It's a retirement account you are allowed to enroll in at work. You can contribute there up to $16000 a year. And when you get it back ( at maturity) you don't pay taxes on it.
I'm not sure how you can pay less taxes otherwise, maybe live in the state without state income taxes ( like Floridam, Texas or Washington). We pay in California extra 10% in addition to federal taxes. And it really, really sucks!