what is an elective deferral contribution 
an elective deferral contribution is made directly from an employee s salary to his or her employer sponsored retirement plan such as a 401 k or 403 b plan the employee must authorize the transaction before the contribution can be deducted elective deferrals can be made on a pre tax the internal revenue service irs establishes limits on how much an employee can defer or contribute to a qualified retirement plan an elective deferral contribution is also known as a salary deferral or salary reduction contribution 12