tax-deferred

Definition

Income whose taxes can be postponed until a later date. Examples include IRA, 401(k), Keogh Plan, annuity, Savings Bond and Employee Stock Ownership Plan.

Use tax-deferred in a sentence

You may want to try and set it up so that you are tax-deferred if you will not be able to pay them until a later date.

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Removing funds from a 401(k) before retirement age cancels the benefits of its tax-deferred status and results in an upfront tax penalty.

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We purchased a traditional IRA retirement account because it was tax-deferred which we hope will be taxed at a lower rate once we are past 65 or 66 years in retirement.

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