Clark Law Group, PLLC
TIAA Accused of Profiting Illegally from Retirement Plan Loans
Workers in Washington, D.C., whose retirement plans are managed by TIAA might have a stake in the lawsuit filed against the company by one investor. The attorneys for the plaintiff are pursuing a class-action suit on the grounds that TIAA allegedly made over $50 million a year by keeping interest from payments made by retirement plan participants who took loans. According to the lawsuit, the company should have credited interest paid by borrowers to their retirement accounts instead of keeping some of the money.
A federal judge has ruled that a portion of the lawsuit may proceed after deciding that some accusations against TIAA appeared credible. The judge applied the legal theory of disgorgement to the case. If found to be valid, the retirement plan service company might have to return money taken while processing loans by plan participants. The profits generated by the practices of TIAA might have violated federal laws that concern retirement plan administration.
The judge chose to dismiss other claims against the company that involved the breach of fiduciary duties as described within the Employee Retirement Income Security Act. The investor’s lawsuit had asserted that TIAA manipulated interest rates on retirement plan loans to generate profits, but the judge said that no evidence supported this claim.
When a person suspects that an employer or plan administrator has mishandled benefits or denied benefits unfairly, consulting an attorney familiar with ERISA benefits may provide answers. An attorney might research the laws that manage employee benefits and recommend how to take legal action to pursue financial damages. A legal analysis of a retirement plan, health plan or amendments to these plans may help inform a person about rights to compensation.
Source: Bloomberg, “TIAA Can’t Escape $50M Lawsuit Over Retirement Plan Loans“, March 29, 2018