A salary reduction agreement refers to the annual maximum allowable contribution to a participant's account in a defined contribution plan.(Defined Contribution Plans)

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A salary reduction agreement is an arrangement in which an employee agrees to reduce their salary or forgo a portion of their future salary in exchange for some form of non-cash benefit, such as contributions to a retirement plan like a 401(k), not the annual maximum allowable contribution.

A Salary Reduction Agreement Refers to the Annual Maximum Allowable