Common use of Salary Reduction Clause in Contracts

Salary Reduction. If you select salary reduction, you are using the tax-deferred method of annuity contribution. Your taxable income is reduced by the amount contributed to retirement; therefore, you pay less in tax dollars. The annuity contribution is not tax free, but is '~deferred~' until you begin receiving the annuity as income. The rationale for tax-deferring your retirement contribution is that at retirement your income may be less thereby putting you in a lower tax bracket (assuming the tax structure is similar to that now in place).

Salary Reduction. If you select salary reduction, you are using the tax-deferred method of annuity contribution. Your taxable income is reduced by the amount contributed to retirement; therefore, you pay less in tax dollars. The annuity contribution is not tax free, but is '~deferred~' ‘deferred’ until you begin receiving the annuity as income. The rationale for tax-deferring your retirement contribution is that at retirement your income may be less thereby putting you in a lower tax bracket (assuming the tax structure is similar to that now in place).

Salary Reduction. If When you select salary reduction, you are using the tax-deferred method of annuity contribution. Your taxable income is reduced by the amount contributed to retirement; therefore, you pay less in tax dollars. The annuity contribution is not tax free, but is '~deferred~' ‘deferred’ until you begin receiving the annuity as income. The rationale for tax-deferring your retirement contribution is that at retirement your income may be less thereby putting you in a lower tax bracket (assuming the tax structure is similar to that now in place).