Which types of retirement accounts are tax-deductible?

Contributions to traditional IRAs and 401(k) plans are indeed tax-deductible, making this the correct choice. When individuals contribute to a traditional IRA, those contributions may be deducted from their taxable income, reducing their overall tax liability for the year. This means that the amount contributed lowers your adjusted gross income (AGI), and potentially allows you to fall into a lower tax bracket or reduce other taxes owed.

Similarly, contributions to 401(k) plans, which are typically offered through an employer, also offer tax advantages. Contributions made to a 401(k) plan are made with pre-tax dollars, which means these funds are not included in the individual's taxable income for that year. The taxes on these contributions are deferred until withdrawal, often during retirement when individuals may be in a lower tax bracket.

This combination of tax-deferred growth and the present-day tax deduction for contributions is what makes traditional IRAs and 401(k) plans effective tools for retirement savings.

In contrast, Roth IRA contributions are made with after-tax dollars and therefore are not tax-deductible at the time of contribution. Education savings accounts, while beneficial for education expenses, do not provide immediate tax deductions for contributions either. Health savings accounts and flexible spending accounts primarily focus