before-tax contribution

before-tax contribution definition - finance
The part of an employeeÂ’s salary that is contributed to a retirement plan before federal income taxes are deducted. Before-tax contributions reduce the taxpayerÂ’s gross income for federal tax purposes. A withdrawal from an account funded with before-tax contributions becomes taxable at the time of withdrawal.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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