Final answer:
Municipal Bonds are the safest investment from federal income tax and offer tax-free income, making them an attractive option. Other investment choices like Roth IRA, Traditional 401(k), and Savings Accounts have different tax implications and benefits.
Step-by-step explanation:
When considering investment options that are safe from federal income tax and also provide decent income, the best choice highlighted here is Municipal Bonds (B). Municipal bonds are issued by local and state governments to fund public projects and are typically exempt from federal income taxes. As a result, they provide tax-free income to investors, making them a particularly attractive option for those in higher tax brackets.
The other choices, such as Roth IRA, Traditional 401(k), and Savings Accounts, also play vital roles in saving for old age and retirement planning. A Roth IRA offers tax-free growth and withdrawals because the contributions are made with after-tax dollars. In contrast, a Traditional 401(k) affords tax-deferred growth, which means taxes are paid upon withdrawal. Lastly, a Savings Account offers liquidity and safety but typically earns a lower rate of return and the interest is taxable.
To maximize retirement savings and ensure financial security in old age, individuals often consider a mix of these investment options, tailored to their personal tax situations and risk tolerance. It's important to remember that tax laws are subject to change and it is advisable to consult a financial advisor or tax professional for current regulations and personalized advice.