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No, we weren't talking about the social security aspect of it. The 401k doesn't reduce the amount of income that is reported for social security purposes. That's good, because it goes towards giving you a higher average income when they calculate your benefits.

I think what you and I are arguing about comes down to semantics. Pretax to me means that the IRS hasn't seen that money and that they don't include it in your income before any deductions.

Under your scenario, sure, you've increased the amount of money that you keep each paycheck, but still you have had taxes taken out of that money. To me, it is not pretax.
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