Which includes amounts contributed to a plan that are excludable from gross income?

Elective deferrals are amounts that employees choose to defer from their salary and contribute directly into specific retirement accounts like a 401(k) or a similar plan. These amounts are not included in the employee's gross income at the time of contribution, providing a tax advantage. By deferring these earnings, employees can reduce their taxable income for the year, potentially lowering their immediate tax obligations.

In contrast, mandatory contributions may not offer the same tax benefits, as they often consist of funds that must be deposited into a plan regardless of the employee's choice. Employee contributions, while relevant to retirement accounts, may or may not be excludable from gross income depending on the specific circumstances of the contribution and the type of plan involved. Incentive shares generally refer to stock options or shares awarded based on performance, which are usually taxed at a different stage of income recognition.

Overall, elective deferrals are distinct in their treatment as excludable from gross income, making them a favorable option for employees looking to maximize their tax efficiency through retirement savings.