Decide what type of 401(k) you will use

The cheapest is a plan in which you don't match your employees' contributions. If you choose to contribute, you need to decide how much and in what fashion. You can contribute a set percentage along with your employees. You can make your contribution a bonus paid annually. You can use the contribution as part of a profit-sharing program. Whatever method you choose, participation by your employees needs to be voluntary.

I recommend: For an overview of plans, see the Business Owner's Toolkit discussion of 401(k) plans. Also review the 401(k) plan requirements. For a comparison of different types of small business retirement plans, check out Wells Fargo.

Get familiar with plan providers

Because 401(k) plans are complex, most companies hire a plan administrator to run their programs. Banks, brokerage houses and other financial services companies offer 401(k) plan services. But even the biggest banks typically use another outside vendor. You can buy directly from some of the same vendors. In addition, some offer more hands-on 401(k) software, usually at reduced costs.

I recommend: One of the major providers of plans for business is ADP Retirement Services, which has partnering agreements with some of the nation's largest financial services firms, including Bank of America, Merrill Lynch and AIG SunAmerica. PAI offers a range of plans for small business. One company that offers self-run plans is 401(k) Easy.

Compare plan options and providers

When shopping for a plan, compare both prices and services. If you have only a few employees, you probably don't need an expensive plan with lots of options. You want to make sure the plan is both affordable and adequate for your needs. If you decide to use a self-run software plan, you should take it for a test drive to be sure you're comfortable running it.

I recommend: Several companies list their services and fees online. BuyerZone provides links to a range of providers and plans. Both Wachovia and 401(k) Easy offer plan descriptions and prices on their Web sites. ShareBuilder offers online quotes for plans based on your number of employees and location.

Know what you're getting before you buy

There's lots of fine print in even the most basic 401(k) plan. Make sure you understand what you're getting and how much it will cost before you buy. Starting over can be a real headache.

I recommend: Use this 401(k) Buyers Guide from BuyerZone to help you evaluate plans and offerings.