Not exactly, the IRS always gets their cut. In traditional IRAs and 401(k) plans taxes are deferred until the retiree begins taking income from their plan (by a

Not exactly, the IRS always gets their cut. In traditional IRAs and 401(k) plans taxes are deferred until the retiree begins taking income from their plan (by age 70.5 at the latest or they pay penalties). Those withdrawals are taxed at whatever the person's current tax rate is (often higher than when they were younger). Roth IRAs and Roth 401(k) plans are taxed up front-- there never was a tax deferment for those, but the upside is the contributions aren't taxed when withdrawn, either. EDIT: Clarity