Pretax contribution

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.

Pre-Tax Contribution

A contribution made to a retirement plan with taxable withdrawals. That is, when one makes pre-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 pre-tax contributions to traditional IRAs and most 401(k)s. See also: After-Tax Contributions.

Pretax contribution.

A pretax contribution is money that you agree to have subtracted from your salary and put into a retirement savings plan or other employer sponsored benefit plan.

Your taxable earnings are reduced by the amount of your contribution, which reduces the income tax you owe in the year you make the contribution.

Some pretax contributions, including those you put into your 401(k), 403(b), or 457, are taxed when you withdraw the amount from your plan. Other contributions, such as money you put into a flexible spending plan, are never taxed.