Tax-Deferred Contribution

Tax-Deferred Contribution

A contribution to a retirement plan on which the contributor does not pay taxes until a later date. One reduces one's taxable income by the amount of the tax-deferred contributions, shielding those contributions from taxation. However, one eventually pays taxes on these contributions when one begins to make withdrawals from the retirement plan. Those contributions (and their investment income) are taxed as ordinary income upon withdrawal. One makes tax-deferred contributions to reduce one's tax liability in the near term in hopes that one's income (and therefore one's tax liability) will be lower after retirement.
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References in periodicals archive ?
For the self-employed individual, a SEP permits a maximum tax-deferred contribution of $55,000 per person in 2018, which is consistent with an individual 401(k) plan (not including the $6,000 catch-up contribution available to 401(k) plan participants who have attained age 50).
SEPs: Simple but not always optimal
The details of the GOP plan haven't been released yet, but The New York Times reported that Republicans are talking about cutting the annual, tax-deferred contribution from the current $18,000 per year for people under 50 ($24,000 for people 50 or older) to a measly $2,000 a year.
Saving for the future
(1) Tax-deferred contribution levels are significantly higher than the $5,000 (in 2009) limit for traditional and Roth IRAs (see Chapter 6).
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As an example, Falconer said the maximum tax-deferred contribution to a 401(k) is $10,500.
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Making tax-deferred contributions is one of the best ways to save.
Pentegra suggests retirement planning tips for 401(k) plans
401(k) accounts were opened in my name at TIAA/CREF and Vanguard, into which I made periodic, tax-deferred contributions. With this type of plan, I vested immediately in that the money contributed to the accounts belonged to me.
Pension system in the U.S. needs fixing
Beyond that level, decide whether you wish to make unmatched tax-deferred contributions to your traditional 401 (k) or similar plans.
Rethinking retirement contributions
Plan sponsors may pay benefits out of operating cash, or they may set aside assets in a rabbi trust--an irrevocable trust in which tax-deferred contributions are invested--and buy an asset that will track what account balances are doing.
An Unseen Challenge
* Tax-deferred contributions (federal and state income tax, where applicable),
Nonqualified deferred compensation plans: don't count them out: changing regulations, an up-and-down economy and negative perceptions have some wondering if nonqualified plans have a future. They do
Catch-up contributions are additional tax-deferred contributions and are separate from regular TSP contributions.
Thrift Savings Plan contribution limits increase
Even though both companies have earned $200,000 (IBWRC), factoring in retirement contributions produces some real differences in L's and H's taxable income if both taxpayers have a solo 401(k) plan in place and maximize their tax-deferred contributions. With $15,500 in wages, L can contribute only $3,875 (25% of $15,500) for the employer portion of his solo 401(k) and $15,500 for the employee component if he wishes to maximize his retirement contributions.
Compensation issues for self-employed S corp. owners
Fortunately, a 401(k) look-alike plan allows executives to overcome this discrimination by permitting tax-deferred contributions to a nonqualified retirement plan.
401(k) look-alikes can help overcome qualified plan limits

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