The Power of Tax Deferral Contributing to a tax-deferred account has two key advantages that may help you accumulate more for retirement. $77,307 $984,286 $681,216 $502,810 $386,648 $233,956 $198,053 $83,830 Assumptions: $6,000 annual investment 6% rate of return Taxable (24% rate) Tax deferred 10 years 20 years 30 years 40 years This hypothetical example is used for comparison purposes only and does not represent any specific investments. Investment fees and expenses are not considered and would reduce the results shown if they were included. Lower maximum tax rates for capital gains and dividends, as well as the tax treatment of investment losses, could make the taxable investment return more favorable, reducing the difference in performance between the accounts shown. Rates of return will vary over time, especially for long-term investments. Actual results will vary. 1. When you contribute to a tax-deferred account, you might be able to contribute more without reducing your cash flow because of the current-year tax savings. 2. Your pre-tax contributions and earnings have the opportunity to accumulate tax deferred, potentially increasing long-term savings growth. Even though you will be liable for income taxes when you make withdrawals from a tax-deferred account, you might be in a lower tax bracket when you retire. You should consider your investment time horizon, risk tolerance, and income tax brackets, both current and anticipated, when making investment decisions. Typically, a 10% federal income tax penalty may apply to distributions from a tax-deferred account prior to age 59½.