ABCs of pensions and retirement: retirement plans help retain and attract employees, and a multitude of options makes it easier for employers to provide them.

• Author: Sergeant, Deborah Jeanne

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As financial institutions and lawmakers have realized the changing needs among America's work force, employers can select from more retirement plans than ever before, which presents the challenge of picking the best plan. A plan that adequately serves few of the employee population hardly provides a real benefit to anyone; however, the plan still must be reasonably priced and easy or affordable to administer.

Like choosing any other benefit, you must consider not only the cost but also the return on the investment you're making.

"If an employer has 25-year-old employees, they are not as concerned about retirement," said Steven Coon, CEO of Safemoney Advisors LLC in Anchorage. "If an employer has $3,000 to apply toward retirement, most younger employees would want a raise, not apply it toward retirement."

He also believes that employees starting families are more interested in their immediate need of good health care coverage than their retirement, which could be as many as 30 years away.

Retirement plans have become very portable, which nearly eliminates the loyalty factor.

Despite the devaluing of the retirement plan as a benefit, when compared to a raise or stellar health benefits, it's still worth your resources as an employer to find a retirement plan to attract experienced talent to your company. If you take a balanced approach in spending your benefit dollars and match the plan to your employees' needs, you're sure to find the right fit for your company and for your employees.

Non-qualified and qualified comprise the two basic categories of retirement plans. Non-qualified retirement plans don't comply with the requirements of the Internal Revenue Code and Employee Retirement Income Security Act of 1974 (ERISA). These kinds of plans tend to favor highly compensated employees and for that reason, they don't receive tax breaks like qualified retirement plans. With the exception of 457 Plans, the earnings on these plans are taxed and cannot be rolled over into an IRA. Non-qualified plans have become less desirable than their tax-deferred counterparts.

Qualified retirement plans comply with Internal Revenue Code and ERISA. Qualified plans provide tax benefits, such as allowing employers to deduct contributions the same year they were made and delaying the taxation of contributions and earnings until they are withdrawn. The earnings on the money held by the plan's trust aren't taxed to it, and employees can also...