**Accounting for Tax-Deferred Investments**

Tax-deferred investments refer to financial instruments where taxes on earnings are postponed until a later date. These investments offer the advantage of allowing individuals to defer taxes on investment gains, potentially leading to increased wealth accumulation over time. Common examples of tax-deferred investments include retirement accounts like 401(k)s and Individual Retirement Accounts (IRAs).

**Key Points:**

1. **Postponed Taxation:** Contributions made to tax-deferred accounts are often deductible from current taxable income, and the investment grows tax-deferred until withdrawal.

2. **Penalties for Early Withdrawal:** Early withdrawals from tax-deferred accounts before the age of 59 may incur penalties, emphasizing the long-term nature of these investments.

3. **Required Minimum Distributions (RMDs):** For certain tax-deferred accounts, such as traditional IRAs and 401(k)s, there are required minimum distributions (RMDs) starting at a certain age, usually 72.

**Objective Type Question:**

What is a common feature of tax-deferred investments that distinguishes them from other types of investments?

A) Immediate taxation of earnings B) Early withdrawal without penalties C) Deductibility of contributions D) No required minimum distributions

Please select the correct option and provide a brief explanation for your choice based on the information provided.