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The deferral compensation is part of the compensation which the taxpayer defers from tax liability by contributing that amount into tax deferral account - as 403b plan in your situation. The tax liability is deferred until the taxpayer eventually takes distributions from that account.
Would the amount the taxpayer deferred & contributed into the plan be taxable? - No.
But when distributed - the distributed amount will be taxable.
Let me know if you need any help.