Deals & People June 2, 2023

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

The offering is geared toward businesses and state auto-IRA programs.

 

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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.

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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.

Compliance June 2, 2023

Senate Passes Debt Ceiling Bill to Avoid U.S. Default

The bill now moves to President Biden for signature ahead of the June 5 default date.

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The U.S. Senate passed The Fiscal Responsibility Act of 2023 late Thursday in a bipartisan 63 to 36 vote to avert a default by the U.S. government.

The Senate passed the bill suspending the $31.4 trillion debt ceiling until early 2025. The legislation makes certain cuts in discretionary spending, rescinds unobligated funds and expands work requirements for some federal programs.

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The House of Representatives passed the bill late Wednesday by a vote of 314 to 117 after weeks of negotiations between President Joe Biden and House Speaker Kevin McCarthy, R-California. The bill now moves to Biden for his signature into law before the June 5 date by which the Department of the Treasury said the government could no longer pay its bills if an agreement was not reached.

“No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a big win for our economy and the American people,” Biden posted on Twitter shortly after the vote.

On Thursday, the Senate worked out an agreement to fast-track the vote by sidestepping 11 various amendments brought to the floor. The amendment attempts included calls for a balanced budget, expedited approval of a natural-gas pipeline project known as the Mountain Valley Pipeline and increased funding for the Department of Defense due to the perceived threats of China and ongoing support of Ukraine in the war against Russia.

“Defaulting on our national debt is unacceptable, unthinkable—we cannot let it occur,” Senate Majority Whip Dick Durbin, D-Illinois, said on the Senate floor ahead of the vote. “So as painful as some of the decisions that will come from this agreement being reached are, they are virtually, at this point, inevitable to avoid default on our debt.”

The bill agrees to suspend the debt ceiling through January 1, 2025, in exchange for cuts to discretionary items to be worked out later and a 3% cap on boosts to military spending in fiscal 2024. It also ends a three-year freeze on student-loan payments that has led to a debate both in Congress and across the country. In addition, the legislation speeds up energy and infrastructure projects and raises to 54 the age that low-income earners without dependents must work to receive food aid.

“Default was the giant sword hanging over America’s head,” Senate Majority Leader Chuck Schumer, D-New York, said at a press conference after the bill passed. “Tonight’s news is very good news for our economy and for American families.”

With the debt ceiling crisis averted, Congress will turn to other matters, including calls for further clarity of SECURE 2.0 retirement legislation going into effect in 2024. This week, the Senate Committee on Health, Education, Labor and Pensions issued a letter urging the Department of Labor to prioritize implementation of certain provisions in the SECURE 2.0 Act of 2022, including those regarding employer ownership, defined benefit annual funding notices and emergency savings.

Meanwhile, the nomination of Julie Su for Secretary of Labor, a post she is currently filling on an acting basis, is still pending but has been approved by the HELP Committee.

 

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