Pre-tax benefit deductions are withheld from your pay before federal income taxes, Social Security taxes and (in most states) state income taxes are deducted. This provides you with a tax advantage—that is, when your taxable pay is less, so are your overall taxes.

Paying for benefits with pre-tax dollars means your future Social Security benefits will be slightly reduced. Generally, the tax advantages of pre-tax plans will outweigh the reduced Social Security benefits later, but if you have any questions or concerns, you should consult your tax advisor.