An investment which accumulates earnings that are not subject to taxes until the investor takes possession of the earnings — often at a point at which the investor is in a lower tax bracket than before, such as retirement.
An investment that allows a person to postpone the owed taxes to a later date.
Earnings from an investment that are not taxed until an investor receives it.
Income whose taxes can be postponed until a later date. Contributions to a 401(k) plan, for example, are not taxed until they are withdrawn from the account, but when withdrawn, they are fully taxed at the applicable tax rate.
Refers to a situation or an investment whereby the tax liability is delayed until a later date. Retirement plans such as 401K and IRAs are examples of this feature.
The tax-free accumulation of earnings until a distribution is made. Return to Previous
Interest, dividends, or capital gains that grow untaxed in certain accounts or plans until they are withdrawn.
Postponement of payment of taxes until a future time.
A tax-friendly environment whereby money grows free of taxes. The money that grows in a tax-deferred environment is not taxed until the money is withdrawn from the environment. Examples of tax-deferred environments include Employer-Sponsored Qualified Retirement Plans, Both Roth & Traditional IRA's, Educational IRA's, Annuities, Life Insurance, stocks, and series EE & HH Government Savings bonds.
Federal income tax is not paid on contributions or earnings to a retirement plan until the money is withdrawn.
No taxes are paid on the accumulated earnings until they are withdrawn from the account at which time they are subject to income tax. Traditional IRAs are tax deferred. Tax deferral gives an investor an advantage because earnings will compound at a faster rate than investment vehicles that are taxed every year. Individuals that anticipate being in a lower tax bracket when the money is withdrawn, such as during retirement, will also find that tax deferral will work to their advantage.
An investment with earnings and/or contributions that are taxed at a later date.
Phrase used to describe investments whose accumulated earnings are not taxed until the investor takes possession of them. In IRAs, for example, all dividends, interest and appreciation accumulate until the account owner starts withdrawing funds from the account, usually at age 59 1/2. See: Annuity; IRA; IRA Rollover; Self-Directed IRA; Qualified Pension Plan Or Trust