Now that you have reviewed (and clearly understand) Principal Life Insurance Company responsibilities to the regulatory community (both State and Federal) as it relates to YOUR money that you have so freely given to the insurance company, to own permanently, UNTIL death if that is possible, you have to be asking yourself, “Why in the HELL would I put my future life savings with a company that has no responsibility to protect MY interest?
The answer is simple… your elected representatives, whether they are State or Federal, convinced you that it was “safe” to do so. After all, when issues come forward related to a better way to protect you, the present taxpayer that is trying to save YOUR money for retirement, those same individuals turn to the State and Federal regulators for answers, and as you most certainly learned by now, these individuals love to “pass the buck.” In fact, billions of dollars every year is handed out to those same elected legislators by insurance company lobbyists, to make sure they can continue to convince you to give your savings to these same insurance companies. With that said, what follows in this post is a clean, regulator‑grade answer you’re looking for — “what Principal is actually required to do under ERISA when it files Form 5500 and Schedule D.” This is the legal baseline against which you can measure what Principal should have done, but did they violate the law?
What Principal Is Required to Do Under ERISA When Filing Form 5500 & Schedule D
Below is the precise, statutory and regulatory minimum Principal must meet when it files Form 5500 as a Direct Filing Entity (DFE) for its Pooled Separate Accounts (PSAs) — the sole structure used for Group Variable Annuities in 401(k) plans. It is the MINIMUM requirement Principal MUST meet to treat millions of 401(k) savers whose money is collected every year in the BILLIONS of dollars, money that is used by Principal to buy investments, NOT for you, whose money was used to buy these investments… Nope! The money is spent to buy Principal-owned investments that you, the investor, own merely a “Unit-of-Value” in, as determined by Principal affiliates each day, week, month, and year.
Everything herein described is grounded in the DOL’s own instructions and ERISA’s reporting provisions.
Citations:
- Principal Must File an Accurate Form 5500 for Each PSA (DFE)
✔ File a Form 5500 every year for each PSA
Because a PSA is a Direct Filing Entity, Principal is legally obligated to file a standalone Form 5500 for each separate account used by ERISA plans.
✔ Ensure the filing “accurately reflects the characteristics and operations” of the PSA
This is explicit in the DOL instructions.
Accuracy is not optional — it is the core legal requirement.
✔ Report the PSA’s financial condition, investments, and operations
This includes:
- Total assets
- Liabilities
- Net assets
- Income/expense
- Transactions
- Fees
- Investment holdings (unless exempted via DFE rules)
✔ File electronically through EFAST2
Paper filings are prohibited.
- Principal Must Provide Complete and Accurate Schedule D Data…. Schedule D is the cross‑reference schedule that links:
- The PSA’s Form 5500 to every ERISA plan that invested in it.
- Principal must report five mandatory data elements for each PSA:
Required Data Elements (per DOL instructions)
- Full legal name of the PSA
- Full legal name of the sponsoring entity (Principal Life Insurance Company)
- EIN and Plan/Entity Number (PN) of the PSA
- Entity type code (“P” for Pooled Separate Account)
- Dollar value of each plan’s interest in the PSA at year‑end
These are not optional.
They must be correct.
They must match what the investing plans report.
- Principal Must Ensure Cross‑File Consistency… ERISA requires that:
✔ The PSA’s Form 5500 must match the plans’ Schedule D filings
If Principal lists a plan as an investor, that plan must list the PSA — and vice versa.
✔ The PSA’s reported asset values must match the plans’ reported values
If Principal reports a plan’s interest as $X, the plan must report the same $X.
✔ The PSA must file its own Form 5500 if plans rely on it for reporting relief
If Principal fails to file, every plan must report the underlying assets themselves — a legal impossibility for most plans.
This is why falsifying Schedule D is so serious:
it breaks the entire cross‑reference system ERISA relies on.
- Principal Must Report Accurate Valuation Information… Even though insurers escape SEC valuation rules, ERISA still requires:
✔ Accurate reporting of the PSA’s year‑end value
✔ Accurate reporting of each plan’s share of that value
✔ Accurate reporting of all investment arrangements and transactions
If Principal internally manufactures unit values, those values must still be:
- Consistent
- Non‑misleading
- Accurately reported
- Reconciled to the PSA’s financial statements If they are not, the Form 5500 is materially false.
- Principal Must Not Misrepresent Who Invested in the PSA
ERISA requires that Principal:
✔ Report only actual ERISA plans that held assets in the PSA
✔ Not list non‑investors as investors
✔ Not omit actual investors
✔ Not commingle ERISA and non‑ERISA assets without proper reporting
Misreporting investors is a violation because Schedule D is a federal legal document signed under penalty of perjury.
- Principal Must Maintain Records Supporting Every Entry… Under ERISA §107:
✔ Principal must keep all records supporting the Form 5500 and Schedule D for at least 6 years
This includes:
- Unit‑value calculations
- Asset statements
- Plan‑level allocations
- Transaction records
- Fee assessments
- Reconciliation worksheets…failure to maintain or produce these records is itself a violation.
- Principal Must Not Make Materially False Statements… This is the enforcement hook.
Under ERISA §501 and 18 U.S.C. §1027:
✔ It is a federal crime to knowingly make a false statement or conceal a material fact in a Form 5500 filing
This includes:
- Listing plans that were not investors
- Omitting plans that were investors
- Misstating asset values
- Misrepresenting the PSA’s structure
- Misreporting the PSA’s EIN or PN
- Misreporting the PSA’s entity type
- Misrepresenting the PSA’s financial condition… This is exactly where Principal is exposed.
- Principal Must Ensure the Filing Is Signed Under Penalty of Perjury… The signer (usually a Principal officer) certifies that:
“To the best of my knowledge and belief, the filing is true, correct, and complete.”
If the Schedule D is falsified, the signature is a false federal certification.
In One Sentence… Principal is required to file a complete, accurate, and truthful Form 5500 and Schedule D for each PSA, correctly identifying all investing plans, reporting accurate valuations, maintaining supporting records, and ensuring cross‑file consistency — all under penalty of perjury.
References (2)
12025 Instructions for Form 5500 Annual Return/Report of Employee …. https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2025-instructions.pdf
2Form 5500 Schedule D: Filing Requirements and Instructions. https://legalclarity.org/form-5500-schedule-d-filing-requirements-and-instructions/