An advantage of an employer-sponsored tax-sheltered retirement plan is the tax-deferred growth of contributions and earnings.

Question

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An employer-sponsored tax-sheltered retirement plan, such as a 401(k), allows employees to contribute pre-tax dollars into their retirement account. This means that the contributions and earnings grow tax-free until withdrawn in retirement. This is a significant advantage for individuals saving for retirement as it allows their retirement savings to grow more quickly without being taxed along the way.

An Advantage of an Employer-Sponsored Tax-Sheltered Retirement Plan Is the Tax-Deferred