You immediately benefit from putting money in a tax-sheltered retirement account because you can make the deposits with after-tax money.

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Contributions to tax-sheltered retirement accounts (such as traditional IRAs, 401(k)s, and 403(b)s) are typically made with pre-tax money, which reduces your taxable income in the year you make the contribution. The earnings in the account also grow tax-free until withdrawn in retirement, but you will pay taxes on the withdrawals. Some retirement accounts, such as Roth IRAs, do allow you to make contributions with after-tax money, but the benefit is in the tax-free growth and withdrawals in retirement, not the immediate tax savings.

You Immediately Benefit from Putting Money in a Tax-Sheltered Retirement