Ask a Fool: What Tax Breaks Are Available for Retirement Savings?
There are several types of tax-advantaged retirement savings accounts – 401(k)s, 403(b)s, traditional IRAs, Roth IRAs, SEP-IRAs, Thrift Savings, and 457 plans, just to name some of the most common. However, the contributions to all of them can be divided up into two broad categories: those that get you a tax break now, and those that get you a tax break later.
Those that get you a tax break now include most 401(k) contributions (which are generally taken pre-tax from your paycheck) and all traditional IRA contributions. Investing money through these types of accounts will lower your taxable income for the current tax year. For example, qualifying traditional IRA contributions of up to $5,500 ($6,500 if you're 50 or older) will reduce your 2017 taxable income.
The catch is that when you take the money out of these retirement savings vehicles later, those withdrawals will count as taxable income.
Source: Fool.com
