What does “pretax” mean?
• The amount that you elect to have deducted for the 403(b) is contributed to the plan before federal and state income tax, therefore reducing your taxable income, which may reduce the federal and state income taxes you pay each year. Deductions do remain subject to FICA. • The earnings on contributions grow tax deferred until you take a distribution. At that time both your contributions and earnings will be taxed as income. • If you would like to calculate how a pre-tax 403(b) deduction would affect your take home pay, use Duke’s Take Home Pay Calculator.
