Tax deferral refers to the delay of taxes and often the initial investment, until the funds are disbursed. This strategy is commonly used in retirement planning, allowing individuals to defer taxes on contributions and earnings until they withdraw the funds. This can result in significant tax savings, as the taxes are typically paid at a lower rate during retirement. By deferring taxes, individuals can potentially increase their overall retirement income. However, it is important to carefully consider the tax implications and potential consequences before utilizing this strategy.
