Locked In

AAA

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.

INVESTOPEDIA EXPLAINS '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 The individual is considered locked in because if a portion of this investment is withdrawn prior to maturity the owner will be taxed at a higher rate than if they waited.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. 401(a) Plan

    A money-purchase retirement savings plan that is set up by an ...
  2. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  3. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  4. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  5. Capital Gains Tax

    A type of tax levied on capital gains incurred by individuals ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
Related Articles
  1. Retirement

    Borrowing From Your Retirement Plan

  2. Retirement

    Tax Tips For The Individual Investor

  3. Retirement

    Lump Sum Versus Regular Pension Payments

  4. Options & Futures

    20 Investments You Should Know

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center