A tax-free retirement account or TFRA is a type of long-term investment plan designed to help minimize taxes on retirement income. A TFRA retirement account isn't a qualified plan, so it doesn't follow the same rules as a 401 (k). However, it can offer both tax benefits and risk protection for investors. Breaking down how a tax-free retirement account works can help you decide if this strategy may be right for you.
A financial advisor can also help you determine if a TFRA is right for you. Try using the free SmartAsset advisor search tool today. A TFRA is a tax-free retirement account. It is NOT a qualified retirement plan or an employer-sponsored retirement plan.
These individual property plans accumulate cash value and allow you to access cash as income without paying taxes under the internal tax code. The biggest difference between a tax-free retirement account and a 401,000 is that contributions to a TFRA are made with after-tax dollars, while contributions to a 401 k are made with pre-tax dollars.