Question

Money deposited into a 401k is not taxed, however it is taxed years later when it is withdrawn for retirement. so if the money is taxed either way, why do many experts recommend tax-deferred savings such as 401k?

Answer 1

I believe the answer is: it gives a special tax break to employees who are saving primarily for retirement. 

This make the taxpayers able to maxmize their purchasing power prior to their retirement. Which allow them to do things such as putting more money down on their mortrage, improve their standard of living, increasing their life saving, or putting of some of their income in various type of investments.

Answer 2

Why do many experts recommend tax-deferred savings such as 401k??

Answer: The reason why many experts recommend tax-deferred savings such as 401k is because it gives a special tax break to employees who are saving primarily for retirement. It is also recommended to fund your 401k up to the match.

I hope it helps, Regards.