Final answer:
The two key elements of Income Tax that promote retirement savings are tax deductions on contributions to retirement accounts and penalties for early withdrawals, which delay taxes and discourage tapping into these savings prematurely.
Step-by-step explanation:
The two important "wrinkles" of the Personal Income Tax which encourage people to save for retirement are A. Tax deductions for retirement savings and C. Tax penalties for early withdrawal of retirement funds. Retirement savings vehicles such as Individual Retirement Accounts (IRAs) and 401(k)s offer tax benefits—the money contributed to these accounts isn't taxed until it is withdrawn during retirement, effectively deferring taxes and promoting long-term saving.
Additionally, withdrawing funds from these accounts before retirement typically incurs tax penalties, acting as a deterrent to early withdrawal and encouraging individuals to preserve their savings for retirement.