401(k) balances climb at Principal as savers hold course

Principal Financial Group's recordkeeping arm, one of the largest in the country, showed retirement account balances rebounding sharply in the second quarter of 2026. Average balances rose 9.6% from the previous quarter. They climbed 12.6% from a year earlier, according to data the firm shared with InvestmentNews.

The gains came with no obvious shift in participant behavior. Teresa Hassara, Principal's SVP of Workplace Savings & Retirement Solutions, told InvestmentNews that participant-weighted deferral rates rose 1.8% from a year earlier. Plan-weighted participation was up 1.5%. The firm's Financial Well-Being Index found that 69% of business owners and decision-makers report employees delaying retirement. Of those employers, 71% point to rising costs of living and inflation as the main cause.

Roth 401(k) adoption numbers may matter more than the balance rebound. Overall Roth usage reached 13.1% of participants. That was 16.9% higher than a year earlier. As of June 30, 2026, 89.4% of plans on the platform offered a Roth option. The share has risen 20.6% since June 30, 2021. Millennials lead with 15.9% usage. Gen X trails at 14.5%. Gen Z sits at 9.2%, a smaller base that is still growing. Participants earning above $150,000 are driving a large share of the year-over-year increase.

For RIAs who run plan sponsor relationships, the figures carry a lesson beyond the bounce. Hassara credits consistent saving habits and long-term thinking for the improvements, not reactive decision-making. Auto-enrollment adoption rose 5.1% year over year. That suggests retirement outcomes owe more to plan design than to participant timing. The Roth momentum indicates participants are weighing tax diversification and flexibility in retirement. Advisors can bring that up when they review plan features with sponsors.

The share of Principal plans with a Roth option reached 89.4% as of June 30, 2026. That is 20.6% above the share on June 30, 2021. This is more than a plan-feature checkbox. It changes how retirement income will be taxed for a generation of savers. Advisors who work with plan sponsors should be asking whether their own platforms are keeping pace, especially as higher-income participants lead the adoption curve.