The salary reduction plan for and employee at a tax exempt institution is called what

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Answer:

Your answer would be a 403(b) plan.

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The salary reduction plan for and employee at a tax exempt institution is called a 403(b) plan.

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Definition:

403(b) plan:

A retirement plan for people that are part of certain education organizations, hospital service organizations, non-profit employers, and self employed ministers.

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Explanation:

The reason why 403(b) plan  is your answer is because the 403(b) plan has a tax exempt for the employee and the employer. The employee can contribute some of the salary they make to the plan, and the employer can contribute the same amount that the employee made to the plan. Most people that have a 403(b) plan is either a employee for a public school, minister, employee for a church, and etc. This plan has some advantages that a 401k retirement plan. The 403(b) plan allows the employee to make a pre-tax contribution so they don't have to pay it later on, if they can't do a pre-tax contribution, the earnings that they have on the plan will be taxed after the money has been distributed. This plan allows people to have a way to pay their taxes. This system is called the " tax-deferred status." The tax deffered status are interest, or capital gains that would be tax-free until the person gets their "receipt" from the plan.

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-Julie