Alan Waxler Group finance director Bill Riska helped his company start a 401(k) retirement plan as a way to keep and attract workers. Photo by Gary Thompson.

Investing in the future just got a little easier for employees of the Alan Waxler Group.

The company, which provides hospitality services ranging from charter transportation to models for trade-show booths, unveiled its first-ever retirement benefit in December. Open enrollment in the company's new 401(k) plan began on Jan. 1.

"We just felt this was another way of attracting and keeping good employees," said Bill Riska, the company's finance director. "Our employees are very enthused about it. Very few of them that I've spoken to had a 401(k) in their previous jobs, so they're excited to see an opportunity for them to save."

Riska said roughly 40 of the Alan Waxler Group's 150 workers have enrolled in the company's 401(k), though he expects that number to climb as enrollment continues through the end of January.

In offering retirement benefits for employees, the Alan Waxler Group has bucked the odds among smaller businesses.

A November study from ShareBuilder, an online investment brokerage that offers 401(k) plans, found that 63 percent of America's small businesses don't offer their employees any retirement plan. And just 14 percent of small businesses provided 401(k)s to their workers, the survey found.

Top among the reasons entrepreneurs go without retirement benefits: too few employees. Fifty-four percent of respondents said they didn't have enough staff members to make a plan worthwhile. In addition, 28 percent said they couldn't afford a company match, 26 percent said they faced unstable business circumstances, 15 percent cited a lack of interest among employees and 15 percent said they had a short-term work force. Nearly two-thirds of small-business owners, 63 percent, said they didn't know how much a 401(k) plan would cost them.

Executives of the 10-year-old Alan Waxler Group faced down some of those concerns when they were contemplating a retirement plan.

Riska said he and other managers weighed programs "for quite some time" before they lined up a specific benefit. Because they wanted to match some of the money workers set aside, the company had to be in a financial position to afford the corporate contributions, Riska said.

"We also had a lot of other things that were priorities on our list of how to make ourselves a better company," Riska added. "We wanted those plans in place first."

Entrepreneurs would be wise to mimic the Alan Waxler Group and consider adding retirement benefits to their compensation packages, observers say.

"(A retirement plan) is something savvy job seekers are looking for," said Mary Beth Hartleb of Prism Human Resource Consulting, the local firm that helped the Alan Waxler Group find its 401(k) plan. "The job market is very tight, and any edge you can get from a recruiting standpoint is important. If a candidate has two equal offers, and one company is offering a 401(k) while the other company isn't, the employee will probably go for the business with a 401(k)."

Craig Copeland, a senior researcher with the Employee Benefit Research Institute in Washington, D.C., said small companies that rely on a professional work force or employees with advanced degrees are feeling especially intense demand for retirement programs. Physician practices, accounting and law firms, smaller consulting businesses -- all have labor forces with skills that are attractive to a wide variety of employers, he said.

Experts say the prospect of setup and administrative costs shouldn't daunt business owners who are interested in initiating a retirement benefit.

Matching employees' contributions isn't mandatory, but all business owners will have to pay administrative fees for tasks such as the performance of an annual 5500 report detailing for the Internal Revenue Service the plan's operation and returns. Startup fees can be a few hundred dollars, Hartleb said, with paperwork costs on top of that initial charge.

Howard Winters, chief executive officer of Payroll Solutions in North Las Vegas, said establishing a 401(k) can cost as little as $1,500 in the first year, depending on how complex a company's needs are and whether the company's owners decide to kick in matching funds.

The Alan Waxler Group's first-year investment will be significantly steeper, because the company is matching 50 percent of the first 6 percent its staffers contribute.

Riska said the plan will cost $30,000 in its first year based on the number of workers who have signed up. He expects that tally to rise as more employees sign up for the plan through January, and again in July, when enrollment reopens.

The cost is worth it, he said.

"Our employees are a major asset to the company," he said. "This (retirement plan) gives them financial security for the future, and it keeps them close to the company."

Consultants say it's the ideal time to consider offering retirement benefits. Major companies are shedding employer-funded pensions and switching over to worker-contribution programs such as the 401(k), and that means smaller companies can better compete with the overall benefits packages their larger counterparts provide. Plus, investment brokerages are offering an increasing number of retirement plans specifically for small businesses.

Many brokerages offer 401(k) plans with bigger discounts on administration fees for small businesses, Hartleb said.

Her research for the Alan Waxler Group turned up worthy plans from major firms including Charles Schwab, Paychex and The Hartford (the company went with The Hartford's program). And Copeland said Fidelity has a 401(k) plan that keeps paperwork costs lower by coordinating the program's administration on the Internet.

Small businesses are also contracting with professional employer organizations such as Payroll Solutions so they can buy into a 401(k) plan with hundreds of other companies. Banding together with like-sized businesses gives even the smallest companies more buying clout and helps them defray administrative expenses among a wider range of workers.

Choosing a retirement plan isn't without its perils.

Winters urges entrepreneurs to watch out for hidden or excessive fees. One new Payroll Solutions client had an existing 401(k) plan with concealed fees that could have siphoned off as much as $3 million in employees' savings over 20 years, he said. Look for a benefits provider that promises transparent fees. Payroll Solutions, for example, has a set cost for administering a plan and includes the cost on employees' statements, Winters said. The company also credits investment-sales commissions back to plan enrollees and invoices companies separately for its third-party administration charges, Winters said.

Taking control of fees is essential, Copeland said, because employees are increasingly suing plan providers and employers for savings lost to charges.

"Companies can put themselves in the way of potential legal harm if they just go out and get a high-priced 401(k) plan," Copeland said. "(The Employee Retirement Income Security Act) makes employers the fiduciary, so they're supposed to do what's in the best interest of the plan's participants. If you find a higher-cost plan, you may be able to justify the higher cost if you're providing more advice, holding seminars or giving people access to their asset portfolios. You at least need to be documenting why you chose one plan over another."

Hartleb said due diligence is essential. Find out how old the plans you're considering are. Make sure you know of all the parties involved in administering a plan, because bigger investment brokerages often outsource 5500 reports or other tasks. Understand who's charging you for what services, and make sure one of the administrators will take responsibility for 5500 record-keeping. A brokerage's plan should also have solid portfolio diversity -- about 30 funds is ideal, Hartleb said, and too many more than that could overwhelm workers. An investment plan should also have options with varying risk levels, including bonds, stocks and international funds.

"You don't want your employees to come back and say, 'They forced me into a couple of funds,' " Hartleb said.

Hartleb recommended that company owners also find a plan that doesn't charge extra for one-on-one investment advice or seminars for employees. And, she said, company owners should always look for an administrator who's a certified financial adviser.

Winters said making the effort to roll out a retirement plan goes beyond helping a company bring on and keep top workers. It's also a way for entrepreneurs to help address the coming shortfall between Americans' contributions to and payouts through Social Security.

"Offering retirement benefits is one of the most socially responsible things a business can do," Winters said. "We have a huge crisis looming, with the baby boomers coming into their retirement years. A lot of them will not have the wherewithal to have the kind of retirement they want to have. As more businesses offer retirement benefits, the younger generations will hopefully learn that it's important to do some retirement planning."