Business and Personal Finance Dictionary

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• SALARY REDUCTION PLAN
  
  A salary reduction plan is a type of qualified, employer-sponsored retirement savings plan. Typical examples are 401(k)s, 403(b)s, 457s, and SIMPLE IRAs. A salary reduction plan allows you to contribute pretax income to a retirement account in your name and to accumulate tax-deductible earnings on those contributions. Your employer may also match some or all of your contributionaccording to a formula that applies equally to all participating employees. Each type of salary reduction plan has an annual contribution cap that's set by Congress.
  
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