Deferred meaning

Deferred definitions

When it comes to financial planning, one important concept to understand is deferred. Deferred refers to something being postponed or delayed to a later time. In the world of finance, this term is commonly used in relation to taxes and retirement savings.

Deferred Taxes

One common area where the term deferred is used is in the context of taxes. Deferred taxes refer to taxes that are postponed to a future date. This often occurs when a taxpayer is allowed to defer paying taxes on some income or gains until a later time. This can provide some financial benefits in the present, but taxes will eventually need to be paid in the future.

Deferred Retirement Savings

Another important area where the concept of deferred is relevant is in retirement savings. Many retirement savings plans, such as 401(k)s or IRAs, allow individuals to defer paying taxes on contributions and investment gains until they withdraw the funds in retirement. This allows their savings to grow tax-deferred, potentially leading to larger savings over time.

Benefits of Deferred

One of the key benefits of deferring taxes or retirement savings is the ability to potentially lower your current tax liability. By postponing taxes to a later date when you may be in a lower tax bracket, you can save money. Additionally, allowing your investments to grow tax-deferred can help accelerate the growth of your savings.

Considerations

While deferred taxes and retirement savings can offer benefits, it's important to consider any potential downsides. For example, if tax rates increase in the future, you may end up paying more taxes on your deferred income. Additionally, early withdrawals from retirement accounts can result in penalties and taxes, so it's essential to understand the rules and implications of deferring.

Deferred Examples

1. She deferred her decision until tomorrow.
2. The project launch was deferred due to lack of funding.
3. He deferred his vacation to help with the busy season at work.
4. The meeting was deferred to the following week.
5. The company deferred payment on the invoice until next month.
6. The decision was deferred to a later date pending further information.
7. She deferred to her colleague's expertise on the subject.
8. He deferred his dreams of traveling the world to focus on his career.
9. The team deferred to the coach's strategy for the game.
10. The court deferred sentencing to consider all the evidence.

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