Salary Reduction Contribution
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Definition of 'Salary Reduction Contribution'
A cash- or deferred-contribution arrangement of an employer-sponsored retirement plan, under which participants can choose to set aside part of their pre-tax compensation as a contribution to the plan.
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Investopedia explains 'Salary Reduction Contribution'
This kind of contribution is also called an elective-deferral contribution. Employees defer the tax on the money until it is distributed to them.
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