Business Glossary

contributions made by an employee into a tax-deferred savings account, such as a 401(k) or 403(b), beyond the level at which an employer will match the investment. Depending on the level of contributions, these may be made on a pretax or aftertax basis. Tax law limits the total amount of money that can be contributed to such a tax-deferred account. In any case, all funds so contributed accumulate without taxation until withdrawn at retirement. The employee chooses the investment vehicles in which the money is invested.