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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?

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If your gross pay is $2000 per month and you are depositing $200 into the 401-K, the company sees this as a 10% contribution.

If they match 100% up to 5% they will contribute 5% of the gross or $100 per month.

It doesn't matter if your contribution is pre- or post-tax and it doesn't matter to the company what your tax bracket is. Also note that all of their contributions are considered pre-tax.

Keep in mind that in the quoted example ignored Social Security, Medicare, state taxes, health insurance...

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