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New York -- Many small business owners working on their tax returns are probably feeling a pang of regret, realizing they could have saved money if only they'd gotten around to setting up that retirement plan for themselves and their employees.

For some businesses, it might not be too late to create a plan and see the benefits on their 2001 returns. For others, a retirement plan needs to be a priority for 2002.

But what kind of plan? The 401(k) is so popular, but it can require a great deal of paperwork and monitoring to comply with federal tax and labor laws, and so it might be beyond the means of many small businesses. There are profit-sharing plans, and traditional pension plans, but they too might be a handful for a small operation.

There are many considerations that go into selecting a plan, including the tax consequences of each, limits on employer and employee contributions and the amount of work a plan entails. It probably goes without saying that a business owner who doesn't have extensive knowledge about retirement plans should consult an accountant or benefits specialist who can sketch out the pros and cons of the various alternatives.

But, having said that, many small business owners with limited time and financial resources might find that two plans, called SEP and SIMPLE, are the best choices for them.

Scott Elliott, manager of human resources at Seabrook Brothers and Sons, in Seabrook N.J., recommended smaller firms seek out the less complicated options.

``The higher up the ladder you go, the worse it gets,'' said Elliott, whose company, a frozen food processor, employs about 300 workers.

The federal government has information on retirement plans on the Internet that can give you a quick overview of some of your options. The Labor Department's Pension and Welfare Benefits Administration has a list of online publications (at www.dol.gov/dol/pwba/public/pubs/main.htm) including explanations of SEPs and SIMPLEs.

IRS Publication 560, Retirement Plans for Small Business, discusses the mechanics and requirements for setting up the plans; it can be downloaded from the IRS site (www.irs.gov) or by calling (800) TAX-FORM. A bookstore or online bookseller also has resources available.

The aptly named Simplified Employee Pension, or SEP, is probably the easiest of the plans. Generally under a SEP, the employer sets up Individual Retirement Accounts for employees and makes contributions to them.

There's little fuss in creating a SEP -- the paperwork can be as little as filling in several blanks on a very short IRS form, 5305-SEP, and giving copies to eligible employees. Or, you might use forms provided by the financial institution where the IRA accounts will be located. In most cases, you don't have to send any forms to the IRS.

Another plus of the SEP is that if you decide to set one up, you can still get a deduction for doing so on your 2001 taxes -- as long as the plan is created by the due date of your business tax return.

It is also much less expensive to operate a SEP; because of the simplicity of setting up the plan, you won't incur the costs of a 401(k) or defined benefit plan.

Another advantage of a SEP is that if you're having a bad year, you can decide not to contribute to employees' accounts (although for the sake of maintaining good relations with your workers, it's a good idea to make up the contribution as soon as possible when business picks up).

The SIMPLE, or Savings Incentive Match Plans for Employees, provides for employers to match employee contributions similar to the process in a 401(k) -- and it's possible for a SIMPLE to be a 401(k), but without some of the administrative requirements.

The SIMPLE carries some restrictions -- for example, it is limited to companies with 100 or fewer employees (which means you'd have to change plans if your work force climbs past 100). Employees can contribute up to $6,000 each year via payroll deductions (SEPs do not involve payroll deductions).

At this point, you can't set up a SIMPLE for tax year 2001. And be forewarned -- if you're thinking of setting up a SIMPLE, it must be done by Oct. 1 of this year.

The paperwork for a SIMPLE is not as easy as it is with a SEP, but it isn't as onerous as the more complex plans. All you might need is to complete IRS Form, 5305-SIMPLE.

These are just two plans. There also are what's known as qualified plans, the most complicated and the most expensive to maintain. They include more standard 401(k)s, profit-sharing plans, money purchase pension plans, and defined benefit plans, which include traditional pension plans. You can look into them for your small business, but be prepared to commit time and money to the process of creating and operating one.

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