salary reduction plan

salary reduction plan definition - finance
A plan that lets employees put pre-tax wages into a tax-deferred retirement plan. A prime example of this type of plan is a 401(k) plan that allows employees to defer part of their salary into a tax-deferred plan to fund their retirement. Employees are then taxed at the lower salary level.

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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