Do 401k Contributions Affect Gross Pay?

Do 401k Contributions Affect Gross Pay? Do 401k contributions affect gross pay? Key Takeaways. Traditional 401(k) contributions effectively reduce both adjusted gross income (AGI) and modified adjusted gross income (MAGI). The potential of tax deferral and reduction of current taxable income means that traditional 401(k) contributions offer ways to soften tax liabilities. Is 401k contribution