Judge Tosses American Skandia Suit

July 31, 2003 (PLANSPONSOR.com) - A lawsuit accusing American Skandia Life Assurance Corp. of misleading investors about the appropriateness of tax-deferred variable annuities for retirement plans has been dismissed.

>US District Judge Milton Pollack in Manhattan ruled the company disclosed its fee structure in its prospectuses, and warned investors to obtain competent tax advice before purchasing the annuities.

>The suit, filed in December, claimed investors paid more in commissions, fees and charges for American Skandia deferred annuities than other, more suitable investments in an already tax-qualified retirement plan, according to a Dow Jones report.

“The prospectuses clearly state that both variable annuities and tax qualified retirement plans are tax deferrable,” Pollack said in the opinion. “That is enough to alert all reasonable investors to the fact that it is unnecessary, if solely for tax reasons, to use a variable annuity to fund a tax-deferred retirement account.”