Question

What is the purpose of tax-deferred retirement accounts?

A. To encourage consumers to invest money before it is taxed

B. To level high taxes on a consumer at retirement age

C. To collect taxes during retirement at higher rates

D. To trick consumers into investments that will incur fines and penalties

Answer 1

The idea is to put time on your side, allowing years of investment savings and income to compound, without having to pay tax on it. You can accumulate tax-deferred savings in several ways: Fund tax-deferred accounts like an IRA or employer-sponsored retirement plan such as a 401(k), 457 or 403(b) plan.\

answer is b