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Traditional IRA - Contributions are sometimes tax-deductible (often simplified as "cash is deposited earlier than tax" or "contributions are made with pre-tax assets"), all transactions and earnings throughout the IRA have no tax influence, and withdrawals at retirement are taxed as earnings (apart from those parts of the withdrawal corresponding to contributions that were not deducted). This is a tax that's levied on tax exempt entities, equivalent to a charity, IRA, or 401(okay) Plan, that have invested in an energetic commerce or enterprise unrelated to its exempt function.