Definition
A traditional retirement account is a retirement savings account where contributions may be tax-deductible (depending on rules), investments grow tax-deferred, and withdrawals are generally taxed as income in retirement.
Why It Matters
It reduces taxes today while shifting tax payments to retirement, shaping long-term saving decisions and retirement income planning.
Example
A worker contributes to a traditional IRA, lowering taxable income now and paying taxes when withdrawing later.