As Gusto continues its path to being a “people-first platform,” it has been adding more services to help small businesses make life easier for their employees. From managing payroll to addressing human resource issues and selecting insurance plans, Gusto has created a one-stop shop for the here and now. But what about the future? On Tuesday, the company announced support for 529 college savings plans, giving employees and small businesses the ability to put some funds away for themselves or loved ones to pursue higher education.
“Philosophically, we really believe whether you’re a big or small company, you have the ability to take care of your team and give them great benefits, whether it’s health, 401(k), or 529,” remarked Joshua Reeves, Gusto’s chief executive. “It was complicated to set up before, so you had to be a big company. Small companies felt left out.”
Through an integration with Gradvisor, Gusto will create the 529 plans for businesses. Employees stipulate how much they wish to contribute from their paychecks and Gusto will handle the transactions. When an employee leaves, the account goes with them, and they can manage it through Gradvisor for any future contributions.
Teaming with Gradvisor is part of Gusto’s long-term strategy, according to Reeves. He explained that his team vetted different providers and came to the conclusion that Gradvisor offered a great dashboard and experience. “We didn’t see the need to do it from scratch. We didn’t need to make the investment and do it ourselves,” Reeves said.
It’s the simplified process that could create more participation from companies, especially those that are interested in offering matching contributions. Gusto said 89 percent of businesses don’t offer college savings programs today, but now that benefit will be available to the more than 40,000 companies on the Gusto platform. What’s more, for individuals, evaluating which plan is best can be an ordeal — each state has different offerings and tax breaks. Gradvisor streamlines the whole experience and offers support to determine which plan is best for you, offering personalized care.
“We want to be the platform that evens the benefits playing field,” Reeves explained. “Companies of any size should be able to take care of their employees and help them save for the future. Gusto, in partnering with Gradvisor, will help them do that.”
Gusto is charging $6 per month per employee participating in the 529 benefit, with a minimum of at least 3 participating employees in order for a business to offer it. There are additional fees, but that will depend on the specific 529 plan chosen.