Under Canadian tax laws, do CODA contributions made by Canadian participants to their 401(k) plan reduce their taxable income? Thanks in advance.

"401(k)" refers to a section number in the U.S. Internal Revenue Code, so there's no such plan under Canadian tax law. Employee deferrals to a RRSP will reduce employees' taxable compensation.

Hopefully that answers your question.

Thanks for the response. I wasn't very clear with my question. These people (Canadian citizens) participate in a 401(k) plan, since they are part of a subsidiary to a US company which has decided to include them in the plan. I am assuming that for Canadian tax purposes, the salary deferral contributions that they make will not reduce their taxable income, but I was wondering if anyone had any experience with this.

I don't think citizenship is the important factor. Is it U.S. income?

It is not US source income.

I'd be careful including Canadian citizens in my U.S. 401(k) plan. Typically, we just set up a "401(k) type" arrangement in canada for canadian employees. While the tax treatment is similar, canada will require you to register the plan in canada.

I agree. If the income is earned in Canada, Revenue Canada will not allow a deduction unless it has been to a registered plan (RRSP) in Canada.