Tax Deferred
What is it? Income whose taxes can be postponed until a later date. Contributions to a 401(k) plan, for example, are not taxed until they are withdrawn from the account, but when withdrawn, they are fully taxed at the applicable tax rate for ordinary income. Withdrawals made from a 401(k) plan before age 591/2 may also be subject to a 10% IRS penalty.Added By: Sydney
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