Elective-Deferral Contribution

Elective-Deferral Contribution

A contribution to an IRA or 401(k) made from an employee's pretax income. That is, an elective-deferral contribution is tax-deferred, meaning that the retirement account holder does not pay taxes on what goes into the account until he/she begins making withdrawals.
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The owner can make elective-deferral contributions from compensation of up to $18,000 in 2015 ($24,000 for those 50 and up) as well as employer non-elective contributions.