NU Online News Service, July 29, 12:59 p.m. – Warehouse-style retailer Costco Wholesale Corp., Issaquah, Wash., is testing a 401(k) plan for small businesses that it hopes to introduce nationwide later this year.
The company is offering the program to customers in Massachusetts and Connecticut through GoldK Inc., Waltham, Mass., a retirement plan administrator.
“We are giving it limited exposure to see if there is some basic level of demand,” says Patrick Callans, vice president of member services for Costco. “We want to control the size of the experiment to make sure it’s wanted.”
Although Callans declines to say how many customers have signed up, he describes the business as slower than expected. For that reason, he plans to continue the test, begun last March, for at least a few more months.
“The small business market was ignored for a long time, and we and Gold K have a little bit of education to do,” Callans says in explaining the slow start.
Callans notes that his company’s definition of small business is a bit smaller than that targeted by banks and broker-dealers for 401(k) plan sales.
“Our small business customer is typically between five and 25 employees, and banks talk about much higher numbers. These businesses are existing Costco business members, including restaurants and professional offices such as real estate, law, and accounting firms. We have lots of firms, including home-office businesses, that have come to us for years to purchase inventory.”