If you are undaunted by the disadvantages of offering a retirement plan in your business and you understand the basic types of plans, you're ready to set some goals. Business owners set up retirement plans for different reasons. Why are you considering one? Do you want to:

• take advantage of the tax breaks, to save more money than you'd otherwise be able to?
• provide competitive benefits in addition to — or in lieu of — high pay to employees?
• primarily save for your own retirement?

You might say "all of the above." Small employers who want to set up retirement plans generally fall into one of two groups. The first group includes those who want to set up a retirement plan primarily because they want to create a tax-advantaged savings vehicle for themselves and thus want to allocate the greatest possible part of the contribution to the owners. The second group includes those who just want a low-cost, simple retirement plan for employees.

If there were one plan that was most efficient in doing all these things, there wouldn't be so many choices. That's why it's so important to know what your goal is. Each type of plan has different advantages and disadvantages, and you can't really pick the best one unless you know what your real purpose is in offering a plan.

Once you have an idea of what your motives are, you're in a better position to weigh the alternatives and make the right pension choice.