income annuity cannot be sold to a third party; thus, the only option to exit the deferred income annuity is to withdraw or transfer the funds. The fair value for each deferred income annuity surrendered within 90 days from the date of the purchase is the purchase amount of the surrendered portion. The fair value for each deferred income annuity surrendered more than 90 days after the date of the purchase is the lesser of the guaranteed income balance or the commuted value associated with the surrendered portion of the deferred income annuity. The fair value will never be greater than and may be less than the guaranteed income balance associated with the surrendered portion of the deferred income annuity. The fair value of the deferred income annuity is reflected in Level 3.
 
Guaranteed Interest Accounts
 
The guaranteed interest accounts cannot be sold to a third party; thus, the only option to exit the guaranteed interest accounts is to withdraw or transfer the funds prior to maturity for an event other than death, disability, termination, or retirement. The fair value represents guaranteed interest account values adjusted to reflect current market interest rates only to the extent such market rates exceed contract crediting rates. This value represents contributions allocated to the guaranteed interest accounts, plus interest at the contractually guaranteed rate, less funds used to pay Plan benefits and Principal Life’s administrative expenses. The fair value of the guaranteed interest accounts is reflected in Level 3.

10

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
4. Fair Value of Financial Instruments (excluding interest in Master Trust Investment Account) (continued)
 
Separate Accounts
 
Separate accounts are designed to deliver safety and stability by preserving principal and accumulating earnings. The separate account assets include, but are not limited to, contributions invested in domestic and international common stocks, high-quality short-term debt securities, real estate, private market bonds and mortgages, and high-yield fixed income securities that are slightly below investment grade, all of which are valued at fair value. The NAV of each of the separate accounts is calculated in a manner consistent with GAAP for investment companies and is determinative of their fair value and represents the price at which the Plan would be able to initiate a transaction. The fair value of the underlying funds and securities is used to determine the NAV of the separate account, which is not publicly quoted. The fair value of the underlying mutual funds and equity securities are based on quoted prices of identical assets. The fair value of the underlying fixed income securities are based on third-party pricing vendors that utilize observable market information. The fair value of all separate accounts is reflected in Level 2.
 
One separate account invests in real estate, for which the fair value of the underlying real estate is based on unobservable inputs and used to determine the NAV of the separate account. The fair value of the underlying real estate is estimated using discounted cash flow valuation models that utilize public real estate market data inputs such as transaction prices, market rents, vacancy levels, leasing absorption, market cap rates, and discount rates. In addition, each property is appraised annually by an independent appraiser. During 2020, this specific separate account had a temporary withdrawal limitation related to turmoil in the credit markets that resulted in a sharp slowdown in the sale of commercial real estate assets. See Note 5 for further discussion related to contingencies.
 
Principal Financial Group, Inc. ESOP
 
The ESOP is reported at fair value based on the quoted closing market price of PFG’s stock on the last business day of the Plan year and is reflected in Level 1.
 
Collective Investment Trusts
 
The CITs invest in growth and value stocks of small, medium and large market capitalization companies, fixed-income securities, domestic and foreign securities, securities denominated in foreign currencies, investment companies (including index funds), securitized products, U.S. government and U.S. government-sponsored securities and derivatives. The NAV of the CITs is calculated in a manner consistent with GAAP for investment companies and is determinative of their fair value and represents the price at which the Plan would be able to initiate a transaction. The fair value of the underlying funds and securities is used to determine the NAV of the CITs. The CITs are reflected in Level 2.

11

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
4. Fair Value of Financial Instruments (excluding interest in Master Trust Investment Account) (continued)
 
Self-Directed Brokerage Account
 
Plan participants have access to a limited number of mutual funds through the SDBA. The SDBA is reflected in Level 1.
 
Assets Measured at Fair Value on a Recurring Basis
 
Assets measured at fair value on a recurring basis are summarized below.
 
 	 	As of December 31, 2020	 	
 	 	Assets	 	 	Fair Value Hierarchy Level	 	
 	 	measured	 	 	 	 	 	 	 	 	 	 	
 	 	at fair	 	 	 	 	 	 	 	 	 	 	
 	 	value	 	 	Level 1	 	 	Level 2	 	 	Level 3	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	2,379,704	 	 	$	—	 	 	$	—	 	 	$	2,379,704	 	
Guaranteed interest accounts	 	 	29,901,810	 	 	 	—	 	 	 	—	 	 	 	29,901,810	 	
Separate accounts	 	 	2,136,550,326	 	 	 	—	 	 	 	2,136,550,326	 	 	 	—	 	
Principal Financial Group, Inc. ESOP	 	 	96,493,917	 	 	 	96,493,917	 	 	 	—	 	 	 	—	 	
Collective investment trusts	 	 	833,940,817	 	 	 	—	 	 	 	833,940,817	 	 	 	—	 	
Self-directed brokerage account	 	 	4,163,091	 	 	 	4,163,091	 	 	 	—	 	 	 	—	 	
Total invested assets, excluding Plan interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
in Master Trust Investment Account	 	$	3,103,429,665	 	 	$	100,657,008	 	 	$	2,970,491,143	 	 	$	32,281,514	 	
 
 	 	As of December 31, 2019	 	
 	 	Assets	 	 	Fair Value Hierarchy Level	 	
 	 	measured	 	 	 	 	 	 	 	 	 	 	
 	 	at fair	 	 	 	 	 	 	 	 	 	 	
 	 	value	 	 	Level 1	 	 	Level 2	 	 	Level 3	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	2,144,958	 	 	$	—	 	 	$	—	 	 	$	2,144,958	 	
Guaranteed interest accounts	 	 	30,880,909	 	 	 	—	 	 	 	—	 	 	 	30,880,909	 	
Separate accounts	 	 	1,978,759,839	 	 	 	—	 	 	 	1,978,759,839	 	 	 	—	 	
Principal Financial Group, Inc. ESOP	 	 	100,996,238	 	 	 	100,996,238	 	 	 	—	 	 	 	—	 	
Collective investment trusts	 	 	696,680,506	 	 	 	—	 	 	 	696,680,506	 	 	 	—	 	
Self-directed brokerage account	 	 	2,910,426	 	 	 	2,910,426	 	 	 	—	 	 	 	—	 	
Total invested assets, excluding Plan interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
in Master Trust Investment Account	 	$	2,812,372,876	 	 	$	103,906,664	 	 	$	2,675,440,345	 	 	$	33,025,867	 	
 
Changes in Level 3 Fair Value Measurements
 
The reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2020 and 2019, was as follows:

12

 	 	For the year ended December 31, 2020	 	 	Changes in	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Unrealized	 	
 	 	Beginning	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Gains	 	
 	 	Asset	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Ending Asset	 	 	Included in Changes	 	
 	 	Balance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Balance	 	 	in Net Assets	 	
 	 	as of	 	 	 	 	 	 	 	 	 	 	 	Transfers	 	 	as of	 	 	Available for	 	
 	 	January 1,	 	 	 	 	 	 	 	 	 	 	 	In (Out) of	 	 	December 31,	 	 	Benefits Relating to	 	
 	 	2020	 	 	Interest*	 	 	Purchases**	 	 	Sales**	 	 	Level 3	 	 	2020	 	 	Positions Still Held	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	2,144,958	 	 	$	14,936	 	 	$	516,878	 	 	$	(297,068	)	 	$	—	 	 	$	2,379,704	 	 	$	14,936	 	
Guaranteed interest accounts	 	 	30,880,909	 	 	 	606,112	 	 	 	14,446,954	 	 	 	(16,032,165	)	 	 	—	 	 	 	29,901,810	 	 	 	262,677	 	
Total	 	$	33,025,867	 	 	$	621,048	 	 	$	14,963,832	 	 	$	(16,329,233	)	 	$	—	 	 	$	32,281,514	 	 	$	277,613	 	
 
 	 	For the year ended December 31, 2019	 	 	Changes in	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Unrealized	 	
 	 	Beginning	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Gains	 	
 	 	Asset	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Ending Asset	 	 	Included in Changes	 	
 	 	Balance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Balance	 	 	in Net Assets	 	
 	 	as of	 	 	 	 	 	 	 	 	 	 	 	Transfers	 	 	as of	 	 	Available for	 	
 	 	January 1,	 	 	 	 	 	 	 	 	 	 	 	In (Out) of	 	 	December 31,	 	 	Benefits Relating to	 	
 	 	2019	 	 	Interest*	 	 	Purchases**	 	 	Sales**	 	 	Level 3	 	 	2019	 	 	Positions Still Held	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	1,524,473	 	 	$	273,478	 	 	$	1,056,661	 	 	$	(709,654	)	 	$	—	 	 	$	2,144,958	 	 	$	273,478	 	
Guaranteed interest accounts	 	 	29,867,853	 	 	 	1,022,163	 	 	 	11,091,700	 	 	 	(11,100,807	)	 	 	—	 	 	 	30,880,909	 	 	 	624,154	 	
Total	 	$	31,392,326	 	 	$	1,295,641	 	 	$	12,148,361	 	 	$	(11,810,461	)	 	$	—	 	 	$	33,025,867	 	 	$	897,632	 	
 
*Includes interest and unrealized gains or losses.
** Includes contributions, transfers from affiliated and unaffiliated plans, transfers to other investments via participant election, benefits paid to participants, and administrative expenses.
 
Quantitative Information about Level 3 Fair Value Measurements
 
The following table provides quantitative information about the significant unobservable inputs used for recurring fair value measurements categorized within Level 3.
 
 	 	As of December 31, 2020	 	
 	 	Assets	 	 	 	 	 	 	 	 	 	 	
 	 	measured at	 	 	Valuation	 	Unobservable	 	Input/range	 	Weighted	 	
 	 	fair value	 	 	technique	 	input description	 	of inputs	 	average	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	2,379,704	 	 	Discounted cash flow	 	Long duration interest rate	 	2.01%  ̶  4.19%	 	 	3.19	%	
 	 	 	 	 	 	 	 	Mortality rate	 	See note (1)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Guaranteed interest accounts	 	 	29,901,810	 	 	See note (2)	 	Interest rate on account	 	0.21%  ̶  2.35%	 	 	1.10	%	
 	 	 	 	 	 	 	 	Applicable interest rate	 	0.61%  ̶  1.00%	 	 	0.66	%	
 	 	 	 	 	 	 	 	Maturity date	 	12/31/2020  ̶  12/31/2026	 	 	 	 	
 
 	 	As of December 31, 2019	 	
 	 	Assets	 	 	 	 	 	 	 	 	 	 	
 	 	measured at	 	 	Valuation	 	Unobservable	 	Input/range	 	Weighted	 	
 	 	fair value	 	 	technique	 	input description	 	of inputs	 	average	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred income annuity	 	$	2,144,958	 	 	Discounted cash flow	 	Long duration interest rate	 	2.77%  ̶  4.19%	 	 	3.60	%	
 	 	 	 	 	 	 	 	Mortality rate	 	See note (1)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Guaranteed interest accounts	 	 	30,880,909	 	 	See note (2)	 	Interest rate on account	 	0.60%  ̶  2.35%	 	 	1.26	%	
 	 	 	 	 	 	 	 	Applicable interest rate	 	2.07%  ̶  2.26%	 	 	2.10	%	
 	 	 	 	 	 	 	 	Maturity date	 	12/31/2019  ̶  12/31/2025	 	 	 	 	
 
	(1)	This input is based on an industry mortality table and a range does not provide a meaningful presentation.	
 
	(2)	If the applicable interest rate is equal to or less than the interest rate on the account, the fair market value is equal to the contract value. If the applicable interest rate is greater than the interest rate on the account, the fair market value is the contract value reduced by a percentage. This percentage is equal to the difference between the applicable interest rate and the interest rate on the account, multiplied by the number of years (including fractional parts of a year) until the maturity date.	

13

5. Contingencies
 
During the first quarter of 2020, the global spread of COVID-19 resulted in volatility in the public equities market, which also impacted the Principal U.S. Property Separate Account. Due to these and other factors, investors submitted an unusual number of withdrawal requests in a concentrated period of time. To allow for orderly administration and management benefiting all separate account investors, Principal Life implemented a pre-existing contractual limitation to delay withdrawal requests for this separate account. Certain high need payments, such as death, disability, required minimum distributions, and hardship withdrawals, were not subject to the withdrawal limitation. Other withdrawal requests were subject to the limitation and such payments were delayed until certain liquidity levels were achieved. Since the inception of the withdrawal limitation, outstanding withdrawal requests have been paid in multiple payments. Except for certain de minimis payments, payments were made proportionately among all other outstanding withdrawal requests, based upon available liquidity. All withdrawals are being transacted at the NAV price at the date of distribution. The withdrawal limitation has been in place since March 20, 2020.
 
While the outcome of any future litigation or regulatory matter cannot be predicted, management does not believe that any future litigation or regulatory matter will have a material adverse effect on our net assets available for benefits. The outcome of such matters is always uncertain, and unforeseen results can occur. It is possible that such outcomes could materially affect net assets available for benefits in a particular year.
 
6. Interest in Master Trust Investment Account
 
A portion of the Plan’s investments are in the Principal Select Stable Value Separate Account (PSSVSA), which is reported as a Master Trust Investment Account (MTIA). The MTIA was established for the investment of assets of The Principal Select Savings Plan for Employees and The Principal Select Savings Plan for Individual Field (the Plans). The Plans gain access to the PSSVSA through a group annuity contract (Contract) issued by Principal Life. Each participating plan has an undivided interest in the PSSVSA. The PSSVSA is an insurance company separate account that invests in Morley Stable Income Bond Funds (Bond Funds) and the Principal Liquid Asset Separate Account (PLASA). The Bond Funds are collective investment trusts that invest in investment-grade fixed income securities. The Bond Funds are maintained by PGITC. The PLASA is a separate account that invests in high quality short term instruments. The PSSVSA is valued at contract value as reported to the Plans by Principal Life.
 
As of December 31, 2020 and 2019, the Plan’s interest in the net assets of the MTIA was approximately 89%. Investment income and administrative expenses are allocated to the individual plans based upon each plan’s interest in the MTIA.
 
The Contract provides a crediting rate that amortizes portfolio gains and losses over time and accounts for benefit payments to the Plans’ participants at the contract value. Under the Contract, Principal Life
 
14

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
6. Interest in Master Trust Investment Account (continued)
 
agrees to pay any deficiency if the investments in the PSSVSA have been exhausted for benefit payments and the contract value is greater than zero. The objective of the PSSVSA is to preserve capital, credit relatively stable returns consistent with its comparatively low risk profile, and provide liquidity for benefit-responsive payments. The crediting interest rate is based on a formula agreed upon with Principal Life, but it may not be less than 0%. Such interest rates are reviewed on a monthly basis for resetting.
 
Certain events limit the ability of the Plans to transact at contract value with Principal Life when material event withdrawals are made, including (1) certain events that result in the termination of employment of a group of participants (including through layoffs or early retirement incentive programs instituted by the Company) representing 25% or more of the Plan Members in any calendar year, (2) a certain spin-off or sale of the Company’s business entity or location that affect more than 25% of the Plan Members, (3) certain adoptions of amendments to one of the plans, any change in practice, or any change in participant withdrawal rights under one of the plans. The Plans do not believe that the occurrence of any such material event is probable.
 
As required by Accounting Standards Codification (ASC) 962, Plan Accounting – Defined Contribution Pension Plans, the Statements of Net Assets Available for Benefits present the fair value of investments, excluding the fully benefit-responsive investment contract which is presented at contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
 
The net assets, including investments, of the MTIA was as follows:  
 
 	 	December 31, 2020	 	
 	 	MTIA	 	 	Plan interest in the MTIA	 	
PLASA	 	$	4,740,264	 	 	$	4,240,627	 	
Bond funds	 	 	219,815,469	 	 	 	196,646,289	 	
Total assets	 	 	224,555,733	 	 	 	200,886,916	 	
Payables	 	 	(17,849	)	 	 	(15,968	)	
Total net assets at contract value	 	$	224,537,884	 	 	$	200,870,948	 	
 
 	 	December 31, 2019	 	
 	 	MTIA	 	 	Plan interest in the MTIA	 	
PLASA	 	$	4,936,436	 	 	$	4,406,843	 	
Bond funds	 	 	138,636,758	 	 	 	123,763,458	 	
Total assets	 	 	143,573,194	 	 	 	128,170,301	 	
Payables	 	 	(6,563	)	 	 	(5,859	)	
Total net assets at contract value	 	$	143,566,631	 	 	$	128,164,442	 	
 
15

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
6. Interest in Master Trust Investment Account (continued)
 
Investment income for the MTIA was as follows:
 
 	 	For the year ended December 31, 2020	 	
 	 	MTIA	 	 	Plan interest in
the MTIA	 	
Interest income	 	$	3,939,943	 	 	$	3,524,662	 	
Expenses	 	 	(261,136	)	 	 	(227,042	)	
Total investment income	 	$	3,678,807	 	 	$	3,297,620	 	
 
7. Related Party Transactions
 
In addition to the transactions with parties in interest discussed herein, Principal Life provides recordkeeping services to the Plan and receives fees. There is a fee charged by Principal Life for the guarantee it provides for participant balances that allows participants to transact at contract value for the PSSVSA. Fees were paid by Plan participants. The Company may pay other Plan expenses from time to time. The ESOP received $4,439,022 in dividends from PFG in 2020.
 
These transactions are exempt from the prohibited transactions rules of ERISA.
 
8. Form 5500
 
The following table reconciles net assets available for benefits per the Statements of Net Assets Available for Benefits to the Form 5500:
 
 	 	December 31,	 	
 	 	2020	 	 	2019	 	
Net assets available for benefits per the Statements of Net Assets Available for Benefits	 	$	3,325,674,300	 	 	$	2,962,300,399	 	
Adjustments from contract value to fair value for fully benefit-responsive investment contract	 	 	6,184,572	 	 	 	1,342,884	 	
Net assets available for benefits per the Form 5500	 	$	3,331,858,872	 	 	$	2,963,643,283	 	
 
The following table reconciles the Statement of Changes in Net Assets Available for Benefits to the Form 5500:
 
 	 	December 31,	 	
 	 	2020	 	
Net change from contract value to fair value for fully benefit-responsive investment contracts	 	$	4,841,687	 	
MTIA investment income	 	 	3,297,620	 	
Net investment gain from MTIA per the Form 5500	 	$	8,139,307	 	

16

The Principal Select Savings Plan for Employees
 
Notes to Financial Statements (continued)
 
8. Form 5500 (continued)
 
GAAP requires that the Plan reports interest in fully benefit-responsive contracts at contract value, while the Form 5500 is required to report these investments at fair value.
 
17

The Principal Select Savings Plan for Employees
 
EIN: 42-1520346 Plan Number: 003
 
Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)
 
December 31, 2020
 
 	 	Description of	 	Current	 	
Identity of Issue	 	Investment	 	Value	 	
Principal Life Insurance Company*	 	Deposits in deferred income annuity	 	$	2,379,704	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in guaranteed interest accounts	 	 	29,901,810	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Small-Cap Value II Separate Account	 	 	27,238,070	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company U.S. Property Separate Account	 	 	206,725,805	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Core Plus Bond Separate Account	 	 	143,562,758	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Diversified International Separate Account	 	 	178,294,624	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Large-Cap Stock Index Separate Account	 	 	400,998,550	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Government and High Quality Bond Separate Account	 	 	48,761,737	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Mid-Cap Separate Account	 	 	278,504,298	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Origin Emerging Markets Separate Account	 	 	106,951,012	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Diversified Real Asset Separate Account	 	 	4,434,211	 	
 
18

The Principal Select Savings Plan for Employees
 
EIN: 42-1520346 Plan Number: 003
 
Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)
 
 	 	Description of	 	Current	 	
Identity of Issue	 	Investment	 	Value	 	
Principal Life Insurance Company*	 	Deposits in insurance company Inflation Protection Separate Account	 	$	37,064,123	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Large-Cap Growth I Separate Account	 	 	215,383,856	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Blue Chip Separate Account	 	 	80,619,167	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Small-Cap Growth I Separate Account	 	 	99,473,246	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Small-Cap Stock Index Separate Account	 	 	177,898,814	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Deposits in insurance company Equity Income Separate Account	 	 	130,640,055	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust Lifetime Hybrid 2010	 	 	12,708,825	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust Lifetime Hybrid 2015	 	 	4,148,567	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust Lifetime Hybrid 2020	 	 	83,521,185	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust Lifetime Hybrid 2025	 	 	43,202,459	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust Lifetime Hybrid 2030	 	 	209,549,507	 	

19

The Principal Select Savings Plan for Employees
 
EIN: 42-1520346 Plan Number: 003
 
Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)
 
 	 	Description of	 	Current	 	
Identity of Issue	 	Investment	 	Value	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2035	 	$	43,177,958	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2040	 	 	183,212,298	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2045	 	 	36,997,219	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2050	 	 	132,790,307	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2055	 	 	32,362,868	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2060	 	 	24,253,809	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid 2065	 	 	3,024,043	 	
 	 	 	 	 	 	 	
Principal Global Investors Trust Company*	 	Collective investment trust  Lifetime Hybrid Income	 	 	24,991,772	 	
 	 	 	 	 	 	 	
Principal Life Insurance Company*	 	Self-directed brokerage account	 	 	4,163,091	 	
 	 	 	 	 	 	 	
Principal Financial Group, Inc.*	 	1,945,050 shares of Principal Financial Group, Inc. ESOP	 	 	96,493,917	 	
 
20

The Principal Select Savings Plan for Employees
 
EIN: 42-1520346 Plan Number: 003
 
Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)
 
 	 	Description of	 	Current	 	
Identity of Issue	 	Investment	 	Value	 	
Loans to participants*	 	Notes receivable from participants with varying maturity dates and interest rates ranging from 3.25% to 10.25%	 	$	18,885,249	 	
 	 	 	 	$	3,122,314,914	 	
 
*Indicates party-in-interest to the Plan.
 
21

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of The Principal Select Savings Plan for Employees has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	THE PRINCIPAL SELECT SAVINGS PLAN FOR	
 	EMPLOYEES	
 	by Benefit Plans Administration Committee	
 	 	 	
Date: June 23, 2021	By	/s/ Lisa Coulson	
 	 	Lisa Coulson	
 	 	Committee Chair	
 
22

Exhibit Index
 
The following exhibit is filed herewith:
 
 	Page	
23 Consent of Ernst & Young LLP	24	

23

Exhibit 23
 
Consent of Independent Registered Public Accounting Firm
 
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-178510) pertaining to The Principal Select Savings Plan for Employees of Principal Financial Group, Inc. of our report dated June 23, 2021, with respect to the financial statements and supplemental schedule of The Principal Select Savings Plan for Employees included in this Annual Report (Form 11-K) for the year ended December 31, 2020.
 
/s/ Ernst & Young LLP
 
Des Moines, Iowa
June 23, 2021