Locked In

DEFINITION of 'Locked In'

A situation where an investor is unwilling or unable to exit a position because of the regulations, taxes or penalties associated with doing so. This may be an investment vehicle, such as a retirement plan, which can not be accessed until a specified retirement date.

BREAKING DOWN 'Locked In'

If there is an increase in value of stocks held by an individual they will be subject to a capital gains tax (with some exceptions). To reduce their tax burden, an investor could shelter these gains in a defined retirement account. The individual is considered locked in because if a portion of this investment is withdrawn prior to maturity the owner will be taxed at a higher rate than if they waited.

RELATED TERMS
  1. Hardship Withdrawal

    An emergency withdrawal from a retirement plan that may be subject ...
  2. Excess Accumulation Penalty

    The penalty a retirement account owner or the beneficiary of ...
  3. Tax Shelter

    A legal method of minimizing or decreasing an investor's taxable ...
  4. Tax Avoidance

    The use of legal methods to modify an individual's financial ...
  5. Tax Deferred

    Investment earnings such as interest, dividends or capital gains ...
  6. Deferred Account

    An account that postpones tax liabilities until a future date. ...
Related Articles
  1. Retirement

    3 Reasons To Be Flexible When Investing For Retirement

    Retirement investing can't be something you set and forget. If you aren't flexible, you could end up with a savings shortfall, a tax hit and high fees.
  2. Personal Finance

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  3. Financial Advisor

    Top Tips for Retirement Account Withdrawals

    Top things you need to know when it comes to managing the complex task of retirement account withdrawals.
  4. Retirement

    Top Tips for Maximizing Retirement Withdrawals

    There can be significant tax advantages to taking withdrawals from one retirement account over another. Here's how to help clients plan.
  5. Personal Finance

    Get a 6-Month Tax Extension

    Discover how to get some extra time from the IRS, without paying a hefty penalty for the privilege.
  6. Retirement

    5 Steps to a Retirement Plan

    These considerations will help you make a realistic and thorough retirement plan.
  7. Financial Advisor

    Why Doing Your Taxes is Good Retirement Planning

    Income tax time is a great time to reevaluate retirement planning, since all the information you need is right at your fingertips.
  8. Financial Advisor

    Retirement Savings: How Much is Enough?

    Sure, you can never save too much for retirement, but just how much is enough?
  9. Retirement

    5 Ways To Reduce Taxes When You Are In Retirement

    There are lots of ways to reduce your tax burden in retirement without getting into trouble with the Internal Revenue Service.
  10. Financial Advisor

    Closing In On Retirement? Read These Tips

    If you're within 10 years of retiring, you and your financial planner should heed these essential tips.
RELATED FAQS
  1. How do deferred tax assets help in meeting retirement goals?

    Learn how tax deferred assets can help individuals achieve long-term financial goals such as retirement and how they differ ... Read Answer >>
  2. Do I have to pay both federal and state taxes?

    I recently purchased my first home with a 401k distribution. I am 60 1/2 years old.  ... Read Answer >>
  3. How can I calculate the amount I will save for my retirement?

    I am 58 years old and just moved $50K into my IRA. I would like to see what I could expect as income when I retire (early ... Read Answer >>
  4. What are the best ways to pay less income tax?

    Learn about reducing your income tax burden by contributing to an employer-sponsored retirement plan or IRA, and see what ... Read Answer >>
  5. Should I use my 401k to pay cash for a home?

    I'm 58 years old and would like to retire at 64. I'm married and have never owned a home. I am thinking of using ... Read Answer >>
  6. Should I use a deferred tax asset for all of my retirement funds?

    Look outside tax-deferred accounts for retirement savings that are worthwhile now and later. Invest a portion in after-tax ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center