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Before-Tax Contributions
(redirected from Pretax 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.


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If you have both before-tax contributions (the most common type) and after-tax contributions (unusual, but possible) in your retirement account, you would pay tax only on the portion that represents your pretax contributions.
Remember, your traditional IRA or IRA rollover accounts are filled with pretax contributions along with untaxed gains over the years.
Communications concentrate on plan basics such as how the plan works, the advantages of pretax contributions, tax-deferred compounding, starting early, contributing regularly and how to invest plan contributions to reach retirement goals.
 
 
 
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