At the same time, employees must weigh the value of the tax deferral against what they might earn in a tax-free investment outside the plan.

Steer clear of opportunities that claim to be tax-free investments.

The bonds provide a steady source of fees and are a relatively safe, and tax-free, investment.

Alternatively, the individual might have used the $40,000 for a 6 percent tax-free investment.

Medical savings accounts would attract the rich, because they get the biggest benefit from tax-free investments.

But it may not make sense to shift a large portion of your portfolio into tax-free investments.

Relatively high yields have added to the appeal of a different tax-free investment - municipal bond funds.

The way around the problem is for the donors to purchase a tax-free or dividend-free investment rather than simply handing over cash.

It might also be pointed out that those whose income comes from pensions cannot move their money into tax-free investments.

But investors with large pools of assets still have certain opportunities to put funds into tax-free or tax-deferred investments before 1993.