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Yale 403(b) Plan Lawsuit

Plaintiffs in this case claim that the exclusive administrative service relationship with TIAA-CREF disadvantaged Yale 403(b) plan participants. The judge allowed the claim that the defendants failed to evaluate investments within the bundled arrangement with TIAA-CREF, resulting in poor performing, costly plan investments. The judge also allowed the claim that the bundled arrangement hampered Yale’s ability to remove investments and essentially locked participants into funds for which Yale did not evaluate as plausible “on its face”, thus breaching the duty of prudence, with Yale abandoning its responsibility to monitor and remove imprudent investments as necessary. Also allowed were the claims of excessive recordkeeping costs through the employment of a revenue-sharing model verses a flat annual fee.

The few dismissed claims include the offering of too many investment options only supported by a listing of those funds available. With regard to two particular vehicles – the CREF Stock account and the TIAA Real Estate Account – the claim of excessive layers of fees was dismissed on the basis that plaintiffs failed to allege facts to show alternative investment products with lower fees available or fewer layers of fees.

www.planadviser.com; April 3, 2018.