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Small-business owners need to know retirement plan options

Rules of ThumbMost small-business owners are on track by recognizing that retirement plans have a positive effect on employee attitude and performance, as well as give companies a competitive advantage in employee recruitment and retention. But when it comes to finding a plan that fits their needs, a recent study indicates that small-business owners need to do their homework.

Less than half of small-business owners considered more than one type of retirement plan when they chose plans for their operations. More than two-thirds of employers (69 percent) chose 401(k) plans. The remaining 31 percent chose from SIMPLE, profit sharing, 403(b), ESOP and other plans, according to the Nationwide Financial Small Business Retirement Study.

"The truth is that 401(k) plans are wonderful for businesses and are often the best choice," said Steve Rose, a vice president for Nationwide Financial. "However, many times a 401(k) plan can be structured with other plans, or some other type of plan can be used to offer tailored solutions for a given business owner. Any investment professional you work with should offer you more than one scenario for your plan and help you weigh the benefits of each."

What worries the boss
The survey also found, not surprisingly, that cost is the top concern of 89 percent of small-business owners looking into establishing company retirement programs.

Other retirement plan issues that worry owners are fiduciary or legal concerns (83 percent), the complexity of offering a plan (81 percent) and the time it takes to administer it (81 percent).

Do you offer a retirement plan to your employees? If so, did you investigate the various plans that are offered before choosing which plan best fit your workers' -- and company -- needs? If not, do you plan to offer retirement benefits to your employees, and will you consider more than one option?

Retirment choices

-- Posted: Jan. 16, 2002

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See Also
Small-business retirement strategies
New plans, software cut 401(k) complexities
An ESOP can turn employees into stockholders

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