Tax-Deferred Contribution

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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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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
Most Americans are now familiar with 401(k) plans epitomized by employee tax-deferred contributions (often with a company match).
Affording the RETIREMENT DREAM
Individuals who choose this option can supplement their individual accounts with additional tax-deferred contributions. About 25 percent of British workers have chosen the personal retirement option over state or employer pensions.
Retirement plans
The statutory yearly limit on tax-deferred contributions to a 401(k) plan is $8,475--not much for a highly compensated executive.
The 401(k) wraparound: an attractive benefit for top executives
Without this safe harbor, low plan participation among middleand lower-income workers might limit allowable tax-deferred contributions from key employees of the sponsoring company, including the business owner or owners.
Automatic enrollment retirement plans

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