Tax-sheltered retirement accounts allow investment earnings to grow more quickly than traditional accounts because taxes do not have to be paid on earnings until the money is withdrawn.

Question

Quizplus · Accepted Answer

Tax-sheltered retirement accounts, such as 401(k)s and IRAs, provide a tax advantage by allowing investment earnings to grow tax-free or tax-deferred until the money is withdrawn. This tax-deferral allows the earnings to compound faster, leading to higher overall returns over time.

Tax-Sheltered Retirement Accounts Allow Investment Earnings to Grow More Quickly