Which plan qualifies for tax-deferred contributions?

Tax-deferred contributions are a significant advantage of certain retirement plans, as they allow individuals to contribute pre-tax income, which can grow without immediate taxation until withdrawal during retirement. Qualified retirement plans, such as 401(k)s, meet specific regulations set by the IRS that allow for these tax benefits.

When employees contribute to a traditional 401(k) plan, the money is deducted from their taxable income, effectively lowering their current tax liability. Additionally, the earnings on those contributions grow tax-deferred, meaning taxes are not owed until the funds are withdrawn, typically during retirement when individuals may be in a lower tax bracket.

While Simple IRAs and 403(b) plans also allow tax-deferred contributions, the question asks specifically about qualifying plans. The term "qualified retirement plans" encompasses not just 401(k) plans but also other types like defined benefit plans and profit-sharing plans. Therefore, the correct choice is one that identifies qualified retirement plans in general, which are designed to offer this tax-deferred status, rather than focusing solely on specific types like Simple IRAs or 403(b) plans.