How I Changed My Principal 401(k) Contribution and Deferral
Changing your Principal 401(k) contribution easy, and making a small change now could have a huge impact on your retirement. Here's how I did it.
At our company, LendEDU, our 401(k) plan is managed by Principal. Principal is one of the largest investment management firms in the country and a popular 401(k) manager.
I recently increased my 401(k) contribution from 6% to 8%. I’ve been under contributing to my 401(k) and prioritizing my student loan payoff, but I’d like to get a little closer to the 2019 maximum contribution of $19,000. The process of updating your contribution, or deferral as it is sometimes called, is fairly easy and can be done online in three easy steps.
Go to the Principal.com website, and in the top right corner click to drop down labeled Log In. Next, click the option that says Personal and then enter your username and password. You will also have the option to recover your username and password if you’ve forgotten either. And for new users, you will be able to create an account that syncs with your employer.
You can also call (800) 986-3343 and talk with a Principal representative who can help you get set up.
Once logged in, click the Contributions tab on the dropdown, and then selectManage Contributions from the available options.
You can allocate your contributions to both a pre-tax traditional 401(k) or an after-tax Roth 401(k), depending on what your employer offers. You can also choose to set your contribution as either a percentage of your paycheck or as a fixed dollar amount, and you have the ability to increase or decrease your contribution amount whenever you want.
Personally, I use the Roth 401(k) and contribute 8% of my paycheck after taxes. I like Roth contributions because although I have to pay taxes on this money now, I won’t any taxes on it in retirement.
Click Review & submit changes, and then click Submit contribution changes to send a notification to your employer.
From here, your employer will receive a notification that changes need to be made to your payroll. Depending on your employer, it may take one to two payroll cycles for the changes to be processed. You will see a notification on your login screen saying “Contribution change pending” until the change is processed by your employer.
At our company, 401(k) contribution changes are typically processed in one payroll cycle.