Bechtel Managed Account QDIA Lawsuit Dismissed

A federal judge in Virginia dismissed for a second time a lawsuit filed against Bechtel Global Corp., its board of directors and its trust and thrift plan committee alleging the company defaulted plan participants into a managed account that did not justify the associated fees. 

U.S. District Judge Anthony Trenga granted the dismissal on January 10, stating that plaintiff Debra Hanigan’s second amended complaint failed to allege a “meaningful benchmark” to support her excessive fee claim. 

In Hanigan v. Bechtel Global, Hanigan originally argued in May 2024 that without participant engagement, the managed account did not produce results worth the additional fees, particularly when target-date funds could have produced similar results at a lower cost.  

According to her complaint, as of February 2024, approximately 63% of Bechtel’s plan participants were enrolled in the managed account, called the Professional Management Program, and it was the qualified default investment alternative for the 401(k) plan. From 2018 to 2023, the managed account participants paid an average of approximately $940 per year in investment, administrative and recordkeeping fees. Approximately 65% of participants do not provide any personalized information to influence the asset allocation within the managed account. 

The managed accounts were run by Edelman Financial Engines as provided by recordkeeper Empower. 

Hanigan also argued that using the managed account as the QDIA for the plan “significantly and imprudently” increased the administrative fees paid to the recordkeeper from participants when compared with defaulting them into TDFs.  

Trenga had previously dismissed the suit in October 2024 for similar reasons, but the judge allowed an opportunity to amend the suit to address the plaintiff’s failure to provide meaningful benchmarks. 

However, Trenga’s recent decision found that Hanigan’s claim that the asset allocation models for the managed account were comparable to a TDF option was neither factual nor plausible. He stated that the managed account engages in a level of asset allocation and management that are not present in a TDF and that Hanigan failed to demonstrate that the asset allocation and investment management of a TDF and a managed account are similar. 

Trenga further ruled that the fact that some participants did not provide personalized information for the managed account does not change this analysis.  

Additionally, because Hanigan did not plausibly allege another breach of fiduciary duty, her claim alleging a failure to monitor was also dismissed. 

The plaintiff was represented by law firms Fitzerald Hanna & Sullivan PLLC and Walcheske & Luzi LLC, and Bechtel was represented by Go