Qualified withdrawals from which account are considered tax-deferred?

A qualified withdrawal from an IRA is considered tax-deferred because the contributions made to a traditional IRA are typically tax-deductible when they are made, allowing the account to grow without immediate tax implications. Taxes on that income are deferred until withdrawal, usually during retirement, when individuals may be in a lower tax bracket. This means that while the funds accumulate over the years without being taxed, taxes are owed when the account holder withdraws the funds, typically after reaching age 59½. This encourages long-term savings for retirement, as it allows for more investment growth since taxes are not deducted from the contributions.

In contrast, while a 401(k) plan also allows for tax-deferred contributions, it operates under different regulations and employer-specific conditions. A Roth IRA, on the other hand, involves post-tax contributions, meaning withdrawals are not tax-deferred but rather tax-free if certain conditions are met. Health Savings Accounts (HSAs) offer some tax advantages but primarily focus on medical expenses rather than retirement savings, allowing tax-deductible contributions but requiring the use of funds for qualified healthcare expenses to maintain tax advantages.