Traditional IRAs and 401(k)s 

Savers prefer tax-deferred retirement accounts such as 401(k)s and traditional IRAs. Contributions to these plans are able to reduce your taxable income, which lets you save more money on your tax bills in the current year. The savings, dividends, and investment gains in any of these accounts will keep on growing on a tax-deferred basis.

However, what they might forget is that, after retiring, they will have to pay taxes down the line, and those taxes will also apply to their gains, and their pretax will apply to deductible contributions. While you can delay withdrawals, the money won’t stay in those accounts forever. At some point, you’ll have to withdraw money from your accounts.

For those who have traditional IRAs and 401(k)s, the required minimum distributions will kick in at 72 years old. People who still work and are over 72 are able to delay taking RMDs from their employer’s 401(k) until they decide to retire, as long as they don’t own more than 5% of the company they work for.

Withdrawals from known accounts such as traditional IRAs and 401(k) are still taxable at the regular income tax rates, even if after-tax and nondeductible contributions are excluded.