Answer: First option is correct.
Step-by-step explanation:
Purpose of tax-deferred retirement accounts are as follows:
1) To encourage consumers to invest money before it is taxed to level high taxes on a consumer at retirement.
As Tax-deferred status means earnings from investments like interest on investments, dividends on shares etc all are tax free until an individual takes a receipt of their profits.
As it encourages consumers to invest more money before it is taxed too high.
Hence, First option is correct.
