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Author: Jachimo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 9945  
Subject: 403b(7) Question Date: 7/2/1999 7:04 PM
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I'm in the process of establishing a 403b(7) for my wife. Vanguard S&P 500 Index Fund, of course. See, fools, I have been paying attention in class! Anyway, my question is this:

Is there any advantage in having an employer give a raise as a employer 503b contribution to the employees' account as opposed to the employee receiving the raise as a gross pay increase and then increasing the 503b contribution by an equivalent amount?

Takehome wise it would seem to be a wash. However, I started to wonder if in the first case the FICA and Medicare deductions would be less if the employee shown gross earnings may not reflect the employer paid 403b contribution. Also, what different tax consequences might there be in each case, if any?
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