When starting an employee retirement plan, you'll find several options available. However, most businesses appreciate the ease and familiarity of traditional 401k plans.

Whether you decide to implement a traditional 401k plan, or another retirement plan option, read our Employee Retirement Plans Highlights chart to get a quick rundown of how different plans work.

401k plans give employees more flexibility with their investment options and contribution amounts than other retirement plans. Participants can invest up to $15,500 in 2008 and incrementally more each year. Employees 50 and older can also take advantage of a "catch up" provision allowing them to invest several thousand dollars more each year, up to $5,000 in 2008.

Participants don't pay taxes on contributions until they withdraw funds once they reach 59½ years in age, which is when withdrawals are allowed without penalty. However, some 401k plans allow participants to request a loan or hardship withdrawal before the minimum age is attained.

Matching, where your company contributes to participants' 401k plans, is a very valuable tool to get employees to participate and remain part of your company for years to come. 401k plans allow you to develop vesting schedules where you can determine how many years an employee must be with the company to gain ownership of your matching contributions. You can allow partial vesting over a period of years – the employee gains ownership to an equal percentage of funds each year – or 100% vesting after multiple years.

If you choose to match employee contributions, expect to pay about 1% of total payroll. You then have two contribution options: match a percentage of an employee's contributions (up to 6% of total compensation), or a fixed amount for every employee. Employee contributions are always 100% vested from day one.

As the plan sponsor, you can seamlessly rollover an employee's 401k plan from a previous employer into your plan. You're also eligible for tax credits for setting up the plan and for matching employee contributions.

Many businesses feel they need over 100 employees to start a 401k plan, but that's not necessarily true. Even if you have fewer than 100 employees, there's a 401k plan for just about any budgetary concern, administrative need, and investment goal. Also, if you're expecting to grow the company, traditional 401k plans are modular, allowing you to add and remove participants over time.

403b plans for non-profits
Non-profit organizations such as universities and hospitals can offer a variation of the 401k known as the 403b. The two plans are essentially identical except 403b participants can't invest in individual stocks. Rather, their funds are placed in annuity contracts with insurance companies or into custodial accounts holding mutual funds. 403b plans also feature the "15-Year Rule." This allows employees with 15 years of service to contribute an additional $3,000 per year for a maximum of five years.