Small Business Owners Overlook Myriad of Plan Options

November 26, 2001 ( - Small business owners are not considering all the options when providing a retirement plan for their staff, according to the key findings of a new study by Nationwide Financial Services.

While 69% of the sample confirmed using a 401(k) plan, far fewer said they even considered other types of plans, such as profit-sharing, money purchase and defined benefit plans.

Asked to list their chief concerns about offering a retirement plan

· almost 90% of business owners were concerned about the cost
· while more than 83% cited fiduciary or legal concerns,
· slightly less listed the complexity of offering a plan, and
· just over 80% cited time constraints

For those with fiduciary concerns, top concerns included:

· business or personal liability, listed by 89%,
· providing enough plan information, cited by 88%, and
· investment selection and monitoring, mentioned by 86%

In addition, small business owners listed several top reasons for offering a retirement plan,

· just over 95% cited concern for employee welfare,
· slightly less mentioned the positive effect on employee attitude and morale
· nine out of 10 respondents cited competitive advantages in recruitment and retention of employees, and
· the same number mentioned tax-deferred savings for employees

The study was conducted by Greenwald & Associates comprised responses of 730 small employers, or those with between 25 and 200 employees.

– Camilla Klein