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"Pick-ups" apply only to governmental plans. Under Code section 414(h), the general rule is that any contribution that the plan calls an "employee" contribution is after-tax. Section 414(h)(2) (the "pick-up" provision) provides an exception that allows an employee contribution to a governmental plan (and only a governmental plan) to be treated as an employer contribution (and therefore made pretax) if certain requirements are met. As to your examples: In Example 1, you are correct that the contribution is subject to both income and FICA taxes. In Examples 2 and 3, the contribution is not subject to income taxes (assuming that the employee has no option to receive the amount in cash instead of having it contributed to the plan). However, because the contribution reduces the employee's salary, it is subject to FICA taxes. As an alternative, the employer could simply agree to pay B a salary of $20,000, and to pay the $10,000 contribution without a salary reduction. In that case, the contribution would be free of both income and FICA taxes. Clearly, the economic effect is identical to that described in 2 and 3, so it might at first blush appear incomprehensible that the tax consequences would be different. However, the thinking seems to be that the employer can go either way, but must pick one, so that an employee cannot get the benefit of reduced FICA taxes now and then argue years later that Social Security benefits should be based on the full unreduced salary.