When you’re thinking ahead to retirement, tax planning should be part of your decision-making from the beginning. The two common retirement accounts that allow people to minimize their tax bills are tax-deferred and tax-exempt accounts.
To be clear, both types of retirement account minimize the amount of lifetime tax expenses someone will incur. This provides incentive to start saving for retirement at an early age. However, the most distinct difference between the two types of accounts is just when the tax advantages kick in.
