With most tax-sheltered accounts other than Roth-type accounts taxes are merely deferred rather than eliminated altogether.

Question

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Tax-sheltered accounts such as traditional IRAs or 401(k)s allow contributions to be made with pre-tax dollars and the earnings grow tax-free. However, when funds are withdrawn in retirement, they are subject to income taxes. So, taxes are deferred rather than eliminated altogether. Roth-type accounts, on the other hand, allow for tax-free withdrawals in retirement.

With Most Tax-Sheltered Accounts Other Than Roth-Type Accounts Taxes Are