Ascensus Restructures Retirement Business and Its Leadership Team

The recordkeeper with a large presence in small businesses and PEPs moves into four business segments.

Recordkeeper and retirement services firm Ascensus LLC announced Monday it has restructured its retirement business into four business segments to focus on the goals and needs of its clients, partner firms and advisers.

The four units will report to President Nick Good, who joined the firm in September 2023 and reports to David Musto, the CEO and chair of the Dresher, Pennsylvania-based firm. The new structure is designed to help the firm manage a near doubling of the “partners, plans, and savers it serves in recent years,” according to the announcement, citing 154,000 retirement plans under administration.

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Nick Good

Ascensus, acquired by private equity firm Stone Point Capital in 2021, offers tax-advantaged retirement plans, including pooled employer plans, 529 education savings accounts, health savings accounts and state-facilitated retirement plan accounts. The firm has more than $723 billion in assets under administration and is the 10th-largest recordkeeper by assets in the U.S., according to PLANSPONSOR’s 2023 Recordkeeping Survey.

The prior structure was a single retirement unit overseen by one person, first Musto and more recently Good. Now the business will be split into four areas, with three named leaders and a search for the fourth:

  • Core Retirement, focused on Ascensus-branded defined contribution activity, will be led by Jason Crane, who also will continue to lead distribution for all of retirement;
  • Partner Solutions, serving the firm’s private-label partnerships with financial institutions, will be led by Jay Candelmo;
  • Small Business, including the firm’s small business retirement offerings CoPilot, Individual(K), SEP and SIMPLE plans and solutions. The company is currently searching for a business unit leader to be named “in the very near future,” according to the announcement; and
  • Retirement Products and Solutions, offering options to banks, credit unions and other entities, will continue to be led by Steve Christenson.

“Creating defined segments allows us to tailor our business even more effectively to the specific needs of those we serve, and enhances our ability to deliver even more to them,” Good said in a statement. “It also strengthens our dedicated focus on our valued partners—and recognizes the almost doubling of our depth and breadth in retirement over the last several years.”

Crane has led distribution for Ascensus’ retirement business since joining in 2018. Candelmo, who joined in 2017, was most recently head of relationship management for retirement. Christenson has served as head of retirement products and solutions since 2000.

Ascensus also works with nonqualified retirement plans, and its FuturePlan by Ascensus is the country’s largest independent retirement third-party administrator.

The firm reported in September 2023 that its pooled employer plans hit $1 billion in assets.

 

 

EBRI Finds Small Businesses Don’t Know About Start-Up Credits

The research institute also found that some businesses would consider ending their plan and joining a state-run auto-IRA program if available.

A survey published Monday by the Employee Benefit Retirement Institute suggests that most small businesses which do not have a qualified plan do not add one because they believe such plans do not cover the expense of plan creation. The research also shows that small businesses lacking a plan are more likely than not to be unaware of tax credits that would likely cover the cost of plan start-up.

The 2023 Small Business Retirement Survey was published by EBRI, Greenwald Research and the Center for Retirement Research at Boston College. The survey was conducted from February through April 2023 and surveyed 703 small businesses, meaning those with 100 or fewer workers; 323 of those sampled offered a plan, and 380 did not.

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Of the 380 businesses that reported they did not have a plan, 72% responded “No” when asked if they were aware of tax credits for starting a 401(k)-type plan, SEP or SIMPLE IRA, credits that can total up to $5,000 per year for three years.

The question was asked in reference to a provision in the SECURE 2.0 Act of 2022 that provides tax credits for expenses related to plan creation and administration for the first three years of the plan. Since small business plans rarely cost more than $5,000 per year to operate, this would make plan administration effectively free for three years for most small businesses.

The lack of awareness of these tax credits is particularly relevant because EBRI also found that the primary reasons given for not starting a plan among small businesses were related to cost. Of respondents who lacked a plan, 48% said their business being “too new or too small” was a “major reason” for not having a plan; 36% said “revenue is too uncertain to commit to a plan;” and 35% said “it costs too much to set up and administer.”

The smaller the business, the less likely it is to know about available tax credits, according to the findings. For employers with 1 to 4 employees, only 16% answered that they were aware of the start-up tax credit, whereas 24% of employers with 20 to 49 employees and 50% of employers with 50 to 100 employees said the same.

Craig Copeland, the director of wealth benefits research at EBRI, explains that there “still are not a lot of interactions between advisers and small businesses.” Many lack exposure and access to outside expertise from retirement advisers and other services and, as such, remain unaware of the assistance available to them.

Of those offering a plan, nine out of 10 said they do so for the positive effect it has on employee attitudes and performance. Furthermore, 90% of those offering a plan said it was a competitive advantage for their business in employee recruitment and retention.

State Auto-IRA Programs

A second key finding of the survey was that a handful of small businesses (21%) that already offer a plan may scrap it if the state in which they do business offers an automatic individual retirement account program, such as those found in California, Illinois, Maryland, Oregon and other states.

An auto-IRA program is a state-run defined contribution plan that increases plan coverage by mandating or incentivizing (as in Maryland) participation by all businesses not already offering their own plan. Joining is typically easier to set up than a plan from the private market, though often also with fewer options for administration. Businesses may continue to operate their existing plan or elect to make a new plan independent of the program.

The survey found that “only” 21% of sampled small businesses with a plan responded, “Yes, Would Stop Offering Current Plan” when asked “If it was a requirement in your state to require employers who do not offer a retirement plan to automatically enroll their employees in an IRA, would you stop offering your retirement plan and enroll your employees in an IRA?”

Copeland says “21% could be a large amount” but adds EBRI has not “seen that in states where they are in effect.” Though 21% “could be considered a considerable number,” dropping a 401(k) plan in favor of an IRA could upset employees and prove more of an obstacle than the respondents realized.

The majority (68%) responded that they would continue to offer their existing plan, and 11% indicated they did not know their next course of action.

Since auto-IRAs are subject to the same annual limits as any other IRA—$7,000 for 2024, less than the $24,000 limit for DC plans—21% of small businesses scrapping their DC plan to join an auto-IRA program could lead to less savings among affected workers.

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