Workers in Washington, D.C., whose retirement plans are managed by TIAA might have a stake in the lawsuit filed against the company by one investor. The attorneys for the plaintiff are pursuing a class-action suit on the grounds that TIAA allegedly made over $50 million a year by keeping interest from payments made by retirement plan participants who took loans. According to the lawsuit, the company should have credited interest paid by borrowers to their retirement accounts instead of keeping some of the money.
A federal judge has ruled that a portion of the lawsuit may proceed after deciding that some accusations against TIAA appeared credible. The judge applied the legal theory of disgorgement to the case. If found to be valid, the retirement plan service company might have to return money taken while processing loans by plan participants. The profits generated by the practices of TIAA might have violated federal laws that concern retirement plan administration.