Pretax Deductions for the US

Pretax deductions are deductions made from a person's gross income. They reduce the total taxable income of the person and the tax withheld.

When working with pretax deductions, consider the following.

• What secondary classifications you can use

• How wage basis rules work with them

• What are their contribution limits

For further info, see Define Pretax Deduction Elements for the US in the Help Center.

Secondary Classifications

The Pretax Deductions primary classification uses these secondary classifications.

• Deferred Compensation 401k

• Deferred Compensation 401k Catch-Up

• Deferred Compensation 403b

• Deferred Compensation 457

• Dental Care 125

• Dependent Care 125

• Flexible Spending Account

• Health Care 125

• Health Savings Account

• Health Savings Account Catch-Up

• Nonqualified Deferred Compensation

• Retiree Dental Care 125

• Retiree Flexible Spending Account

• Retiree Health Care 125

• Retiree Health Savings Account

• Retiree Health Savings Account Catch-Up

• Retiree Vision Care 125

• Vision Care 125

Wage Basis Rules

Use wage basis rules to determine how pretax deductions reduce gross wages. A reduction in gross wages results in a reduction of taxable income, thereby allowing a reduction of some taxes and involuntary deductions.

For example, Pretax Healthcare 125 deductions are exempt from medicare and social security taxes. However, 401(k) deductions reduce taxable wages for federal income tax (FIT) only and not for social security and Medicare. In most cases you use the predefined rules and don't need to do anything.

For further info, see Tax Wage Basis Rules for the US in the Help Center.

Contribution Limits

The predefined contribution limits help ensure the employee is in compliance with statutory limits. However, there are some cases where you need to adjust the limits for individual employees.

For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.