In a traditional 401(k), contributions are made...

In a traditional 401(k), contributions are made pre-tax, meaning that the money is taken from your paycheck before income tax is applied. This has the immediate benefit of lowering your taxable income for the year, which can result in a lower tax bill during that same tax year. The contributions then grow tax-deferred, allowing for potentially greater investment growth since you're not paying taxes on the earnings each year.

When you eventually withdraw the money in retirement, it will be taxed as ordinary income, which is when you will pay taxes on those contributions and the investment earnings. The pre-tax nature of these contributions is a key feature that makes traditional 401(k) plans attractive as part of a long-term retirement savings strategy.

The other options, while they have their own contexts in different types of accounts or systems, do not describe how contributions are structured in a traditional 401(k).