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.
Investopedia Commentary
This kind of contribution is also called an elective-deferral contribution. Employees defer the tax on the money until it is distributed to them.
Related Links
Introductory Tour through Retirement Plans
See also: Active-Participant Status, Defined-Contribution Plan, Elective-Deferral Contribution, Employee Contribution Plan, Matching Contribution, Nonelective Contribution, Pension Plan, Simple, Simplified Employee Pension