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Tax-Deferred Retirement Plans

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Tax-deferred retirement plans
Employer-sponsored and other plans that allow contributions and earnings to be made and accumulate tax-free until they are paid out as benefits.

Tax-Deferred Retirement Plan
A retirement investment plan in which a contributor does not pay taxes on contributions until after withdrawal at retirement. That is, one places a portion of his/her pre-tax income into a retirement account that allows it to be invested. Taxation is deferred until withdrawal from the account following retirement. Presumably, one's tax rate will be lower after retirement because one's income is usually lower after retirement. Common examples of tax-deferred retirement plans include IRAs and traditional 401(k)s. Some employers make matching contributions to these plans.


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The first new 403(b) regulations in 40 years will increase employers' role as sponsors of these tax-deferred retirement plans, with respect to investments, transfers, documentation, plan administration, and participant disclosures, according to Lincoln Financial Group.
In the meantime, contribute the maximum amount possible to your employer's retirement or 401(k) tax-deferred retirement plans.
If you want to accumulate wealth, tax-deferred retirement plans like 401(k) plans are a great way to do it, but resist the urge to tap those funds before retirement 'cos that's not the idea of a retirement plan
 
 
 
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