If you’re like many Americans, much of your retirement assets may exist in plans such as an employer-sponsored 401(k) or an IRA. These plans are attractive retirement savings vehicles because of their unique tax structure. Many qualified plans offer tax-deductible contributions and tax-deferred growth as long as the funds stay in the account.
On most qualified plans, though, the taxes aren’t deferred forever. While the Roth IRA offers tax-free distributions, withdrawals from 401(k) plans, traditional IRAs and other IRA types are considered taxable events.