Tax Deferred


Tax Deferred
Investment earnings such as interest, dividends or capital gains that accumulate tax free until the investor withdraws and takes possession of them. The most common types of tax-deferred investments include those in individual retirement accounts (IRAs) and deferred annuities.

By deferring taxes on the returns of an investment, the investor benefits in two ways. The first benefit is tax-free growth: instead of paying tax on the returns of an investment, tax is paid only at a later date, leaving the investment to grow unhindered. The second benefit of tax deferral is that investments are usually made when a person is earning higher income and is taxed at a higher tax rate. Withdrawals are made from an investment account when a person is earning little or no income and is taxed at a lower rate.


Investment dictionary. . 2012.

Look at other dictionaries:

  • tax-deferred — ˌtax deˈferred adjective TAX not taxed until a later time: • tax deferred savings * * * tax deferred UK US adjective TAX ► used to describe a situation in which you pay tax for something at a later date than usual: »With this plan, your… …   Financial and business terms

  • tax–deferred — adj: not taxable until a future date or event (as withdrawal or retirement) Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • tax-deferred — tax de ferred adj AmE not taxed until a later time ▪ tax deferred savings …   Dictionary of contemporary English

  • tax-deferred — tax de ferred adjective AMERICAN taxed at a later time: tax deferred investments …   Usage of the words and phrases in modern English

  • tax-deferred — /taks di ferrd /, adj. noting or providing income that is not taxed until a later time. * * * tax deferred UK US adjective american taxed at a later time tax deferred investments Thesaurus: relating to tax and taxationhyponym * * * adj US : not… …   Useful english dictionary

  • tax-deferred — adjective AmE not taxed until a later time: tax deferred savings …   Longman dictionary of contemporary English

  • tax-deferred — UK / US adjective American taxed at a later time tax deferred investments …   English dictionary

  • tax-deferred — adjective Describing something that tax will not be due on until a later time (i.e. taxation is deferred to a later time) …   Wiktionary

  • tax-deferred — Describing a financial instrument in which tax is paid at maturity …   Big dictionary of business and management

  • tax-deferred — /tæks dɪ fɜ:d/ adjective US where the payment of federal income tax is put back to a later date …   Dictionary of banking and finance


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