When contributions to a retirement plan are tax-deferred,
A) the employee is not required to pay taxes on them at any time
B) benefits are not taxed until the employee withdraws them at retirement
C) the employer pays all taxes
D) taxes gradually rise until benefits are withdrawn at retirement

Question

Quizplus · Accepted Answer

Contributions to a tax-deferred retirement plan are not taxed at the time of contribution. Instead, taxes are paid when the employee withdraws the money during retirement, typically at a lower tax rate.

When Contributions to a Retirement Plan Are Tax-Deferred