St. Mary's County 457(b) plan assets rise to about $25.4 million; committee hears target-date fund reviews

The St. Mary's County 457(b) governance committee heard presentations Thursday on the plan's first-quarter 2025 activity and the performance of its target-date funds, with plan administrators reporting higher balances and investment managers explaining drivers of recent returns.

The update began with Sarla Kata of Voya Retirement Services, who told the committee the plan opened the quarter with a beginning balance of $23,700,000 and received roughly $436,000 in payroll contributions in Q1 2025; committee materials show the plan balance was about $25,400,000 as of the day before the meeting. Kata said there were 11 new accounts opened during the quarter and 10 participants closed qualifying accounts, leaving 446 total participants (active and terminated). She reported 21 distributions in Q1 versus six in the prior-year period and noted 132 terminated employees still hold plan balances, 30 of whom have balances under $7,000.

Patrick Wing, the committee's investment reviewer, summarized market drivers for the quarter and flagged that target-date funds comprise nearly 70% of plan assets — making them the largest single allocation. Wing said non-U.S. developed and emerging-market equities outperformed U.S. equities in Q1, in part because of U.S. dollar weakness, while investment-grade bonds also posted solid gains. He noted that many active managers in the plan outperformed their benchmarks in a difficult U.S. equity environment because they were generally underweight the large speculative mega-cap growth names that lagged in Q1.

Representatives from American Funds joined remotely to review their target-date series. An American Funds representative told the committee the series emphasizes global diversification, active management and a glide path that provides meaningful equity exposure even near retirement while shifting to more dividend-focused equities as participants approach distribution. The presenter said the series added a small allocation to an emerging-market bond fund in 2024 and increased exposure to a global emerging-market equity fund; the firm is evaluating additional strategies, including ways to hedge against short-term inflation spikes and potential inclusion of a U.S. mid-cap fund or an international bond hedge strategy.

Committee discussion touched on participant behavior and engagement. Voya reported an average account balance of about $53,000, an average deferral rate for percentage contributors of 6.9%, and an average new-enrollee deferral of 6.6%. Kat a and committee staff said managed-account usage and on-site enrollment assistance are slowly increasing, and that some supervisors have encouraged employees to meet with the on-site representative.

The committee also discussed plan administration mechanics. Kata and staff clarified that the plan’s small-balance “force-out” threshold aligns with the SECURE 2.0 Act changes that raised limits for certain distributions; the meeting materials and presenters referenced the $7,000 threshold for small-balance distributions. No policy changes were adopted during the session.

A motion to accept the committee reports — including the Voya plan summary and the investment performance report — was made, seconded and carried by voice vote.

The committee did not take action to change fund lineups during the meeting; American Funds said it would communicate any future implementation timetable if it and the committee decide on series changes.