Question

The term tax free in tax deferred ________

mean the same thing

a) do

b) do not

c) neither

Answer 1

The term tax free and tax deferred do not mran the same thing.

Tax free mean the government charges no tax on the income .But the tax deffered mean the government presently charging no tax on an income but in future will charge tax on the same. Suppose a bond is tax free, both the interest(periodic) and repayment of principle in future will attract no tax liability. But in tax deffered investment tax is charged at the time when withdrawal is made out of that investment like in IRA.