Princeton University is settling a class-action lawsuit over the school’s 403(b) plans for $5.8 million, according to court records filed July 28.
The agreement ends the three-year-old case, in which plaintiffs alleged the school breached its fiduciary duties of loyalty and prudence. The retirement plans carried exceptionally high administrative charges and included restrictive, poorly performing and expensive investment options, the plaintiffs stated in the 2017 complaint.
The school tentatively reached a settlement with the plaintiffs in April, though the terms were not finalized or disclosed at the time. The case was one of many lawsuits under the Employee Retirement Income Security Act aimed at elite colleges and universities. That wave of lawsuits followed a massive volume of Erisa litigation against 401(k) sponsors a few years earlier, a trend that continues today.
Princeton’s defined-contribution plans represented more than $2 billion in assets among more than 24,000 participants in 2018.
Along with the monetary component of the settlement, the university agreed to work to reduce the plan’s record-keeping fees, which the plaintiffs stated were more than $300 per year per participant. The school also agreed to issue a request for proposals for administrative services and third-party investment consulting. Further, the defendant agreed to review the TIAA collateralized loan program in the plan, as well as several TIAA investments that were central to the lawsuit.
The case is one of several that have focused on the TIAA Traditional Annuity, which the plaintiffs contend is highly restrictive. That product included a surrender charge of 2.5% for lump-sum payments, which could only be made within 120 days of leaving employment at Princeton, according to the complaint. Under normal circumstances, payments from the annuity are made over 10 years, via annual installments, the plaintiffs stated.
The plaintiffs are represented in the lawsuit by Berger Montague and Schneider Wallace Cottrell Konecky Wotkyns, which have been active in class-action retirement plan litigation over the past several years.
Princeton is represented by law firm Jackson Lewis.
Wells Fargo adds two bank-channel recruits, UBS lands a JPMorgan Chase veteran, and a multi-family office lifts Atlas past $1B
“The state comes down on you in years when you make 40% returns for clients,” said Bill Swayne, the advisor and son of Candace Swayne.
The Independent broker-dealer giant has had “active conversations” with the Claude maker, which is days away from its expected IPO
For Gen X clients entering life after work, answering the financial question isn't enough to solve the entire retirement equation.
Tools from Grantd, Income Lab and Healthspan Wealth aim to keep RIAs involved in clients’ biggest money decisions
Growing wealth, evolving priorities, and untapped opportunities are reshaping how women approach long-term investing.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
