Tax-Deferred Account

Tax-Deferred Account

1. See: 401(k).

2. See: Traditional IRA.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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After Mark's death, his widow Sue--the IRA beneficiary--has few assets outside of this tax-deferred account.
There won't be tax consequences for these moves if you're investing inside a tax-deferred account, such as an IRA or 401(k).
Seven in 10 retirement-age participants-defined as those ages 60 and older terminating from a defined contribution plan-have preserved their savings in a tax-deferred account after five calendar years, according to research from Vanguard.
If an investor is going to venture into less liquid investments in hopes of higher returns, it probably makes sense to do so in an IRA or other tax-deferred account given that these will likely be the last assets they tap into.
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.
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.
Strategy #2: Contribute to the 401(k) (tax-deferred account) up to the match, but not a penny above and beyond.
This rule differs from the traditional IRA rollover process, which allows the taxpayer to avoid taxation when he or she deposits the IRA funds into another tax-deferred account within sixty days of the initial withdrawal.
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.
In the table below, we show pre-tax equivalent returns of earning 8% in a tax-deferred account. The overall tax rate is an estimate of your total federal and state taxes.
For example, it's generally not a good idea to hold tax-free investments, such as municipal bonds, in a tax-deferred account (e.g., a 401[k], IRA, or SEP).
Someone withdrawing $100,000 a year from a tax-deferred account would fall into the 25 percent federal tax bracket.