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Figure 2. Comparison of a Tax-Deferred Retirement Investment with a Nontax-Deferred Investment. This figure assumes an investment of $2,000 of before-tax income on an annual basis in a retirement account where those contributions are fully tax-deductible versus investing $2,000 of before-tax income on a non-tax-deferred basis. A 9% annual return is assumed on both investments, with the investment earnings in the tax-deferred account not being reduced by taxes, and the earnings in the other account being taxed annually. A marginal tax rate of 31% also is assumed. Source: Keown, A.J. (2000) Personal finance: Turning money into wealth. Upper Saddle River, New Jersey: Prentice-Hall.