What Does Voluntary Income Deduction Mean?

A voluntary income deduction is a deduction, authorized by you, to come out of your pay check usually on a regular basis. Many types of voluntary income deductions exist, such as money coming out of your pay check to pay a debt. People use voluntary income deductions as a matter of convenience.

Savings

You can have a voluntary income deduction set up so that money comes out of your pay check to go into a checking or savings account. This may discipline you to save money. To get started, go to the bank, fill out any necessary forms and take them to your human resource office or personnel office. They will complete the process.

Retirement Account

Another type of voluntary income deduction is for a retirement account, such as a 401k. You determine the amount of money you want to contribute to this program. This money is not taxed when it is deducted. The amount of your voluntary income deduction can be increased or decreased during certain times of the year.

Discipline

Setting up a voluntary income deduction account helps discipline you to make retirement account contributions and save money. You don't have to worry about these types of deductions, because they take place every month without any action on your part.

Efficient

A voluntary income deduction helps you achieve your financial goals more efficiently and effectively. Once the deductions start, you get used to them and sometimes you don't even realize they are taking place. After awhile you don't even miss the money that's being taken out of your pay check.

Time Frame

When you have a voluntary income deduction, it allows you to save time. Without a plan in place such as this, you would normally have to make those payments on your own. You don't need to go online or write a check with a voluntary income deduction; it happens automatically.

Cancellation

Most voluntary income deductions can be stopped when you want. You may have to wait for a specific period of time such as the beginning of a quarter or the beginning of the year. Sometimes it takes approximately 30 days for the deductions to stop. Make sure you give yourself enough time prior to the cancellation of a voluntary income deduction.