Tax-deferred growth
Retirement savings and taxes do not make a good combination… Well, Uncle Sam might disagree with that, but still!
When it comes to taxable accounts, you’ll pay taxes in distributions like capital gains and dividends. In addition, you’ll owe money on the money you make on gains on investments that sell at a higher price than the one you bought them at.
With that being said, if you own funds in a 401(k) account that pay out distributions, you don’t have an immediate tax liability and you won’t owe taxes on sales of assets inside that account immediately either.
What that means is that your money will grow even more!
