Final answer:
Automatic deduction of a specified amount from a paycheck into a mutual fund typifies an automatic investment plan, which is commonly associated with defined contribution retirement plans such as 401(k) and 403(b) plans that offer tax-deferred growth.
Step-by-step explanation:
Having money taken at regular intervals from your paycheck and put into a mutual fund is an example of an automatic investment plan (AIP). This is a common feature of defined contribution retirement plans such as 401(k)s and 403(b)s. The funds are contributed regularly, often every pay period, by both employer and employee and these contributions are invested in various financial instruments such as mutual funds.
These retirement account contributions are tax-deferred, meaning they are made with pre-tax income and aren't taxed until withdrawn at retirement. One of the benefits of such plans is that they are portable across employers, ensuring that employees can continue to grow their retirement savings throughout their careers.