When retirement plans are offered employees take advantage of them. According to a 1999 Hewitt survey of 401(k) plan sponsors, 78% of eligible employees participate in their company's 401(k) plan. The Hewitt survey also found that 41% of the plans surveyed represented the primary source of retirement income for the employees covered.

There may be a number of reasons why small employers choose not to offer a retirement plan for their employees. According to the 2000 Small Employer Retirement Survey conducted by Employee Benefits Research Institute, 21% of respondents say employees prefer wages or other benefits to retirement plans. And another 13% say the uncertainty of their business prevents them from offering retirement benefits.

Although these reasons are valid, the upside of offering a retirement plan can be substantial. 47% of respondents to the 2000 EBRI survey who provide retirement benefits believe that the benefit has a major impact on their ability to hire and retain quality employees. And 34% believe that plan sponsorship has a positive impact on employee morale and performance.

Benefit plans may include:

• Flexible matching contribution amounts
• Variety of vesting options
• Numerous investment vehicle choices
• Multiple plan administrator choices
• Loan provisions
• Balance transfers