First, your contributions are deducted from your paycheck before taxes are taken out; as a result, your current taxes are lower. (For New York residents, this includes federal, state and local taxes. Please check with your accountant about state taxes if you are not a resident of New York State.) Furthermore, taxes are deferred on both your contributions and your investment return; therefore, more of your money remains invested, and your money grows faster than it would in a comparable investment that isn’t tax-deferred. Finally, taxes are payable at the rate charged when you withdraw the funds, a rate that may be lower than your tax rate during your peak earnings years. Another important benefit is that your contributions are made through payroll deductions; this makes saving for your retirement automatic and convenient.