Suit alleges TIAA engaged in prohibited transactions and breached fiduciary duties by charging its own retirement plans higher fees than it charged to other retirement plans for the same investments, and by retaining an underperforming in-house fund for 16 years
NEW YORK, May 20, 2025 (GLOBE NEWSWIRE) -- Sanford Heisler Sharp McKnight filed an ERISA class action complaint today in the U.S. District Court for the Southern District of New York that alleges retirement plan mismanagement by Teachers Insurance and Annuity Association of America (“TIAA”) and other fiduciaries of TIAA’s two retirement plans. According to the lawsuit, TIAA engaged in “multiple breaches” of fiduciary duties under ERISA owed to the participants of its Retirement Plan and 401(k) Plan (the “Plans”).
According to the allegations in the Complaint, TIAA offers in its Plans an in-house investment option called the College Retirement Equity Fund (“CREF”). CREF held over $2 billion of the Plans’ assets and included eight different investment accounts packaged within variable annuities, each with different share classes and fees. The Complaint alleges that instead of offering the cheapest share class to the Plans’ participants, TIAA included a share class whose fees were higher. As a result, the TIAA Plans paid millions more in higher fees for the same investment option and TIAA reaped millions more in fee income from the Plans’ investments in CREF.
The Complaint also alleges that TIAA failed to remove its underperforming CREF Growth Fund from its Plans despite sixteen years of underperformance, as compared to the fund’s market benchmark, the Russell 1000 Growth Index, and the performance of other comparable large-cap growth funds, costing participants and beneficiaries millions of dollars in retirement savings. Participants of TIAA’s Plans had invested approximately $480 million of their retirement savings in the CREF Growth Fund as of the end of 2023, according to the Complaint.
The Complaint asserts that, through these actions, TIAA and its Plans’ fiduciaries breached ERISA’s fiduciary duties of prudence and loyalty and engaged in “prohibited transactions” barred by ERISA.
The named plaintiff Brian Byrne filed this case on behalf of the TIAA Plans, which have approximately 28,000 participants and beneficiaries and over $9 billion in assets. Named as Defendants are TIAA, the TIAA Board of Directors and its members, and the TIAA Plan Investment Review Committee and its members.
“Companies that choose to offer in-house investment options to their employees are under a heightened duty to act with an ‘eye single’ to their employees’ interests, yet here, we believe that TIAA breached that duty,” said Charles Field, Co-Chair of the firm’s Financial Mismanagement and ERISA Litigation Practice Group and counsel for Plaintiff and the proposed class. “Cases like this are an important tool for ensuring company fiduciaries do not abuse their positions of trust, and for protecting the hard-earned retirement savings of employees. This is especially important given the over $2.2 billion in retirement savings invested in the CREF Funds.”
“The fiduciaries of TIAA’s Plans are duty-bound to monitor the Plans’ investments and to remove investment options that are imprudent; no investor wants to be stuck with a dog,” said Russell Kornblith, a Partner and General Counsel at the firm and counsel for the proposed class. “That obligation takes on special importance when the investment product is one created by the company itself. Here, TIAA’s Plan participants have invested over $480 million in TIAA’s proprietary, in-house CREF Growth Fund. TIAA owed these participants a duty to ensure that money was invested prudently and in their best interest.”
Sanford Heisler Sharp McKnight has filed the TIAA ERISA complaint on the heels of several significant ERISA class settlements in 2024. In December 2024, the firm filed for preliminary approval of a record $69 million settlement in its multi-year class action against UnitedHealth Group. Earlier in 2024, Sanford Heisler Sharp McKnight, together with co-counsel, also obtained final approval of a $61 million settlement in a long-running ERISA class action against General Electric. The UnitedHealth and GE settlements were among the most significant ERISA settlements of 2024. They were also among the highest value settlements ever in cases involving allegedly poor-performing plan investments.
About Sanford Heisler Sharp McKnight
Sanford Heisler Sharp McKnight is a public interest and civil rights law firm with offices in New York, Washington, DC, San Francisco, Palo Alto, Nashville, and San Diego. The firm focuses on executive representation, wrongful termination, employment discrimination, sexual harassment, retaliation, wage theft and overtime violations, whistleblower and qui tam, sexual violence, Title IX violations and victims’ rights, financial mismanagement and ERISA litigation, and Asian American litigation and finance matters. Our lawyers have recovered over $1 billion for our clients through many verdicts and settlements.
In 2024, Forbes named Sanford Heisler Sharp McKnight Chairman and Co-Founder David Sanford to its inaugural list of America’s Top 200 Lawyers. The National Law Journal has selected Sanford Heisler Sharp McKnight as Civil Rights Firm of the Year, and it has recognized the firm as both Employment Rights Firm of the Year and Human Rights Firm of the Year. Benchmark Litigation has named the firm Labor & Employment Firm of the Year, and Law360 has recognized the firm as Employment Practice Group of the Year.
For the latest news about Sanford Heisler Sharp McKnight, visit the firm’s newsroom or follow the firm on LinkedIn, Facebook, or Twitter.
If you have potential legal claims and are seeking counsel, please call 646-768-7070 or email David.sanford@sanfordheisler.com. Attorneys at Sanford Heisler Sharp McKnight would like to have the opportunity to help you.
Media Contact: Jamie Moss, newsPRos, at 201-788-0142 or jamie@newspros.com.