Question

What is the purpose of tax-deferred retirement accounts?

°Δ°to encourage consumers to invest money before it is taxed
°Δ°to level high taxes on a consumer at retirement age
°Δ°to collect taxes during retirement at higher rates
°Δ°to trick consumers into investments that will incur fines and penalties

Answer 1

Tax-deferred plans delay taxable income that was received during the use of the account either until withdrawal or till a specified time.