401(k) options for small businesses

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(FORTUNE Small Business) -- Dear FSB: I would like a 401(k) for my small business but there are so many, and I don't know who to trust. I'd like an online 401(k) so my employees have access to their information. I would like to know what fees there are and what fees will be charged to my employees. I don't want them to have to pay a lot on their investments.

- Julie, Manor Electric Inc., Minneapolis

Dear Julie: Is a 401(k) really what you need?

"So often people make the term 401(k) synonymous with 'retirement plan,'" says Gene Fairbrother, lead small business consultant for the National Association of the Self-Employed (NASE), a resource for self-employed workers and micro-businesses. "Be sure that a 401(k) is the best plan for your business and your employees compared to other plans."

If you're not certain, the IRS provides a non-biased source of information for small business owners shopping for retirement plans for their employees. Go to their website and take a look at "Choosing a Retirement Solution for Your Small Business" and "Retirement Plans for Small Businesses." They contain helpful charts comparing different types of plans in easy-to-digest language.

"We're a reliable and neutral source of information - in plain language - for small business owners," says Mark O'Donnell, director of customer education and outreach for employee plans at the IRS. "We promote getting the right plan and operating it properly. One of the biggest causes of noncompliance is that people get in the wrong plan, or one that's too confusing."

If you're set on a 401(k), put together some information before you sit down with investment counselors. You'll need a basic overview of the type of contribution your business can afford, how many employees will participate, their ages and the length of their employment, says Fairbrother.

"Be able to talk intelligently to plan administrators before you meet with them," he recommends.

Bone up on benefits on the IRS website with their "401(k) Resource Guide," where you'll find information about everything from choosing to terminating plans.

"Generally, if you stick to the big national firms, you're going to find them to be pretty competitive," Fairbrother says. Talk to three to five potential administrators and make them convince you why they should be the company that handles the 401(k) for your employees.

As for an "online 401(k)," you might be referring to the features available through the bank, credit union or mutual fund that's holding the money, suggests O'Donnell. Most offer features similar to a bank's checking account, where you can track your plan online.

"Fees charged by an institution can be significant and are often not very visible," he warns. They vary with the financial institutions that operate the plans. To help you understand the fees, the U.S. Department of Labor Employee Benefits Security Administration provides an overview in "A Look at 401(k) Plan Fees."