Tax Sheltered Account

Tax Sheltered Account

A Tax Sheltered Account is a type of investment account that offers tax advantages to encourage savings and investment for retirement or specific purposes. Contributions to these accounts may be tax-deductible, and the investment growth is typically tax-deferred, meaning that taxes are not paid on earnings until withdrawals are made.

Common examples of Tax Sheltered Accounts include Individual Retirement Accounts (IRAs), 401(k) plans, and Health Savings Accounts (HSAs). Withdrawals from these accounts may be subject to taxes and penalties if taken before a certain age or for non-qualified expenses, depending on the account type.