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You, as a business owner and employer, would have to set up and administer your own small business retirement plan for yourself and your employees.

It can be costly to set up a retirement plan but if you do some homework, you can get it cheaply coupled with a number of advantages too such as:

• Employer's contributions to a retirement plan is a tax deductible expense
• A sound retirement plan can attract and retain qualified and valuable personnel
• A tax credit of up to $500 is available to small business (normally less than 100 employees) for the cost of creating or maintaining an employee retirement plan
• Enhances your business's credibility and integrity
• Increases your employees' loyalty

You could go for a variety of plans such as:

1. Defined Contribution Plan

It uses an allocation formula to specify a percentage of contribution made by employees. Say, your employees can voluntarily deduct a certain portion of their salaries, in many cases before taxes, and place the money into a qualified retirement plan of your company, where it'll grow tax-deferred.

You as an employer can also match the contribution your employees make.

2. Defined Benefit Plan

You as an employer, determine a desired level of benefits to be paid upon your employees' retirement, using a fixed monthly payment or a percentage of compensation and then you (the employer) contribute to the plan yearly according to a formula so that the benefits are available when needed.

The amount of annual contributions is determined by an actuary, based upon the age, salary level, and years of service of your employees, plus prevailing interest and inflation rates. You'll bear the risk of providing a specified level of benefits to your employees when they retire.

This plan loses its attractiveness attributed to the fact that nowadays employees became more mobile, and few are willing to commit their entire working lives to a single employer in order to gain a pension.

Employers, too, began moving away from this plan because of the financial pressure involved in funding them.

3. Simplified Employee Pension (SEP) Plan

This is an employer-funded retirement account that allows a small business to direct at least 3% and up to 15% of each of your employee's annual salary, to a maximum of $30,000, into tax-deferred individual retirement accounts (IRAs) on a discretionary basis.

It's easy to set up and inexpensive to administer, as you simply make contributions to IRA initiated by your employees. Your employees would have to make investment decisions regarding their own IRAs. That way, you avoid the risk and cost involved in accounting for employee retirement funds.

Besides, you've the flexibility to make large percentage contributions during good financial years and to reduce contributions during leaner times.

SEP plan applies to all types of business entities, including proprietorship, partnership and corporation. Employee's eligibility: aged 21 or older with at least 3 years of service in your company and a minimum level of compensation.

4. Savings Incentive Match Plan For Employees (SIMPLE)

This plan comes in 2 forms: SIMPLE IRA and SIMPLE 401k.

Both provide an easy, low-cost way for a small business and its employees to contribute jointly to tax-deferred retirement accounts.

An IRA or 401k set up as a SIMPLE account requires you, the employer to match up to 3% of an employee's annual salary, up to $6,000 per year. An employee is also allowed to contribute up to $6,000 annually to his/her own account.

If you set up a SIMPLE, you can't offer any other type of retirement plan.

It's best you choose the SIMPLE IRA option, as the SIMPLE 401k proves more expensive than a regular 401k due to the company matching requirements.

OK, Which Plan Is For You And Your Business?

I would say you should carefully examine your priorities when deciding on a small business retirement plan for yourself and your employees.

If your main concern is to minimize administrative cost, a SEP plan would be your best bet.

If you count upon key older employees, a defined benefit plan would help reward and retain them.

If you go for a long time horizon until retirement, you would probably do best with a defined contribution plan.

If you want your employees to fund part of their own retirement, you should go for a SIMPLE or a 401k plan.

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Retirement can be a very tough time for most people - even if you have made sure that you are financially secure, you still cannot be happy. You might have thought that the freedom and the relaxation might be just what you wanted, but in all likelihood, you will be disappointed.

For anybody who has been active for years, to be told one fine day that you have basically nothing to do, it can be very difficult. This might start giving you some moody fits even before your retirement dinner party, and this is only natural. However, you can start to alleviate this mood right from the time of your retirement dinner party.

After all, a party is mean to be fun - so go prepared. As part of your retirement dinner party speech, say a few funny retirement poems. Yes, this is why you must go prepared - you have to sit down and see if you can write a few funny retirement poems! Now, after you have written few, you will want to test the waters a bit before you can actually read them out aloud. This means - a blog. You can create a blog and upload a few of your funny retirement poems and see what the responses are.

Once you do this, you will see that there are other blogs like yours, maybe a few with even some funny retirement poems, like yours. This is a great way to start building a small network of people on the net - after all, it is never too late to find people who think and feel the same way that you do!

Once you do this and get a few responses, you can improve your own work and make sure that people read them. So, to do all of this, you have to start getting to work on your funny retirement poems at least a month before your retirement dinner party.

You will soon see that this is an interesting pastime, which you might like to pursue. Now that you have time to think, a blog is also the ideal place to jot down some of your thoughts and see if there are like-minded people out there - and there are bound to be plenty.

So, in one fell swoop, you will have solved quite a few of your problems - you will have found something that will keep you occupied once you have retired, you will have found a way to make the best retirement dinner party speech ever, and you will have found a few new friends! Retirement need not be that bad.

Katie Appleby is an accomplished niche website developer and author. To learn more about retirement, please visit You Retired for current articles and discussions.

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