Referring to How 401(k) plans work:
What does "pre-tax" really mean?
Let's do the math to see the advantage of pre-tax saving. For example, you may decide you want to put $200 into your account each month. Assume that, prior to starting your 401(k), you were bringing home $2,000 per month pre-tax, and $1,440 post-tax (paying $560 in tax for a 28-percent tax bracket). Because the $200 comes out pre-tax, that means you are taxed on $1,800 (paying $504 in tax), so your post-tax income is $1,296. In other words, you are paying $200 into your 401(k), but your take-home pay only goes down by $144. You just saved $56 per month!
What I was trying to find out is whether the percentage matched by my employer is before tax or after tax?
Let's say I was told by HR that they match 100% up to 5%. Using the salary example from above, would that be 5% of $2,000 or 5% of $1,440 that gets matched?