Definitions for "Tax-Deferral"
A capability offered by certain financial vehicles, such as traditional IRA's, tax-deferred annuities, and 529 Educational Savings Plans - that enables you to save assets before taxes, deferring tax payments on your returns until after you start to draw on the balance. This fosters more rapid asset growth over time, supported by the power of compound interest.
The postponement of taxes to a later year, usually by recognizing income or a gain at a later time. Tax-deferred, like-kind exchange transactions are a common method of deferring capital gain and depreciation recapture taxes.
Amounts in your annuity are untouched by current federal income tax during the accumulation period; no tax is paid until you begin to receive income payments or make a withdrawal.
When tax liability is delayed until some time in the future.
Investments that can accumulate earnings tax-free until a specific time, usually once the term has expired, at which time taxes must be paid.