Which of the following options often provides tax benefits for individuals planning for retirement?

Tax-sheltered retirement plans are designed specifically to provide tax advantages for individuals saving for retirement. These plans, such as 401(k) accounts and Individual Retirement Accounts (IRAs), allow individuals to either contribute pre-tax income (as in the case of traditional IRAs and 401(k)s) or enjoy tax-free growth and withdrawals in retirement (as with Roth IRAs). This distinct feature helps individuals save more effectively for retirement by reducing their taxable income in the present or deferring taxes until a later date when they may be in a lower tax bracket.

In contrast, savings accounts, taxable investment accounts, and standard checking accounts do not provide the same level of tax benefits. While they may offer some degree of interest accumulation or capital gains, the income generated in these accounts typically gets taxed in the year it is earned, limiting their effectiveness as retirement savings tools. Therefore, tax-sheltered retirement plans are uniquely positioned as vehicles that encourage retirement savings through significant tax benefits.