College Retirement Plans Face a New Wave of Lawsuits
Faculty and staff at some of the nation’s most prestigious universities are the latest to sue their employers over high fees for retirement plans. Plaintiffs’ attorneys recently filed lawsuits against Yale, the Massachusetts Institute of Technology, New York University, Johns Hopkins University, Duke University, the University of Pennsylvania, Vanderbilt University and Emory University. The eight complaints hit upon a common claim in litigation over retirement plans: Participants are paying excessively high fees for investments, record keeping, and administration services. But there’s a new twist: The suits against the colleges largely center on high fees in 403(b) plans, which are retirement plans for nonprofit organizations, not the more common 401(k) plans that companies offer. As of the first quarter of 2016, these 403(b) plans accounted for $876 billion in assets, compared with $4.75 trillion in 401(k) plans, according to the Investment Company Institute. The 403(b) plans offered by nonprofits, school districts, and hospitals have a reputation for high costs and complexity. High fees are rampant in 403(b) plans that use annuities, advisors say.
David Wingate is an elder law attorney at the Elder Law Office of David Wingate, LLC. The elder law office services clients with powers of attorneys, living wills, Wills, Trusts, Medicaid and asset protection. The Elder Law office has locations in Frederick and Montgomery Counties, Maryland.