Vanguard and Ascensus have announced a major deal that could potentially shake up the small-business retirement plan market.
According to the April 16 announcement, Ascensus has entered into a definitive agreement to acquire Vanguard's Individual 401(k), Multiple Participant SEP (Multi-SEP), and SIMPLE IRA plans business.
Under the transaction, Ascensus will assume recordkeeping and client servicing for Vanguard's current line-up of SIMPLE, Multi-SEP, and Individual 401(k) retirement plans, and increase its overall retirement plans under administration to nearly 280,000 plans.
Ascensus will provide custodial and trustee services, recordkeeping, client servicing, transaction processing, tax reporting, and other services, and plan participants will retain access to a diverse lineup of Vanguard mutual funds via the Ascensus platform.
Vanguard, meanwhile, will continue to offer a one-person SEP IRA for small business owners who do not employ others. This agreement does not include Vanguard's other retirement solutions, the announcement notes.
“Our longstanding partnership with Vanguard and knowledge of the business made this a logical business decision and will result in a smooth transition for plan sponsors and participants,” an Ascensus spokesperson said when asked about the genesis of the deal. “Ascensus strongly believes in its purpose as an organization—to help more savers save more and create peace of mind for their futures.
“Our growth as an organization is driven by both organic growth and our ability to capitalize on strategic acquisition opportunities,” he continued. “Both enhance our scale, which along with our expertise, user experiences, and technology make saving for the future easier for savers and more affordable for plan sponsors. We’re confident we can provide an excellent platform and great service to these clients. We will continue to be a destination for even more clients that would benefit from these plan types and want access to Vanguard investments, low costs, and a great platform and client experience.”
The transaction is expected to close in the third quarter of 2024 and the acquired business will operate as part of the Ascensus Retirement line of business.
“This acquisition offers small business employers continued access to Vanguard's investment strength and the technology, expertise, and operational excellence that clients have come to expect from Ascensus,” Ascensus President Nick Good said in a statement. “Plan sponsors and participants also will benefit from Ascensus' commitment to providing flexible and intuitive digital experiences and sophisticated underlying technology, including a modern account management platform optimized for plan administration.”
“The breadth and nuance of small business plan administration increasingly requires deep specialization, and we believe business owners and their employees will be best served by an organization with significant expertise and scale in serving Multi-SEP, SIMPLE IRA, and Individual 401(k) savers,” added Armond Mosley, head of Vanguard’s Self-Directed business. “We know that clients in these plans will benefit from Ascensus' longstanding commitment to helping these small business clients meet their retirement objectives.”
Separately, Ascensus provides recordkeeping and other administrative services for Vanguard's 529 education savings business serving individual investors. The company's brands include Ascensus; Newport, an Ascensus company; and FuturePlan by Ascensus. As of Dec. 31, 2023, Ascensus has more than $760 billion in assets under administration and employs more than 5,400 associates.
