Definition 1.
Denoted by an A under the Purchase Constraints column, this group includes any fund offered through a retirement plan that meets the necessary IRS requirements allowing participants to deduct the amount of their investment from their taxable income. In other words, investors can invest pre-tax dollars. Employee pension plans, 401 (k) and 403 (b) plans all fall into this group. Money builds up on a tax-deferred basis, and when the investor withdraws money, both principal and profit are treated as taxable income.
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