Elective Deferral

Elective Deferral

Elective Deferral means:
a retirement plan option that allows an employee to have part of his or her pay contributed by the employer to a retirement fund rather than included in current wages. The deferred pay is not taxable to the employee until it is distributed from the retirement fund. Penalties apply to early withdrawals.

Elective deferrals generally include elective contributions to cash or deferred arrangements [Section 401(k) plans], Section 501(c)(18) plans, salary reduction plans, simplified employee pension plans, and tax-sheltered annuities for employees of not-for-profit organizations. Former IRC (check if this IRC provision is current here) §402(g)(3).





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