Tax-deferred means you don't pay taxes on earnings or contributions until a later date, usually retirement. This allows your money to grow faster over time.
In Depth
When an account or investment is tax-deferred, you delay paying income tax on the money earned within that account. This applies to both the initial contributions (in some cases) and any investment growth. The main benefit is that your money can compound without being reduced by annual taxes, leading to potentially larger balances. You will eventually pay taxes when you withdraw the money, typically in retirement, often at a lower tax bracket.
Example
A traditional 401(k) is a tax-deferred retirement account, meaning you won't pay taxes on contributions or earnings until you take withdrawals in retirement.