Selecting the Right Plan
Designing and implementing an employee-benefit program can be a complicated process. Many small businesses contract with employee benefit consulting firms, insurance companies, specialized attorneys, or accounting firms to assist in this task. As you establish your program yourself or with a professional, ask yourself:
What should the program accomplish in the long run?
What's the maximum amount you can afford to spend on a program?
Are you capable and knowledgeable in administering the program?
What kind of program will best fit the needs of your employees?
Should you involve your employees in the design and selection of the benefit program? If so, how much and at what stage?
Certain plans are more suitable for consulting services, based on the employees' financial situations and the demographics of the employee group. Employers who are not confident of their future income may not want to start a defined benefit plan that will require a specific level of contributions. However, if the employees are fairly young, a profit-sharing plan or a 401(k) plan can result in a more significant and more appreciated benefit than a defined benefit plan. Remember that while a qualified plan has many positive aspects, the qualified retirement plan area is complicated and well monitored by the government. Make sure you have adequate counsel before you decide on the most appropriate plan for your business.