a retirement plan just because you have had one good year,” he points out. “If you make a $5,000 retirement plan contribution to an employee’s account one year, for example, and then cut back, that employee likely will be upset. If all of your employees are upset, you’re in trouble.” If revenues are stable and business owners can make annual contributions, such a plan will help recruit and retain employees, says Newman.
The U.S. Department of Labor offers two brochures for small business owners that can help them decide on the right retirement plan: Simplified Employee Pensions (SEPs)—What Small Businesses Need to Know and Savings Incentive Match Plans for Employees of Small Employers (SIMPLE)—A Small Business Retirement Savings Advantage. For a copy, contact the publication hotline at 800-998-7542 or go to www.dol.gov/ pwba/pubs/savings.htm.