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TIAA Loan Program Lawsuit

This previously reported case has been allowed to move forward, as the plaintiff, a retirement plan participant, need not prove that TIAA knew that its actions were unlawful. The plaintiff claims that across its client base, TIAA “systematically” failed to credit the interest on plan loan repayments to participants taking loans, instead keeping the interest for itself, totaling more than $50 million. In a previous ruling in this case, the judge dismissed fiduciary breach claims as it was ruled that TIAA was not a fiduciary. In the latest ruling, the judge ruled that TIAA could still be held liable despite its non-fiduciary status, by engaging in prohibited transactions that require TIAA’s knowledge of the “factual circumstances underlying” the transactions. The burden on proving that the loan practices satisfied an exemption from ERISA’s prohibited transaction rules lies with TIAA, not the plaintiff.

www.bloomberglaw; March 28, 2019.; February 7, 2017 (original report source).