When you contribute to a defined-contribution retirement plan, your employer often puts in money too, and you are able to defer taxes on these contributions.

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In a defined-contribution retirement plan, such as a 401(k) or 403(b), both the employee and employer can contribute money. The contributions made by the employee are often made on a pre-tax basis, which allows for the deferral of taxes on these contributions until the funds are withdrawn in retirement. Many employers also match a portion of the employee's contributions, further enhancing the retirement savings.

When You Contribute to a Defined-Contribution Retirement Plan, Your Employer