As of September 2021, you can now opt for certain accounts to be excluded from automatic withdrawals. In order to understand why this may be useful, we'll first go over the Planner's Expense Hierarchy and how expenses are covered within the tool.

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Expense Hierarchy

Uses For Excluding From Withdrawals

How to Exclude a New Account From Withdrawals

How to Exclude an Existing Account From Withdrawals

The Planner uses the following hierarchy to fund all expenses (unless otherwise earmarked, e.g. by My Plan > Money Flows):

The Planner will first attempt to fund a given expense using income. If that is not enough, it will draw down from taxable savings. If all of your taxable savings are depleted, it will go higher up the food chain and finally resort to modeling debt.

Within each category, the Planner chooses accounts based on their rates of return. The Planner will first draw down the lowest RoR accounts and then move upwards.

So how does the Exclude from Withdrawals feature play into all this?

For an account that is excluded from withdrawals, that account will not be considered when attempting to pay for a given expense. Even if the account is fully funded and there are no other accounts available to pay an expense, the account will not be tapped and lifetime debt will instead be modeled.

IMPORTANT: Excluding an account from withdrawals does NOT exclude it from manual withdrawals, only from our automatic withdrawals based on the Expense Hierarchy. Using My Plan > Money Flows to direct money out of an excluded account not only works but allows for much more control over your Plan.

This can be helpful if you are earmarking money for a very specific cause or expense, or if you are attempting to model a special account type that does not allow for withdrawals. For example, you can use this feature to set up a savings account (which is usually the first account type to be depleted) that will ONLY be used to pay for a down payment on a home. There are a few sections in the Planner that allow for such control:

You can use the Exclude feature to model account types such as 529s (i.e. college savings accounts) in conjunction with the One Time Expenses section of My Plan > Expenses and Healthcare to model qualified education expenses.

You may use the Exclude feature if you're using the Roth Conversion Explorer and have a non-eligible account. The Explorer treats all traditional IRA and pre-tax accounts as eligible for conversion by default. If you have an account that is not eligible — a non-rollover 401(k) with a plan that doesn't allow conversions, for example — excluding it prevents the Explorer from recommending conversions from that account.

This is the part that surprises most people.

When an account is excluded, the planner funds all expense shortfalls entirely from your included accounts. That means your included accounts may be drawn down harder and faster than you expect — especially if the excluded account is large relative to the rest of your portfolio.

In Monte Carlo, excluded accounts are not depleted across simulations. If your included accounts alone can't cover your expenses in a given scenario, the model accrues what's called "lifetime debt" — an estimate of how much additional savings you would have needed. The planner then compares your lifetime debt to your excluded account balance at your goal age:

A low Chance of Success combined with a large excluded account is often a signal worth investigating. It may mean your plan is treating a significant asset as untouchable when you didn't intend that.

(Press here to skip to how to edit an existing account)

Step 1: Navigate to My Plan > Assets and Debts
​Step 2: Open the Savings section

Step 3: Press on "Add an account +"

Step 4: Select the account type you wish to add (in this case, I'll be making a taxable savings account to pay for my dream car)

Step 5: Decide if you want to manually enter or link your account (I will be manually entering)

Step 6: Fill out the account details to the best of your ability. Remember that rates of return are nominal, not real

Step 7: Press "Yes" when asked to exclude this account from your withdrawal strategies

Step 8: Press "Next: Contributions"

Step 9: Decide if you want to set up recurring or one-time contributions. At this point, you have successfully created an account that is excluded from automatic withdrawals

Step 1: Navigate to My Plan > Assets and Debts
​Step 2: Open the Savings section

Step 3: Press the ✎ (pencil) icon to edit your desired account

Step 4: Find the "Exclude this account from your withdrawal strategies?" field and select "Yes"

Step 5: Press "Save." You have successfully excluded an existing account from automatic withdrawals