TIAA to pay $5M in 401(k) excessive-fee suit

Employees allege the firm failed to act in their best interests when managing their retirement plans.
MAY 12, 2017

TIAA agreed to pay $5 million to settle a lawsuit alleging the firm breached its fiduciary responsibilities in two retirement plans it provides to its employees. Plaintiffs brought the suit against TIAA in October 2015, claiming their plans overpaid in administrative and investment management fees. They also said the plans were filled entirely with investments managed by and paying fees to TIAA, the complaint said. As part of the settlement, TIAA also agreed to make design changes in the plans, including adding non-proprietary and cheaper investment options. The plans should save more than $2 million a year in fees with the adjustments, according to the settlement filed Wednesday in New York district court. The firm agreed to the settlement, but TIAA denies violating its fiduciary duties under the Employee Retirement Income Security Act of 1974. "To avoid the significant time, cost and distraction of ongoing litigation, we agreed to settle," said Chad Peterson, spokesperson for TIAA. "We value our people and are committed to providing our employees with retirement plans that help ensure their financial well-being, and have always acted in their best interests." The class-action lawsuit involved one 401(k) plan and a second retirement plan — both of which TIAA provides to its own employees — and was filed on behalf of plan participants from October 14, 2009, through the present. TIAA is one of several financial services companies sued in recent years over its 401(k) plan administration. In one recent case, Jackson National Life Insurance employees alleged the company chose high-cost, proprietary products for the firm's 401(k) plan, violating its fiduciary duty, according to a class action lawsuit in March.

Latest News

Retirement delays, Social Security fears prompt advisors to rethink income strategies
Retirement delays, Social Security fears prompt advisors to rethink income strategies

Concerns about outliving savings and healthcare costs are reshaping how "Peak 65" Americans and advisors approach income planning.

Merrill Lynch on the hook for $3.7M after clients claimed sale of unsuitable private equity
Merrill Lynch on the hook for $3.7M after clients claimed sale of unsuitable private equity

Some investors recently have seen million dollar plus decisions by FINRA arbitration panels involving complex products decisions go their way.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut
RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut

Modern Wealth's latest deal for a California-based fee-only RIA marks its fourth acquisition of 2025.

Empower defends private market access in 401(k)s in response to Warren scrutiny
Empower defends private market access in 401(k)s in response to Warren scrutiny

Sen. Warren has warned of private market investment risks due to opacity, illiquidity, and past regulatory issues.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.