Ascensus Pens Deal for Vanguard’s Small Plan Recordkeeping Division

Ascensus plans to acquire the recordkeeping business for Vanguard’s Individual 401(k), Multiple Participant SEP and SIMPLE IRA Plans division, under a deal announced Tuesday. The acquisition is projected to close in the third quarter of 2024; terms of the transaction were not disclosed.

As part of the agreement, Ascensus will take on the responsibilities of recordkeeping and client servicing for Vanguard’s existing SIMPLE, Multi-SEP and individual 401(k) retirement plans, thereby expanding its total retirement plans managed to nearly 280,000. Ascensus did not provide the number of plans coming over via Vanguard.

The deal does not involve Vanguard’s corporate plan recordkeeping business, which ranked as the third-largest in the country at $523.5 billion in total 401(k) assets as of the latest data from the PLANSPONSOR recordkeeping survey, published in June 2023. Ascensus ranked tenth at $151.8 billion.

According to Ascensus, retirement plans such as SIMPLE, SEP, and Individual 401(k) are well-suited for small businesses. The individual 401(k) plan, the firm commented, is particularly beneficial for owner-only businesses seeking similar advantages to larger 401(k) plans. Meanwhile, multi-SEP and SIMPLE IRA Plans provide participants with simplified retirement savings options, minimizing administrative hassles for plan sponsors.

A spokesperson for Ascensus stated that these plans will be served as part of the small business retirement segment, and the firm hopes to name a leader for that segment very soon.

“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,” Nick Good, Ascensus’s president, said in a statement.

Ascensus in 2022 added the fifth-most new defined contribution plans overall to its platform with 7,561 new plans, and Vanguard booked the tenth most new plans that year at 3,458, according to the most recent data from PLANSPONSOR. The top three recordkeepers for new plans were Paychex Inc. (23,246), ADP Inc. (22,589) and Guideline (12,472).

Along with custodial and trustee services, Ascensus will offer recordkeeping, client servicing, transaction processing, tax reporting and additional support. Through the Ascensus platform, plan participants will maintain access to a varied selection of Vanguard mutual funds. Additionally, Vanguard will provide a one-person SEP IRA option for sole proprietors. Vanguard’s other retirement offerings are not part of the agreement.

“The breadth and nuance of small business plan administration increasingly requires deep specialization,” Armond Mosley, principal and head of Vanguard’s self-directed business, said in a statement. “We know that clients in these plans will benefit from Ascensus’ longstanding commitment to helping these small business clients meet their retirement objectives.”

The announcement comes just weeks after Ascensus announced plans to acquire more than $3.9 billion in assets under administration and more than 2,300 retirement plans from Mutual of Omaha’s 401(k) recordkeeping business.