Edgar Filing: PRINCIPAL FINANCIAL GROUP INC

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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, 2010

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 23
	Exhibit Index – Page 22

Report of Independent Registered Public Accounting Firm

The Benefit Plans Administration 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, 2010 and 2009, 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, 2010 and 2009, 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, 2010, 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

Des Moines, Iowa

June 29, 2011

Page 2 of 23


The Principal Select Savings Plan for Employees

Statements of Net Assets Available for Benefits




	December 31
	2010	2009
Assets
Investments at fair value:
Unallocated investment options:
Guaranteed interest accounts	$ 49,394,988	$ 51,968,974
Separate accounts of insurance company	1,099,709,012	927,833,298
Principal Financial Group, Inc. ESOP	75,259,838	60,280,300
Total invested assets at fair value	1,224,363,838	1,040,082,572

Receivables:
Contribution receivable from Principal Life Insurance
Company	2,194	184
Contributions receivable from participants	3,528	–
Notes receivable from participants	19,871,117	18,460,785
Total receivables	19,876,839	18,460,969
Net assets available for benefits	$ 1,244,240,677	$ 1,058,543,541

See accompanying notes.




		Page 3 of 23


The Principal Select Savings Plan for Employees

Statements of Changes in Net Assets Available for Benefits


	Year Ended December 31
	2010		2009
Additions
Investment income:
Interest	$ 1,193,796	$ 1,618,564
Dividends	1,335,560		1,220,564
Net appreciation of investments	175,195,922		162,845,311
Total investment income	177,725,278		165,684,439

Interest income on notes receivable from participants	1,201,136		1,292,114

Contributions:
Principal Life Insurance Company	32,390,305		30,701,738
Employees	62,098,514		60,834,331
Total contributions	94,488,819		91,536,069
Total additions	273,415,233		258,512,622

Deductions
Benefits paid to participants	86,214,687		66,015,483
Transfers to affiliated and unaffiliated plans, net	1,171,071		536,219
Administrative expenses	332,339		312,346
Total deductions	87,718,097		66,864,048
Net increase	185,697,136		191,648,574

Net assets available for benefits at beginning of year	1,058,543,541		866,894,967
Net assets available for benefits at end of year	$ 1,244,240,677	$ 1,058,543,541

See accompanying notes.




			Page 4 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements

December 31, 2010

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.

Valuation of Investments

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

benefit policy (described in the Employee Retirement Income Security Act of 1974, as amended

(ERISA 401(b)) and separate accounts (described in ERISA 3(17)) of 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. Employee Stock

Ownership Plan (ESOP), which consists of common stock of Principal Financial Group, Inc., the

ultimate parent of Principal Life, is reported at fair value based on 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.

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.

Page 5 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

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.

Use of Estimates

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

principles 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.

Reclassifications

Certain prior year amounts in the statement of net assets available for benefits and statement of

changes in net assets available for benefits have been reclassified to conform to the current year

presentation.

Page 6 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In September 2010, the Financial Accounting Standards Board (FASB) issued authoritative

guidance that requires participant loans to be measured at their unpaid principal balance plus any

accrued but unpaid interest and classified as notes receivable from participants. Previously loans

were measured at fair value and classified as investments. The guidance is effective for fiscal

years ending after December 15, 2010, and is required to be applied retrospectively. The

adoption of this guidance did not change the value of participant loans from the amount

previously reported as of December 31, 2009. Participant loans have been reclassified to notes

receivable from participants as of December 31, 2009.

In January 2010, the FASB issued authoritative guidance to clarify certain existing fair value

disclosures and require a number of additional disclosures. The guidance 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. The guidance 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, the guidance 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 was effective for reporting periods beginning after December 15, 2009. Since

the guidance only affects fair value measurement disclosures, adoption of the guidance did not

affect the Plan’s net assets available for benefits or its changes in net assets available for

benefits.

Page 7 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

In September 2009, the FASB issued authoritative guidance for measuring the fair value 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 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 the guidance, 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 the guidance 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 April 2009, the FASB issued authoritative guidance, which provided additional information

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. It 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 fair

value reporting. The Plan adopted the guidance for the reporting period ended December 31,

2009. Adoption of the guidance did not have a material effect on the Plan’s net assets available

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

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).

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. The Plan is subject to the provisions of

ERISA.

Page 8 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

2. Description of the Plan (continued)

Contributions

On January 1, 2006, Principal Life 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

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

Life’s 401(k). 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%.

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 Plan document. The federal and state income taxes of the participant are

deferred on the contributions until the funds are withdrawn from the Plan.

Forfeitures

Upon termination of employment, participants forfeit their nonvested balances. Forfeited

balances of terminated participants’ nonvested accounts are used to reduce Company

contributions. At December 31, 2010 and 2009, forfeited nonvested account balances totaled

$41,454 and $44,761, respectively. In 2010 and 2009, employer contributions were reduced by

$1,259,764 and $2,590,822, respectively, from forfeited nonvested accounts.

Page 9 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

2. Description of the Plan (continued)

Participant Loans

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 asset, 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 2010 and 2009 was 5.25%. The notes receivable balance was reduced by

$1,198,838 and $2,213,491 in 2010 and 2009, respectively, for terminated participants that

received their account balance, net of the outstanding loans, as a benefit distribution.

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, participants will become fully vested in their accounts.

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 Benefit Plans Administration Committee (BPAC) and the Plan sponsor

intend to operate the Plan in conformity with the provisions of the Plan document and the Code.

BPAC and the Plan sponsor acknowledge that inadvertent errors may occur in the operation of

the Plan. If such inadvertent errors occur, BPAC and the Plan sponsor represent that they 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.

Page 10 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

3. Income Tax Status (continued)

Accounting principles generally accepted in the United States require 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. The plan administrator has analyzed the tax

positions taken by the Plan and has concluded that as of December 31, 2010, 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. The IRS commenced examination of the Plan for 2008 in August 2010. The plan

administrator believes it is no longer subject to income tax examinations for years prior to 2007.

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 11 of 23


The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)




4. Investments (continued)

The following presents individual investments that represent 5% or more of the Plan’s net assets
available for benefits in 2010 and 2009. Principal Life is a party in interest with respect to these
investments.

	December 31
	2010	2009

Large-Cap Stock Index Separate Account	$ 138,471,505	$ 82,394,133
Diversified International Separate Account	100,006,483	89,803,495
International Emerging Markets Separate Account	94,948,394	82,278,171
Bond and Mortgage Separate Account	85,247,318	71,326,432
Small-Cap Stock Index Separate Account	79,740,461	62,209,141
Principal Financial Group, Inc. ESOP	75,259,838	60,280,300
Medium Company Blend Separate Account	68,704,871	*
U.S. Property Separate Account	68,032,089	70,014,680
Money Market Separate Account	63,699,465	69,773,529

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

During 2010 and 2009, the Plan’s investments that are related to Principal Life appreciated
(depreciated) in value by $175,195,922 and $162,845,311, respectively, as follows:

	Year Ended December 31
	2010	2009

Guaranteed interest accounts	$ 94,260	$ (332,450)
Separate accounts of insurance company	153,693,987	147,329,049
Principal Financial Group, Inc. ESOP	21,407,675	15,848,712
	$ 175,195,922	$ 162,845,311




		Page 12 of 23


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 are reflected at the NAV price.

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

Transfers between fair value hierarchy levels are recognized at the beginning of the reporting
period.

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 2010.




	Page 13 of 23

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. The fair value of the

guaranteed interest accounts is reflected in Level 3 and the valuation is based on the applicable

interest rate. 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. If the applicable

interest rate is equal to or less than the interest rate on the account, the fair value is equal to the

contract value.

Separate Accounts of Insurance Company

The 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. Most separate accounts are reflected in

Level 2. Several of the separate accounts invest in publicly quoted mutual funds or actively

managed stocks. Some of the separate accounts also invest in fixed income securities. The fair

value of the underlying mutual funds or stock and of the underlying securities, which is based on

quoted prices of similar assets, is used to determine the NAV of the separate account which is

not publicly quoted.

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 2010 and 2009, 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 and is reflected in

Level 3.

Page 14 of 23


The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)




5. Fair Value of Financial Instruments (continued)

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 and 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, 2010
	Assets Measured at			Fair Value Hierarchy Level
		Fair Value		Level 1	Level 2		Level 3
Assets
Guaranteed interest accounts	$ 49,394,988		$ –		$ –	$ 49,394,988
Separate accounts of insurance company:
Fixed income security		105,258,341		–	105,258,341		–
Lifetime balanced asset allocation		169,747,870		–	169,747,870		–
Large U.S. equity		247,657,740		–	247,657,740		–
Small/Mid U.S. equity		238,768,265		–	238,768,265		–
International equity		194,954,877		–	194,954,877		–
Short-term fixed income		63,699,465		–	63,699,465		–
U.S. real estate		68,032,089		–	–		68,032,089
Other		11,590,365		–	11,590,365		–
Principal Financial Group, Inc. ESOP		75,259,838		75,259,838	–		–
Total invested assets	$ 1,224,363,838		$ 75,259,838		$ 1,031,676,923	$ 117,427,077

				As of December 31, 2009
	Assets Measured at			Fair Value Hierarchy Level
		Fair Value		Level 1	Level 2		Level 3
Assets
Guaranteed interest accounts	$ 51,968,974		$ –		$ –	$ 51,968,974
Separate accounts of insurance company:
Fixed income security		84,063,050		–	84,063,050		–
Lifetime balanced asset allocation		131,406,126		–	131,406,126		–
Large U.S. equity		210,528,079		–	210,528,079		–
Small/Mid U.S. equity		180,520,707		–	180,520,707		–
International equity		172,081,666		–	172,081,666		–
Short-term fixed income		69,773,529		–	69,773,529		–
U.S. real estate		70,014,680		–	–		70,014,680
Other		9,445,461		–	9,445,461		–
Principal Financial Group, Inc. ESOP		60,280,300		60,280,300	–		–
Total invested assets	$ 1,040,082,572		$ 60,280,300		$ 857,818,618	$ 121,983,654




						Page 15 of 23

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, 2010 and 2009, are

as follows:


		Year Ended December 31, 2010				Changes in Unrealized Gains (Losses) Included in Statements of Changes in Net Assets Available for Benefits Relating to Positions Still Held


	Beginning Asset Balance as of January 1, 2010	Total Realized/ Unrealized Appreciation (Depreciation)	Purchases, Sales, Issuances, and Settlements **	Transfers in (Out) of Level 3	Ending Asset Balance as of December 31, 2010



Assets
Guaranteed interest accounts	$ 51,968,974	$ 1,288,052	$ (3,862,038)	$ –	$ 49,394,988	$ 94,260
U.S. real estate	70,014,680	10,084,871	(12,067,462)	–	68,032,089	9,717,904
Total	$ 121,983,654	$ 11,372,923	$ (15,929,500)	$ –	$ 117,427,077	$ 9,812,164


		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

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



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)
Total	$ 150,649,980	$ (30,108,662)	$ 1,442,336	$ –	$ 121,983,654	$ (31,941,715)


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




						Page 16 of 23

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

6. Contingencies

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 for the real estate

separate account. Certain high need payments, such as death, disability, certain eligible

retirements, and hardship withdrawals, were not subject to the withdrawal limitation. Other

withdrawal requests were subject to the limitation until certain liquidity levels were achieved,

mainly via proceeds from sales of underlying properties, rents from tenants and new investor

contributions. With the inception of the withdrawal limitation, all sources of cash were 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 were 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. In October 2010, the queue was completely distributed with regular payments

occurring approximately every three weeks. The restriction had been in place since

September 26, 2008 and ended on March 25, 2011.

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.

7. Related Party Transactions

In addition to the transactions with parties-in-interest discussed in Notes 2, 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. These transactions are exempt from

the prohibited transactions rules of ERISA. 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 2010 and 2009 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, 2010

and 2009.

Page 17 of 23


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, 2010

Identity of Issue	Description of Investment		Current Value
Principal Life Insurance
Company*	Deposits in guaranteed interest accounts		$49,394,988

Principal Life Insurance	Deposits in insurance company Small-Cap Value II
Company*	Separate Account		15,910,644

Principal Life Insurance	Deposits in insurance company Large Company
Company*	Growth Separate Account		44,027,974

Principal Life Insurance	Deposits in insurance company Money Market
Company*	Separate Account		63,699,465

Principal Life Insurance	Deposits in insurance company U.S. Property Separate
Company*	Account		68,032,089

Principal Life Insurance	Deposits in insurance company Bond and Mortgage
Company*	Separate Account		85,247,318

Principal Life Insurance	Deposits in insurance company Diversified
Company*	International Separate Account		100,006,483

Principal Life Insurance	Deposits in insurance company Large-Cap Stock Index
Company*	Separate Account		138,471,505

Principal Life Insurance	Deposits in insurance company Government and High
Company*	Quality Bond Separate Account		17,267,106

Principal Life Insurance	Deposits in insurance company Medium Company
Company*	Blend Separate Account		68,704,871

			Page 18 of 23


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		$ 94,948,394

Principal Life Insurance	Deposits in insurance company Large Company
Company*	Value Separate Account		15,258,542

Principal Life Insurance	Deposits in insurance company Inflation Protection
Company*	Separate Account		2,743,917

Principal Life Insurance	Deposits in insurance company Partner Large-Cap
Company*	Growth I Separate Account		18,670,372

Principal Life Insurance	Deposits in insurance company Lifetime Strategic
Company*	Income Separate Account		5,754,361

Principal Life Insurance	Deposits in insurance company Partner Mid-Cap
Company*	Growth Separate Account		39,195,567

Principal Life Insurance	Deposits in insurance company Partner Small-Cap
Company*	Growth I Separate Account		35,216,722

Principal Life Insurance	Deposits in insurance company Small-Cap Stock
Company*	Index Separate Account		79,740,461

Principal Life Insurance	Deposits in insurance company Partner Large-Cap
Company*	Value Separate Account		31,229,347

Principal Life Insurance	Deposits in insurance company Principal Financial
Company*	Group, Inc. Stock Separate Account		11,590,365




			Page 19 of 23


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		$ 12,587,934

Principal Life Insurance	Deposits in insurance company Lifetime 2020
Company*	Separate Account		41,440,624

Principal Life Insurance	Deposits in insurance company Lifetime 2030
Company*	Separate Account		48,903,034

Principal Life Insurance	Deposits in insurance company Lifetime 2040
Company*	Separate Account		37,444,702

Principal Life Insurance	Deposits in insurance company Lifetime 2050
Company*	Separate Account		23,617,215

Principal Financial	2,311,420 shares of Principal Financial Group, Inc.
Group, Inc.*	ESOP		75,259,838

Loans to participants*	Notes receivable from participants with interest rates
	ranging from 5.25% to 10.50%		19,871,117
			$1,244,234,955
*Indicates party in interest to the Plan.




			Page 20 of 23


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, 2011	By /s/ Tammy DeHaai
	Tammy DeHaai
	Committee Member




	Page 21 of 23


Exhibit Index

The following exhibit is filed herewith:

		Page

23	Consent of Ernst & Young LLP	23













		Page 22 of 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-

156677) pertaining to The Principal Select Savings Plan for Employees of Principal Financial

Group, Inc. of our report dated June 29, 2011, 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, 2010, filed with the Securities and

Exchange Commission.

/s/ Ernst & Young, LLP

Des Moines, Iowa

June 29, 2011

Page 23 of 23