Business and Personal Finance Dictionary

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• PRETAX CONTRIBUTION
  
  A pretax contribution is money that you agree to have subtracted from your salary and put into a retirement savings plan or other employer sponsored benefit plan. Your taxable earnings are reduced by the amount of your contribution, which reduces the income tax you owe in the year you make the contribution. Some pretax contributions, including those you put into your 401(k), are taxed when you withdraw the amount from your plan. Other contributions, such as money you put into a flexible spending plan, are never taxed.
  
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