A tax-deferred investment is an investment where the earnings (like interest, dividends, or capital gains) grow without being taxed until you withdraw the funds, usually in the future. This essentially means you're delaying the tax liability on your investment growth.
Employer-sponsored retirement plans These include 401(k)s, 403(b)s, and 457 plans, which typically allow pre-tax contributions and tax-deferred growth.
Traditional Individual Retirement Accounts (IRAs) You may be able to make pre-tax contributions to a traditional IRA, which then grows tax-deferred.
Annuities These are contracts with insurance companies that can provide tax-deferred growth on your invested funds.
529 Plans: These are designed for education savings, with tax-deferred growth and potential tax-free distributions for qualified education expenses.
Health Savings Accounts (HSAs) These offer a triple tax advantage: tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses.
Lower current taxes Pre-tax contributions can reduce your taxable income, potentially leading to a lower tax bill in the present year.
