Tax-Deferred Account

Tax-Deferred Account

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Tax-Deferred Account

Tax-Deferred Account definition:  Tax-deferred accounts include IRAs, deferred annuities, and 401(k) plans. Tax-deferred accounts benefit from tax-free growth until withdrawals are made. The ideal use of tax-deferred accounts is to invest when a client’s tax rate is higher and withdraw when the tax rate is lower. For example, a high-income individual saves on taxes now, while a beneficiary at a lower tax rate withdraws or inherits money in the future.  Tax-free growth can accumulate a significant amount without the impedence of taxes.

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