Before-tax contributions

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Before-tax contributions

The portion of an employee's salary contributed to a retirement plan before federal income taxes are deducted; this reduces the individual's gross income for federal tax purposes.

Before-Tax Contributions

Contributions made to a retirement plan with taxable withdrawals. That is, when one makes before-tax contributions to a retirement plan, one does not pay taxes on the contributions in the year they are made, but defers taxation until one begins to make withdrawals from the plan. One makes before-tax contributions to traditional IRAs and most 401(k)s. See also: After-tax contributions.
References in periodicals archive ?
Adding a Cash Balance Plan allows them to rapidly accelerate savings with pre-tax contributions as high as $100,000 to $240,000, depending on their age.
And the limit on pre-tax contributions to flexible spending accounts are now capped at $2,500 annually.
It ensures that highly-compensated employees can maximize their pre-tax contributions to the plan; and
The IRS said the changes immediately allow employers with cafeteria plans--plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits--to permit employees to begin making pre-tax contributions to pay for the expanded benefit.
The IRS issued guidance announcing the changes immediately allow employers with cafeteria plans to permit employees to begin making pre-tax contributions to pay for this expanded benefit.
One option would be to allow pre-tax contributions to employee-pay-all VEBAs for all workers.
American workers are increasingly relying on 401(k) plans, which allow pre-tax contributions to individual accounts, for their retirement income.
However, unlike pre-tax contributions, both Roth contributions and the earnings would be excludible from income when paid out of the plan via a qualified distribution.
When workers have qualified plan coverage, they can make pre-tax contributions to HSAs they own and control.
This legislation allows employers and employees to make pre-tax contributions into a savings account that is designed specifically for medical costs.