Vestwell Partners With Payroll Provider Gusto on Integrated 401(k)

Small plan 401(k) provider Vestwell Holdings Inc. announced Thursday a partnership with payroll solutions provider Gusto Inc. to provide a retirement recordkeeping service with payroll solutions to businesses and state auto-IRA programs.

Vestwell and Gusto make the announcement as the number of states offering state-facilitated or state-sponsored retirement plans has grown to 18 this year, with analysts expecting more to come. Pennsylvania may be the next state to offer such a plan, with its House of Representatives passing on May 24 a bill to establish the Keystone Saves program, an automatic enrollment, payroll-deduction IRA savings program.

New York-based Gusto, which provides payroll services to 300,000 businesses, has teamed with Vestwell to provide retirement plan services through an application programming interface the firms say will save “time (and money)” on adding a retirement savings options for employees. The integration is available to the more than 1,000 Gusto users who are already using Vestwell, also based in New York, according to the announcement.

“Together with Gusto, we’re bringing a modern and user-friendly platform to the small businesses previously excluded from offering an affordable workplace savings program to their employees,” Aaron Schumm, founder and CEO of Vestwell, said in a statement. “The Vestwell and Gusto integration not only provides a flexible offering that can be delivered through advisors and TPAs; it also creates seamless integration across the rapidly expanding state IRA solutions.”

In the announcement, the firms noted that small business owners often have to “upload their payroll files to their retirement plan provider and are responsible for tracking any changes that are made on the 401(k) platform by their employees,” which can be time-consuming and lead to mistakes.

The integration is designed to streamline that process, and it also gives employers the ability to access Vestwell directly through the Gusto portal.

Small plan providers such as Vestwell, Ascensus and Ubiquity Retirement+Savings have reported growth in states that are requiring small businesses to add retirement plans. They also anticipate further growth based on incentives for businesses to add retirement plans coming online in 2024 from the SECURE 2.0 Act of 2022.