Contributions to the Plan By contributing to the UFCW Local 1776 and Participating Employers Retirement and Savings Plan with pre-tax dollars, you pay less in taxes. The Plan allows you to invest more than you could without the Plan. Pre-Tax Contributions. Pre-tax contributions are designed primarily for retirement savings. This savings option takes advantage of Section 401(k) of the Internal Revenue Code, which provides a tax shelter for long-term savings. With pre-tax contributions, federal income taxes are calculated after your contributions are deducted from your gross pay, thereby reducing your current taxes. Depending on where you live, you may not have to pay state and local taxes on your pre-tax contributions. Federal income taxes on your pre-tax contributions, as well as on the earnings on your contributions, are deferred until you take money out of the Plan. You may contribute, on a pre-tax basis, a percentage of your pay. In either case your contribution cannot exceed the lesser of 20% of your pay or the Internal Revenue Code dollar limit in effect for that calendar year. Your contributions are automatically deducted from your pay each pay period. For the 2002 calendar year, the dollar limit for your pre-tax contributions is $11,000, as required by federal law. This $11,000 limit on pre-tax contributions will be adjusted each calendar year by $1,000 per year through 2006.The Internal Revenue Code has also set additional limits on the amount higher-paid employees can contribute. If you have exceeded this or any other Internal Revenue Service ("IRS") imposed limit, you will be notified. When determining your contribution amounts, pay means your base pay, overtime and shift differential up to a maximum of $200,000. This figure may be adjusted each year for cost of living, as the law requires.