With a tax-exempt account, pay taxes now and enjoy tax-exempt distributions when you retire. Examples include Roth IRAs and 401 (k) Roth IRAs. IRAs are another way to save for retirement while also reducing taxable income. Depending on your income, you may be able to deduct any IRA contribution on your tax return.
Like a 401 (k) or 403 (b), IRA money will increase with deferred taxes and you won't pay income tax until you withdraw it. Traditional 401 (k) and IRA accounts are what are known as tax-deferred accounts, while Roth 401 (k) and IRAs are tax-exempt.
