Gusto is buying the retirement-plan provider Guideline for about $600 million, according to people familiar with the deal, and intends to sell off Guideline customers that are run through competing payroll platforms. The move would deepen the integration between Gusto’s primary payroll suite and Guideline’s 401(k) engine, while steering clear of channel conflict with competitors, according to those people.
A spokeswoman for Guideline disputed the price and said the company had no plans to end relationships with any of its customers as part of a deal. Gusto declined to comment on the terms of its deal and plans for post-close operations.
Why Guideline Fits Gusto’s Playbook for SMB Benefits
Gusto has long used benefits as a wedge product for greater retention among small and midsize businesses, where bundled payroll, HR and compliance are becoming table stakes. Guideline brings a modern 401(k) stack that’s been praised for its flat per-employee fee model over the still widely used percentage-of-assets approach. That pricing has hit a chord in small business, where predictable costs matter more than basis points and opaque fund menus.
The two companies have been working together for years, though Guideline also has relationships with several other payroll providers, including ADP, Intuit, Paylocity, TriNet and Rippling. Folding Guideline in-house provides Gusto with a defensible moat against those same competitors — as long as it can manage the intricacies of multi-channel distribution without burning partners or customers.
Price Tag and Investor Outcomes for the Deal
Guideline’s most recent primary funding, capital that grows the company and delivers new ownership stakes to investors, priced it at around $1.15 billion, as General Atlantic led with previous backers Felicis, Tiger Global and NEA also on the cap table.
A sale at about $600 million would fall short of that headline valuation, but could still distribute capital to early investors, people familiar with the matter said. One person said the proceeds of selling rival-linked accounts would be split between Gusto and Guideline shareholders, which could increase total returns.
Guideline has been able to scale significant subscription recurring revenue in recent years. CNBC has reported that annualized recurring revenue is nearly $140 million, a leading reason why retirement-plan administration margins rely on automation and operating in low-cost positions.
Customer Divestitures As Channel Strategy
The decision to sell Guideline accounts that run on rival payroll systems highlights a strategic fork: retain those customers and compete directly with partners, or more efficiently consolidate behind the Gusto-native channel. Gusto is believed to be leaning toward the latter option, which would minimize friction in partner ecosystems while consolidating investment into one tightly integrated experience, sources say.
Such carve-outs are rare, though not unheard-of, in payroll and benefits. Both vendors continually rebalance book-of-business exposure in order to satiate partners or regulators, particularly where customer onboarding, support and compliance tooling varies substantially by platform.
Integration and Regulatory Watchpoints for Retirement Plans
Bringing a recordkeeping platform in does not simply involve a product map exercise; it entails a compliance lift. State-based retirement plans implicate ERISA, fiduciary duties and state-run auto-IRA programs like CalSavers and OregonSaves. In the meantime, SECURE 2.0 incentives and auto-enrollment provisions are prompting more small employers to initiate plans, serving as a tailwind for providers that can make onboarding easy and inexpensive.
Consolidation might invite scrutiny if it restricts access for small firms linked to other payroll systems. That risk is reduced through access to open APIs, which means that if assets are transferred away to independent recordkeepers, or some other destination, the data remains available through integration. That said, clear communication will be key for sponsors and participants, who care more about their contributions, transfers and disclosures continuing in an uninterrupted manner than they do the mechanics behind it.
Market Context And Competitive Landscape
Small employers are still underserved for retirement balances. The Bureau of Labor Statistics has consistently reported that rates of access are significantly lower among firms with fewer than 50 employees compared to larger employers. That delta is the reason low-friction, low-fee plans have exploded with players like Vestwell, Human Interest and Betterment at Work also competing for distribution across payroll, PEO, and adviser channels.
For Gusto, having a retirement solution could increase customer lifetime value through cross-sell opportunities while also decreasing churn. For competitors, the move is yet another signal that payroll incumbents are dragging more adjacencies — benefits, workers’ comp, HSA/FSAs — onto their core stack. The competitive question is whether the more open approach can win (open, partner-led ecosystems can scale faster by sharing value with third parties), or whether “all-together” bundles and ever more “bundled” experiences end up winning in the long run given they have tighter UX and economics.
What to Watch Next as the Gusto–Guideline Deal Unfolds
Key signals will be if a third party emerges to buy the rival-tied accounts, how soon Gusto and Guideline reconcile onboarding and plan administration, and whether partners renew integrations or shift to competing providers.
Customer communications — particularly those regarding fees, fund lineups and fiduciary processes — will show how the combined company plans to compete in transparency and cost.
If the reported price and divestiture plan stick, Gusto is gambling that clarity of channel and product control beats revenue from cross-platform accounts. In a trust- and compliance-driven market, that could be the difference between a nice-to-have add-on and an absolute must-have pillar of the SMB benefits stack.
