Funds that are deposited to a deductible retirement plan and not taxed at that time are fully taxable when the money is withdrawn.

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Contributions to deductible retirement plans, such as traditional IRA and 401(k), are not taxed at the time of deposit but are subject to income tax when withdrawn. This is because these contributions were made with pre-tax dollars, and the government wants to tax the income when it is received in retirement.

Funds That Are Deposited to a Deductible Retirement Plan and Not