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Tax deferred

Tax deferred investments are accounts which under the US tax code grow tax free for an extended period, but then pay taxes at ordinary tax rates when profits are paid out as distributions as in retirement. Typical plans of this type include traditional IRAs, 401(k) plans, 403(b) accounts, and 457 plans.

Expanded Definition

In contrast, distributions on Roth IRA accounts and Roth 401(k) accounts are tax free (but contributions to the accounts are with after tax funds).

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