When it comes to benefits, your employees are asking, "What's in it for me?" At the same time, you should be asking, "What's in it for my business?"

While the attraction of benefits to employees is obvious, the plan you select should also be attractive to your business—one that will help you stay competitive in your market so you can attract and keep the best employees. You should also keep up with the newest benefit trends and regulations, which change rapidly. Knowledge of these changes can lead to overall cost savings and better overall plan design.

To get you started, here is an introduction to the general types of regulations affecting employee benefits. Your Northwestern Mutual Financial Network Representative, working with your attorney or accountant, can further clarify how these issues impact your business and the plan you choose to offer your employees.

Employers want tax deductions. Employees want tax deferral. The tension between these two contrasting objectives can make designing your employee benefit plan difficult.

Balancing the concerns of each side not only takes careful negotiation, but also involves rigid adherence to the rules relating to deferred compensation.

• With a qualified plan (one which meets stringent tax code requirements), employers and employees may get the best of both worlds.

• With nonqualified plans, the timing of income and deductions will be determined by the rights and obligations under the plan, and the applicable Internal Revenue Service Tax Code rules.

Determining which employees will be granted benefits under an employer-sponsored plan is not just up to the largesse of the employer. The Employee Retirement Income Security Act (ERISA) spells out certain nondiscrimination requirements that must be met for qualified plans, as does the tax code.

However, as an employer you have some leeway in the provision of nonqualified plans, particularly if these plans are being provided for key executives. Even these types of plans have certain reporting rules, although safe harbor reporting rules are also available. This is an area where even a minor mistake can cause the loss of certain tax benefits, or may require you to expand the provision of benefits to employees who were not originally recipients of such benefits.

Particularly with qualified plans and nonqualified deferred compensation plans, the accounting concerns can be as complicated as the tax issues. These plans can have a major impact on the balance sheet and income statements. Dealing with these issues up front is necessary to give a consistent picture to your creditors, investors and employees. In fact, the accounting impact can be used to show your employees how dedicated you are to providing valuable benefits to the workforce.

Each state may have certain rules regarding income tax withholdings, required provision of benefits and other mandates relating to how an employer should deal with benefit plans for employees.