Edgar Filing: PRINCIPAL FINANCIAL GROUP INC

employees11k.htm - Generated by SEC Publisher for SEC Filing


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, 2009

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)




		Page 1 of 22
		Exhibit Index – Page 21

Report of Independent Registered Public Accounting Firm

The Management Resources Committee

Principal Life Insurance Company

We have audited the accompanying statements of net assets available for benefits of

The Principal Select Savings Plan for Employees as of December 31, 2009 and 2008, and the

related statements of changes in net assets available for benefits for the years then ended. These

financial statements are the responsibility of the Plan’s management. Our responsibility is to

express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting

Oversight Board (United States). Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement. We were

not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included

consideration of internal control over financial reporting as a basis for designing audit

procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements, assessing the accounting

principles used and significant estimates made by management, and evaluating the overall

financial statement presentation. We believe that our audits provide a reasonable basis for our

opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects,

the net assets available for benefits of the Plan at December 31, 2009 and 2008, and the changes

in its net assets available for benefits for the years then ended, in conformity with U.S. generally

accepted accounting principles.

Our audits were performed for the purpose of forming an opinion on the financial statements

taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of

December 31, 2009, is presented for purposes of additional analysis and is not a required part of

the financial statements but is supplementary information required by the Department of Labor’s

Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income

Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management.

The supplemental schedule has been subjected to the auditing procedures applied in our audits of

the financial statements and, in our opinion, is fairly stated in all material respects in relation to

the financial statements taken as a whole.

/s/ Ernst & Young LLP

June 29, 2010

Page 2 of 22


The Principal Select Savings Plan for Employees

Statements of Net Assets Available for Benefits


	December 31
	2009	2008
Assets
Investments:
Unallocated investment options, at fair value:
Guaranteed interest accounts	$ 51,968,974	$ 52,824,799
Separate accounts of insurance company	927,833,298	750,825,585
Principal Financial Group, Inc. ESOP	60,280,300	45,034,534
Notes receivable from participants	18,460,785	18,210,049
Total invested assets	1,058,543,357	866,894,967

Contribution receivable from Principal Life Insurance
Company	184	–
Net assets available for benefits	$ 1,058,543,541	$ 866,894,967

See accompanying notes.

Page 3 of 22


The Principal Select Savings Plan for Employees

Statements of Changes in Net Assets Available for Benefits



	Year Ended December 31
	2009	2008
Investment income (loss):
Interest	$ 2,910,678	$ 3,361,323
Dividends	1,220,564	735,118
Net realized and unrealized appreciation (depreciation) in
aggregate value of investments	162,845,311	(438,848,550)
Total investment income (loss)	166,976,553	(434,752,109)

Contributions:
Principal Life Insurance Company	30,701,738	37,210,263
Employees	60,834,331	75,430,533
Transfers from affiliated and unaffiliated plans, net	–	391,098
Total contributions	91,536,069	113,031,894
	258,512,622	(321,720,215)

Deductions:
Benefits paid to participants	66,015,483	58,166,064
Transfers to affiliated and unaffiliated plans, net	536,219	–
Administrative expenses	312,346	220,093
Total deductions	66,864,048	58,386,157
Net increase (decrease)	191,648,574	(380,106,372)

Net assets available for benefits at beginning of year	866,894,967	1,247,001,339
Net assets available for benefits at end of year	$ 1,058,543,541	$ 866,894,967

See accompanying notes.

Page 4 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements

December 31, 2009

1. Significant Accounting Policies

The accounting records of The Principal Select Savings Plan for Employees (the Plan) are

maintained on the accrual basis of accounting.

Valuation of Investments

The unallocated investment options consist of guaranteed interest accounts under a guaranteed

benefit policy (described in ERISA 401(b)) and separate accounts (described in ERISA 3(17)) of

insurance company; Principal Life Insurance Company (Principal Life). The guaranteed interest

accounts and separate accounts are reported at fair value as determined by Principal Life. The

Principal Financial Group Inc. ESOP, which consists of common stock of Principal Financial

Group, Inc., the ultimate parent of Principal Life, is reported at the quoted closing market price

of the stock on the last business day of the Plan year.

These unallocated investment options are non-benefit-responsive and are valued at fair value.

The guaranteed interest accounts’ fair value is the amount plan participants would receive

currently if they were to withdraw or transfer funds within the Plan prior to their maturity for an

event other than death, disability, termination, or retirement. This 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 the insurance company's administrative expenses. The

separate accounts of insurance company represent 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 which are slightly below

investment grade, all of which are valued at fair value.

The notes receivable from participants are reported at cost (unpaid balances), which

approximates fair value.

Page 5 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various

risks such as interest rate, market, 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 the amounts

reported in the statements of net assets available for benefits.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting

principles requires management to make estimates and assumptions that affect the amounts

reported in the financial statements and accompanying notes. Actual results could differ from

those estimates.

New Accounting Pronouncements

In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position

157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability

Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4).

FSP 157-4 amended FASB Statement No. 157 (codified as Accounting Standards Codification

(ASC) 820) to provide additional guidance on estimating fair value when the volume and level of

activity for an asset or liability have significantly decreased in relation to its normal market

activity. FSP 157-4 also provided additional guidance on circumstances that may indicate that a

transaction is not orderly and on defining major categories of debt and equity securities to

comply with the disclosure requirements of ASC 820. The Plan adopted the guidance in FSP

157-4 for the reporting period ended December 31, 2009. Adoption of FSP 157-4 did not have a

material effect on the Plan’s net assets available for benefits or its changes in net assets available

for benefits.

Page 6 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

In September 2009, the FASB issued Accounting Standards Update 2009-12, Investments in

Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2009-12).

ASU 2009-12 amended ASC 820 to allow entities to use net asset value (NAV) per share (or its

equivalent), as a practical expedient, to measure fair value when the investment does not have a

readily determinable fair value and the net asset value is calculated in a manner consistent with

investment company accounting. The Plan adopted the guidance in ASU 2009-12 for the

reporting period ended December 31, 2009 and has utilized the practical expedient to measure

the fair value of investments within the scope of this guidance based on the investment’s NAV.

In addition, as a result of adopting ASU 2009-12, the Plan has provided additional disclosures

regarding the nature and risks of investments within the scope of this guidance. Refer to Note 5

for these disclosures. Adoption of ASU 2009-12 did not have a material effect on the Plan’s net

assets available for benefits or its changes in net assets available for benefits.

In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving

Disclosures about Fair Value Measurements, (ASU 2010-06). ASU 2010-06 amended ASC 820

to clarify certain existing fair value disclosures and require a number of additional disclosures.

The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each

“class” of assets and liabilities measured at fair value and provided guidance on how to

determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also

clarified the requirement for entities to disclose information about both the valuation techniques

and inputs used in estimating Level 2 and Level 3 fair value measurements. In addition, ASU

2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reasons for

any significant transfers between Levels 1, 2 and 3 of the fair value hierarchy and present

information regarding the purchases, sales, issuances and settlements of Level 3 assets and

liabilities on a gross basis. With the exception of the requirement to present changes in Level 3

measurements on a gross basis, which is delayed until 2011, the guidance in ASU 2010-06

becomes effective for reporting periods beginning after December 15, 2009.

Page 7 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

2. Description of the Plan

The Plan is a defined contribution plan (401(k) plan) that was established January 1, 1985. The

Plan is available to substantially all employees of Principal Life or its subsidiaries (the

Company). On January 1, 2006, Principal Life made several changes to the retirement program.

Employees 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 401(k) Plan and forgo receipt of the additional benefits offered by amendments to

Principal Life’s 401(k). The employees 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%. 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 Plan

document. The federal and state income taxes of the participant are deferred on the contributions

until the funds are withdrawn from the Plan.

At December 31, 2009 and 2008, forfeited nonvested account balances totaled $44,761 and

$552,625, respectively. In 2009 and 2008, employer contributions were reduced by $2,590,822

and $1,564,538, respectively, from forfeited nonvested accounts.

Although it has not expressed any intent to do so, the Company has the right to terminate the

Plan subject to the provisions of the Employee Retirement Income Security Act of 1974

(ERISA). In the event of Plan termination, participants will become fully vested in their

accounts.

Information about the Plan agreement, eligibility, and benefit provisions is contained in the

Summary Plan Description. Copies of the Summary Plan Description are available from the

Benefit Administration Department or the Intranet.

Page 8 of 22

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

February 28, 2003, 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. Once qualified, the Plan is

required to operate in conformity with the terms of the Plan document and the Code to maintain

its qualification. The Plan sponsor intends to operate the Plan in conformity with the provisions

of the Plan document and the Code. The Plan sponsor acknowledges that inadvertent errors may

occur in the operation of the Plan. If such inadvertent errors occur, the Plan sponsor represents

that it will take the necessary steps to bring the Plan’s operations into compliance with the Code,

including voluntarily and timely correcting such errors in accordance with procedures

established by the IRS.

4. Investments

Contributions are invested in unallocated guaranteed interest accounts supported by the general

account of insurance company (a pooled account invested primarily in fixed income securities

having a range of maturities); in separate accounts of insurance company, the portfolios of which

are primarily 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 which are slightly below investment grade, as appropriate for each separate account;

and The Principal Financial Group Inc. ESOP, which consists of common stock of Principal

Financial Group, Inc., the ultimate parent of Principal Life. Participants elect the investment(s) in

which to have their contributions invested.

Page 9 of 22


The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)




4. Investments (continued)

The following presents investment that represent 5% or more of the Plan’s net assets available
for benefits in 2009 and 2008. Principal Life is a party in interest with respect to these
investments.

	December 31
	2009	2008

Diversified International Separate Account	$ 89,803,495	$ 70,448,118
Large-Cap Stock Index Separate Account	82,394,133	64,065,482
International Emerging Markets Separate Account	82,278,171	45,607,591
Bond and Mortgage Separate Account	71,326,432	56,932,329
U.S. Property Separate Account	70,014,680	97,825,182
Money Market Separate Account	69,773,529	72,857,964
Small-Cap Stock Index Separate Account	62,209,141	48,923,664
Principal Financial Group, Inc. ESOP	60,280,300	45,034,534
Guaranteed Interest Accounts	*	52,824,799

*Less than 5% of the fair value of net assets available for benefits at respective date.

During 2009 and 2008, the Plan’s investments that are related to Principal Life (depreciated)
appreciated in value by $162,845,311 and $(438,848,550), respectively, as follows:

	Year Ended December 31
	2009	2008

Guaranteed interest accounts	$ (332,450)	$ 122,313
Separate accounts of insurance company	147,329,049	(384,805,975)
Principal Financial Group, Inc. ESOP	15,848,712	(54,164,888)
	$ 162,845,311	$ (438,848,550)




		Page 10 of 22


The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)




5. Fair Value of Financial Instruments

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. Our Level 1 assets include the Principal Financial Group, Inc. ESOP.

•	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. Our Level 2 assets are separate
	accounts of insurance company and all transactions are being transacted at the NAV price
	at the day of the transaction.

•	Level 3 – Fair values are based on significant unobservable inputs for the asset. Our
	Level 3 assets include guaranteed interest accounts, real estate separate accounts of the
	insurance company, and notes receivable from participants.

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. We did not make any significant
changes to our valuation processes during 2009.




	Page 11 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

5. Fair Value of Financial Instruments (continued)

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 the funds prior to maturity. The fair value of the

account is the value paid when funds are withdrawn prior to their maturity. If the applicable

interest rate is greater than the interest rate on the account, the fair 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.

Separate Accounts of Insurance Company

Net asset value (NAV) of each of the separate accounts is calculated in a manner consistent with

U.S. 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. Several of the separate accounts

invest in publicly quoted mutual funds or actively managed stocks. The fair value of the

underlying mutual funds or stock is used to determine the NAV of the separate account, which is

not publicly quoted. Some of the separate accounts also invest in fixed income securities. The

fair value of the underlying securities is based on quoted prices of similar assets and used to

determine the NAV of the separate account. 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. Currently, this specific separate account has 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. The uncertain environment led to significantly increased requests for withdrawals.

To allow for orderly administration and management benefiting all separate account investors,

Principal Life implemented a pre-existing contractual limitation to delay withdrawal requests.

Currently, certain, high need payments, such as death, disability, certain eligible retirements, and

Page 12 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

5. Fair Value of Financial Instruments (continued)

hardship withdrawals, are not subject to the withdrawal limitation. Other withdrawal requests are

subject to the limitation until certain liquidity levels are achieved, mainly via proceeds from sales

of underlying properties, rents from tenants and new investor contributions. Since the inception

of the withdrawal limitation, all sources of cash are first used to satisfy cash requirements at the

properties, meet debt maturities, maintain compliance with debt covenants and meet upcoming

separate account obligations. Outstanding withdrawal requests will be paid in multiple payments.

Except for certain de minimis payments, payments will be 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. Currently, there is no estimate of when

this restriction will end. The restriction has been in place since September 26, 2008.

Principal Financial Group, Inc. ESOP

The Principal Financial Group Inc. ESOP, which consists of common stock of Principal

Financial Group, Inc., the ultimate parent of Principal Life, is reported at the quoted closing

market price on the last business day of the Plan year.

Notes Receivable from Participants

Participant loans are reported at unpaid balances which approximates fair value. There is no

existing external exit market for these loans as all transactions are restricted to participants.

These loans cannot be assumed or sold to outside parties. There is no credit risk involved with

these loans as any participant defaults are deemed taxable distributions to the participant.

Page 13 of 22


The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)




5. Fair Value of Financial Instruments (continued)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of 2009 and 2008 are
summarized below.

		As of December 31, 2009
	Assets Measured	Fair Value Hierarchy Level
	at Fair Value	Level 1	Level 2	Level 3
Assets
Guaranteed interest account	$ 51,968,974	$ –	$ –	$ 51,968,974
Separate accounts of insurance
company:
Fixed income security	153,836,579	–	153,836,579	–
Lifetime balanced asset
allocation	131,406,126	–	131,406,126	–
U.S. large cap equity	219,973,540	–	219,973,540	–
U.S. small/mid cap equity	180,520,707	–	180,520,707	–
U.S. real estate	70,014,680	–	–	70,014,680
International equity	172,081,666	–	172,081,666	–
Principal Financial Group, Inc.
ESOP	60,280,300	60,280,300	–	–
Notes receivable from participants	18,460,785	–	–	18,460,785
Total assets	$ 1,058,543,357	$ 60,280,300	$ 857,818,618	$ 140,444,439

		As of December 31, 2008
	Assets Measured	Fair Value Hierarchy Level
	at Fair Value	Level 1	Level 2	Level 3
Assets
Guaranteed interest account	$ 52,824,799	$ –	$ –	$ 52,824,799
Separate accounts of insurance
company	750,825,585	–	653,000,404	97,825,181
Principal Financial Group, Inc.
ESOP	45,034,534	45,034,534	–	–
Notes receivable from participants	18,210,049	–	–	18,210,049
Total assets	$ 866,894,967	$ 45,034,534	$ 653,000,404	$ 168,860,029




				Page 14 of 22


The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)




5. Fair Value of Financial Instruments (continued)


Changes in Level 3 Fair Value Measurements


The reconciliation for all assets and liabilities measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) for the years ended December 31, 2009 and 2008, are
as follows:


		Year Ended December 31, 2009					Changes in Unrealized Gains (Losses) Included in Statements of Changes in Net Assets Available for Benefits Relating to Positions Still Held


		Total Realized/ Unrealized Appreciation (Depreciation)	Purchases, Sales, Issuances, and Settlements **			Ending Asset Balance as of December 31, 2009
	Beginning Asset Balance as of January 1, 2009			Transfers in (Out) of Level 3


Assets
Guaranteed interest
accounts	$ 52,824,799	$ 1,286,114	$ (2,141,939)	$ –		$ 51,968,974	$ (332,450)
U.S. real estate	97,825,181	(31,394,776)	3,584,275		–	70,014,680	(31,609,265)
Notes receivable from
participants	18,210,049	–	250,736		–	18,460,785	–
Total	$ 168,860,029	$ (30,108,662)	$ 1,693,072	$ –		$ 140,444,439	$ (31,941,715)


		Year Ended December 31, 2008					Changes in Unrealized Gains (Losses) Included in Statements of Changes in Net Assets Available for Benefits Relating to Positions Still Held


		Total Realized/ Unrealized Appreciation (Depreciation)	Purchases, Sales, Issuances, and Settlements **			Ending Asset Balance as of December 31, 2008
	Beginning Asset Balance as of January 1, 2008			Transfers in (Out) of Level 3


Assets
Guaranteed interest
accounts	$ 47,920,796	$ 1,872,970	$ 3,031,033	$ –		$ 52,824,799	$ 122,313
Separate accounts of
insurance company	131,052,835	(14,632,918)	(18,594,736)		–	97,825,181	(20,842,206)
Notes receivable from
participants	17,829,131	–	380,918		–	18,210,049	–
Total	$ 196,802,762	$ (12,759,948)	$ (15,182,785)	$ –		$ 168,860,029	$ (20,719,893)


** Includes interest, contributions, transfers from affiliated and unaffiliated plans, transfers to other investments via participant direction,
benefits paid to participants, and administrative expenses.




							Page 15 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

6. Notes Receivable From Participants

The Plan document provides for loans to active participants, which are considered a participant-

directed investment of his/her account. The loan is a Plan investment but only the borrowing

participant’s account shall share in the interest paid on the loan or bear 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, and the rate

for the loans issued in 2009 and 2008 ranged from 5.25% to 9.25%. The notes receivable balance

was reduced by $2,213,491 and $1,180,708 in 2009 and 2008, respectively, for terminated

participants that received their account balance, net of the outstanding loans, as a benefit

distribution.

7. Transactions With Party in Interest

In addition to the transactions with parties in interest discussed in Notes 4 and 5, Principal Life

provides recordkeeping services to the Plan and receives fees, which are paid through revenue

generated by Plan investments, for those services. Principal Life may pay other Plan expenses

from time to time.

8. Form 5500

Certain line items of net asset additions and deductions in the 2009 and 2008 Forms 5500 differ

from similar classifications in the accompanying financial statements. However, such differences

are not considered material and create no differences in net asset balances at December 31, 2009

and 2008.

Page 16 of 22


The Principal Select Savings Plan for Employees

	EIN: 42-0127290	Plan Number: 003

Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)

December 31, 2009

Identity of Issue	Description of Investment		Current Value

Principal Life Insurance
Company*	Deposits in guaranteed interest accounts		$ 51,968,974

Principal Life Insurance	Deposits in insurance company Small-Cap Value II
Company*	Separate Account		10,371,709

Principal Life Insurance	Deposits in insurance company Large Company
Company*	Growth Separate Account		35,763,247

Principal Life Insurance	Deposits in insurance company Money Market
Company*	Separate Account		69,773,529

Principal Life Insurance	Deposits in insurance company U.S. Property
Company*	Separate Account		70,014,680

Principal Life Insurance	Deposits in insurance company Bond and Mortgage
Company*	Separate Account		71,326,432

Principal Life Insurance	Deposits in insurance company Diversified
Company*	International Separate Account		89,803,495

Principal Life Insurance	Deposits in insurance company Large-Cap Stock
Company*	Index Separate Account		82,394,133

Principal Life Insurance	Deposits in insurance company Government and High
Company*	Quality Bond Separate Account		12,736,618

Principal Life Insurance	Deposits in insurance company Medium Company
Company*	Blend Separate Account		52,910,593


			Page 17 of 22


The Principal Select Savings Plan for Employees

	EIN: 42-0127290	Plan Number: 003

Schedule H, Line 4i – Schedule of Assets
(Held at End of Year) (continued)


Identity of Issue	Description of Investment		Current Value

Principal Life Insurance	Deposits in insurance company International
Company*	Emerging Markets Separate Account		$ 82,278,171

Principal Life Insurance	Deposits in insurance company Large Company
Company*	Value Separate Account		12,084,911

Principal Life Insurance	Deposits in insurance company Partner Large-Cap
Company*	Blend I Separate Account		39,304,219

Principal Life Insurance	Deposits in insurance company Partner Large-Cap
Company*	Growth I Separate Account		13,428,403

Principal Life Insurance	Deposits in insurance company Lifetime Strategic
Company*	Income Separate Account		4,923,295

Principal Life Insurance	Deposits in insurance company Partner Mid-Cap
Company*	Growth Separate Account		30,107,869

Principal Life Insurance	Deposits in insurance company Partner Small-Cap
Company*	Growth II Separate Account		24,921,395

Principal Life Insurance	Deposits in insurance company Small-Cap Stock
Company*	Index Separate Account		62,209,141

Principal Life Insurance	Deposits in insurance company Partner Large-Cap
Company*	Value Separate Account		27,553,165

Principal Life Insurance	Deposits in insurance company Principal Financial
Company*	Group, Inc. Stock Separate Account		9,445,462



			Page 18 of 22


The Principal Select Savings Plan for Employees

	EIN: 42-0127290	Plan Number: 003

Schedule H, Line 4i – Schedule of Assets
(Held at End of Year) (continued)


Identity of Issue	Description of Investment		Current Value

Principal Life Insurance	Deposits in insurance company Lifetime 2010
Company*	Separate Account		$ 11,571,106

Principal Life Insurance	Deposits in insurance company Lifetime 2020
Company*	Separate Account		32,649,046

Principal Life Insurance	Deposits in insurance company Lifetime 2030
Company*	Separate Account		37,616,099

Principal Life Insurance	Deposits in insurance company Lifetime 2040
Company*	Separate Account		27,183,533

Principal Life Insurance	Deposits in insurance company Lifetime 2050
Company*	Separate Account		17,463,047

Principal Financial	2,507,500 shares of Principal Financial Group, Inc.
Group, Inc.*	ESOP		60,280,300

Various participants	Notes receivable from participants with interest rates
	ranging from 5.25% to 10.50%		18,460,785
Total invested assets			$1,058,543,357

*Indicates party in interest to the Plan.




			Page 19 of 22


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 29, 2010	By /s/ Ralph C. Eucher
	Ralph C. Eucher
	Committee Member




	Page 20 of 22


Exhibit Index

The following exhibit is filed herewith:

	Page

23	Consent of Ernst & Young LLP 22











		Page 21 of 22

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-

72002) pertaining to The Principal Select Savings Plan for Employees of Principal Financial

Group, Inc. of our report dated June 29, 2010, with respect to the financial statements and

schedule of The Principal Select Savings Plan for Employees included in this Annual Report

(Form 11-K) for the year ended December 31, 2009.

/s/ Ernst & Young, LLP

Des Moines, Iowa

June 29, 2010

Page 22 of 22