Payroll Deduction Plan


DEFINITION of 'Payroll Deduction Plan'

A contribution plan in which an employer deducts a specified amount from an employee's pay and puts the funds toward insurance, healthcare or an investment account. In most situations, employees enter into payroll deduction plans on a voluntary basis.

BREAKING DOWN 'Payroll Deduction Plan'

Payroll deduction plans offer employees a convenient way to automatically contribute income toward an ongoing expense or investment. For example, it is common for employees to deduct a set percentage of income and contribute it to their Traditional or Roth IRAs. An employee may also choose to have the premiums from an insurance policy deducted from their pay, ensuring that a payment is never missed.

  1. Health Savings Account - HSA

    An account created for individuals who are covered under high-deductible ...
  2. Roth IRA

    An individual retirement plan that bears many similarities to ...
  3. Payroll Tax

    Tax an employer withholds and/or pays on behalf of their employees ...
  4. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  5. Premium

    1. The total cost of an option. 2. The difference between the ...
  6. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
Related Articles
  1. Retirement

    Payroll Deductions Pay Off

    Find out how you can bypass or defer taxes on thousands of dollars each year.
  2. Options & Futures

    Basic Investment Objectives

    You might know about different asset types, but do you know how each type contributes to a particular goal?
  3. Taxes

    Small Business Tax Obligations: Payroll Taxes

    Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations.
  4. Retirement

    SEP IRAs Tutorial

    Learn about the set-up, the contributions to and the distributions from this IRA-based plan to which employers may make tax-deductible contributions on behalf of eligible employees.
  5. Options & Futures

    Roth IRAs Tutorial

    This comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
  6. Retirement

    Traditional IRAs Tutorial

    This comprehensive guide goes through what a Traditional IRA is and how to set one up, contribute to it and withdraw from it.
  7. Markets

    What Is the Labor Market Conditions Index?

    The Labor Market Conditions Index is a new Fed indicator to track labor statistics. How useful is it?
  8. Professionals

    How To Hire and Retain An Overqualified Candidate

    Understand how to hire and retain overqualified candidates by proactively seeking them out, discerning their motivations and then offering what they want.
  9. Entrepreneurship

    7 HR Basics for Small Businesses

    Whether or not you are a fan of human resources, every employer needs to know the answers to these questions.
  10. Savings

    A Quick List of FSA Eligible Expenses

    The ABCs of FSAs: What you can and can't use your Flexible Spending Account funds for.
  1. Can LLCs have employees?

    A limited liability corporation (LLC) can have an unlimited number of employees. An employee is defined as any individual ... Read Full Answer >>
  2. Do flexible spending accounts (FSA) funds roll over?

    An individual can utilize an employer’s cafeteria plan of employee benefits to establish a flexible spending account (FSA). ... Read Full Answer >>
  3. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>
  4. How do modern companies assess business risk?

    Before a business can assess or mitigate business risk, it must first identify probable or likely risks to its bottom line. ... Read Full Answer >>
  5. Why has emphasis on corporate governance grown in the 21st century?

    Corporate governance refers to operational practices, management protocols, and other governing rules or principles by which ... Read Full Answer >>
  6. What should a whistleblower do if their employer retaliates?

    Although specifically prohibited by employment law, employer retaliation against whistleblowers for exposing employers' wrongdoings ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center