A 401(k) is a defined contribution plan that allows your employees to set aside tax-deferred income for retirement. The key advantages of a 401(k) include:

• Allows employees to defer a portion of their compensation, up to $15,500 (2007 limit) (often more than a SIMPLE IRA) into their own retirement account
• Employers can offer matching and profit sharing contributions
• Loan provisions can be offered to allow employees to gain access to their retirement plan assets to meet more immediate needs (subject to certain limitations)
• Requires significant record keeping, but offers flexibility in designing benefits and features
• Employees who are age 50, or older, can defer an additional $5,000 (2007 limit), pre-tax, each year