Investopedia

Pretax Contribution

Dictionary Says

Definition of 'Pretax Contribution'

Any contribution made to a designated pension plan, retirement account or other tax deferred investment vehicle where the contribution is made before federal and/or municipal taxes are deducted.
Investopedia Says

Investopedia explains 'Pretax Contribution'

In calculating a pretax contribution, the amount of taxes withheld will be reduced, as the basis for the taxable amount will be reduced. Making pretax contributions is beneficial to those who are eligible, as this will reduce the amount of taxes paid at that time. It is always better to defer payments due to the time value of money.

Articles Of Interest

  1. Retirement Plan Tax Form 8606: When To File

    If you have a Roth IRA, you are responsible for keeping track of your pretax versus after-tax assets.
  2. How After-Tax Rollovers Affect Your IRA

    Consolidating retirement assets? Make sure you account for pre-tax and after-tax assets separately.
  3. I am self-employed and do not need most of my IRA RMD for expenses. Can I reinvest it in Roth IRAs?

    You can use your required minimum distributions (RMDs) to fund your Roth IRA as a Roth IRA contribution. This is because the source from which you take the cash to fund your IRA can be from any ...
  4. I am making after-tax contributions to an IRA. Will I get taxed again when I withdraw it (when eligible)?

    No. Withdrawals of your after-tax contributions to your IRAs should not be taxed. However, the only way to make sure this does not happen is to file IRS Form 8606. Form 8606 must be filed for ...
  5. How To Start Saving For Retirement

    If you establish these money-saving habits and patiently allow your wealth to build, you will be taking some huge steps forward in making your financial future more secure.
  6. Depreciation: Straight-Line Vs. Double-Declining Methods

    Appreciate the different methods used to describe how book value is "used up".
  7. An Introduction To The Keogh Retirement Plan

    Learn more about this popular defined-contribution retirement plan that many business owners, proprietors, and self-employed people can benefit from.
  8. Why Your Pension Plan Has Sovereign Debt In It

    One type of security pensions tend to invest in is sovereign debt, or debt issued by a government.
  9. How To Buy Annuities (And When Not To)

    Annuities are complicated products that require some basic homework to be done before requesting quotes. Retirees will want to think about how they envisage their lifestyle and even their potential ...
  10. How To Profit From Risk

    CDs may look safe and attractive but considering most pay a rate that is less than the rate of inflation seniors today risk actually losing money with CDs. We need to be our own money managers ...
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