A new lawsuit argues the practices used by the Teachers
Investment and Annuity Association (TIAA) to credit portions of interest payments
made by participants on loans taken from their own retirement accounts back to
the firm—rather than to the borrowing participant—violate the Employee
Retirement Income Security Act (ERISA).
The complaint, which names as defendant the Teachers Investment
and Annuity Association, was filed in the U.S. District Court for the Southern District
of New York. It seeks to recover money that TIAA “unlawfully took” from retirement
accounts similarly situated in the Washington University Retirement Savings
Plan and across its U.S. business.
Background information included in case documents shows the
lead plaintiff borrowed money from her retirement account on four separate
occasions. She has completely repaid two of the loans, she claims, plus
interest, and is currently repaying the other two loans. All of the interest the
plaintiff paid in connection with those loans “should have been credited to plaintiff’s
account,” the suit argues.
According to the compliant, TIAA did not credit the full
amount of paid interest to plaintiff’s account and instead “credited a smaller
amount of interest to her account and kept the remainder for itself.”
The allegations go further and suggest the conduct at issue
is systematic. “Defendant is retaining interest paid by similarly situated
investors across the country,” the suit contends. “The amount of defendant’s
ill-gotten gains exceeds $50 million per year.”
The action cites violations of ERISA Sections 502(a)(2) and
502(a)(3), along with the corresponding sections in the U.S. Code.
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