Tax-Deferred Account

Tax-Deferred Account

1. See: 401(k).

2. See: Traditional IRA.
References in periodicals archive ?
If I believe I will be in the 15 percent marginal tax bracket in retirement and I have $18,000 to save in 2015,1 may want to save my first $12,550 in a tax-deferred account like a 401(k) that avoids current income tax and the remaining $5,450 in tax-free account (Roth) that I pay tax on now, but will grow tax free.
Withdrawals from a tax-deferred account are subject to a 10% federal penalty tax unless an exception applies.
There is often confusion about the benefits and mathematics of tax deferral, as well as pretax savings, because sometimes a tax-deferred account or investment only defers one from paying potentially more down the road.
HSA savings are deposited into a tax-deferred account and can be withdrawn tax-free when used for qualified medical expenses, which include health insurance deductibles as well as dental, vision and other types of care often not covered by health insurance.
In the table below, we show pre-tax equivalent returns of earning 8% in a tax-deferred account.
But with an HSA, as long as the funds are used for qualified medical expenses, account holders never pay taxes on the money--it's not a tax-deferred account like an IRA or a 401(k), it's actually a tax-free account.
Someone withdrawing $100,000 a year from a tax-deferred account would fall into the 25 percent federal tax bracket.
A covered expatriate holding an interest in a specified tax-deferred account is treated as having received a distribution of his or her entire, interest in the account on the day before the expatriation date.
It may surprise you even more to learn how little time it can take for a tax-deferred account to break even with, and then outperform, a taxable account.
Only the tax-deferred account requires a taxable RMD distribution.
If you look over your whole 20-year career, generally speaking, you're going to pick up a couple hundred thousand dollars by contributing to a tax-deferred account as opposed to a taxed account.
We are assuming this is a tax-deferred account like an IRA or 401(k).