Employees elect to set aside money for retirement on a pretax basis through a Salary Deferral Agreement (PDF) with MCPS. This is an arrangement under which the participating employee agrees to take a reduction in salary. The amount by which the salary is reduced is directed to investments offered through the employer. These contributions are called elective deferrals and are excluded from the employee's income. Contributions grow income tax-deferred until the time of retirement, when withdrawals are taxed as ordinary income.