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Dear Workforce What Retirement Options Are Available For My Small Company, With Employee Retention A Key Driver

I am new to HR. I work for a small company and want to craft the best retirement plan possible for my employees. I want some type of incentive for my employees to stay.
April 9, 2003
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Related Topics: Retirement/Pensions, Dear Workforce
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Dear Stumped:
Fortunately there are many options for you to choose from, but before we goover what may be available, you should probably answer some important questions.
1) What are the demographics of the workforce -- age, gender, educationlevel, geographic location, average pay? These will have a considerable impacton the design of the plan, the types of investments that you make available, andhow you communicate the plan.
2) What is your philosophy regarding the provision of employee benefits -- amore paternalistic view (we'll take care of you), or a more employeeself-reliant view (employee should take care of himself or herself)?
3) Do you want flexibility in designing your plan? This can involve moreadministrative work. Do you want easier communication and administration? Thislimits your flexibility with how you can set up and fund your plan.
4) What is the make-up of the pay levels within your organization -- do youhave two or three highly paid individuals, and the rest $8-an-hour employees?Or, are they all highly-paid individuals, as is often the case in a doctor'soffice?
There are many other questions you will need to answer, but you can see thatdeciding on the type of plan is as much about the culture of your organizationas it is saving for retirement. That said, for a small company, the followingare several of the most popular retirement plan options.
1) A straight profit-sharing plan. Under this plan, the employer agrees topay a certain amount, usually a percentage of employees' pay, to the plan onthe employee's behalf each year. This money grows in the account based uponthe investments that the employer chooses.
2) A 401(k) Plan. This is the most popular plan today and involves employeesmaking their own contributions to the plan and deciding where that money isinvested. Employers can choose to match these contributions and also makeadditional contributions. There are also different types of 401(k) plans, suchas SIMPLE 401(k)s (SIMPLE stands for Savings Incentive Match Plan for Employees)and Safe Harbor 401(k)s that are designed for smaller companies and involve much less administrationthan a regular 401(k) plan. with this easier administration comes lessflexibility with how you can operate the plan, but many companies have signed onto these approaches.
3) SIMPLE IRAs. This is another 401(k) alternative designed for small employers and has easy administration.
The best way to find out which plan is right for you is to start talking toretirement plan administrators in your area. They can lead you through adiscussion of which plan is right for you.
SOURCE: Bill Dickmeyer, CEBS, Madison Human ResourcesConsulting, LLC,Madison, Wisconsin, Aug. 14, 2002.
LEARN MORE: Read 10 New Tax Revisions That May Affect Your EmployeeBenefits.
The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.
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 The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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