Elective deferrals are the portion of your paycheck that you choose to put directly into a retirement plan, like a 401k, instead of receiving it as take-home pay. You “elect” to defer this money, meaning you delay using it now so it can grow for your future. These contributions are usually either pre-tax, which can lower your taxable income today, or Roth, where you pay taxes now but don’t owe taxes on qualified withdrawals later. Elective deferrals are one of the main ways employees save for retirement through workplace plans.