Tax-deffered retirement plans a type of:
a)exemption
b)itemized deduction
c)passive income
d)tax shelter
Is C CORRECT ANSWER?THANK YOU:)))
No, C is not correct.
http://www.answers.com/401k
I have no idea what a "passive income" is.
Notice the term "tax-deferred." This means that while a person is in the peak earning years before retirement, s/he pays no taxes on these investments.
No, option C is not the correct answer. The correct answer is option D) Tax shelter.
Tax-deferred retirement plans are a type of tax shelter. These plans, such as Traditional 401(k)s or Traditional IRAs, allow individuals to contribute a portion of their income before tax. This means that the money contributed to the retirement plan is not subject to income tax in the year of contribution, providing a tax benefit and reducing the individual's current taxable income.
The taxes on the contributions and any investment gains made within the retirement plan are deferred until the individual withdraws money from the account, typically during retirement. At that time, the withdrawals are subject to income tax.
Tax-deferred retirement plans help individuals save for retirement while also providing a tax advantage by allowing them to defer paying taxes on their contributions and investment growth until later in life.