Pretax contributions do not reduce the amount of annual income subject to income tax. (Managing the Costs of Employee Benefits)

Name: Pretax contributions do not reduce the amount of annual income subject to income tax. (Managing the Costs of Employee Benefits)
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Pretax contributions, such as those made to a 401(k) or traditional IRA, are not subject to income tax in the year they are made. This reduces the amount of taxable income for that year and can lower the tax bill.

Pretax Contributions Do Not Reduce the Amount of Annual Income