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 ?
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.
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.
SAR-SEP plans are salary reduction SEPs that allow employees to make pretax contributions to their IRAs.
WHAT IT IS: This employer-sponsored retirement plan primarily is funded by pretax contributions from the employee's salary.
Another point that should be made is a client's ability to continue making pretax contributions to retirement plans, an amount that will increase to $15,500 in the 2007 tax year, he adds.
The card provides electronic access to the pretax contributions set aside in the accounts, eliminating the paperwork associated with securing reinbursement for qualified expenses.