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 ?
Edward Karas, as well as agreed to refund pretax contributions of $100,631.14 he made to the fund over the course of 13 years with the village public safety department.
However, it may be possible to pay the tax on those pretax contributions at today's tax rates and move the dollars over to the Roth version, if the paperwork allows such in-plan Roth conversions.
These savings accounts would now be eligible for pretax contributions and mid-career workers would be allowed to contribute up to $4,000 tax free each year, with a maximum contribution limit of $10,000.
The wellness plan provides typical wellness program benefits; however, the plan also provides substantial incentives that, in essence, reimburse the employee's pretax contributions for the wellness plan.
I would be totally against it," said Reynolds, referring to Washington talk about replacing the current system of pretax contributions to 401(k) plans with aftertax contributions, as in Roth retirement savings plan.
The combination of pretax contributions and tax-deferred growth creates the opportunity to build an impressive retirement fund with a 403(b) plan, depending on investment performance.
Employees do not have to choose 100% Roth contributions or 100% pretax contributions. As long as combined deferrals do not exceed the annual contribution limit, employees can designate any portion of their earnings to their designated Roth account and the remaining portion to their traditional pretax retirement account.
* 401(k) allows employees to make pretax contributions: matching employer contributions are allowed but not mandatory.
A plan sponsor can now offer a Roth feature allowing participants to convert all plan assets, including employer and employee pretax contributions and earnings, to Roth savings.
Most plans allow pretax contributions and tax-deferred account earnings.
The pretax contributions and earnings in the 401 (k) plan are not a factor because the after- tax contributions and their earnings are considered held under a separate contract.
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.