Elective-Deferral Contribution

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DEFINITION of 'Elective-Deferral Contribution'

A contribution arrangement of an employer-sponsored retirement plan under which participants can choose to set aside part of their pretax compensation as a contribution to the plan.

Also known as "salary-deferral" or "salary-reduction contributions."

INVESTOPEDIA EXPLAINS 'Elective-Deferral Contribution'

When making these contributions, employees defer the tax on the money until it is distributed to them.

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