The Boldin Planner allows you to select a Traditional withdrawal order or tailor your withdrawal order based on when you expect make withdrawals and better manage your tax brackets in retirement using the Customized feature.
Default Withdrawal Order
When using the Default Traditional Withdrawal Order, the Planner will automatically fund the expenses in your plan. It will first use available Income such as work income, Social Security, Pensions, etc.
When income does not meet your expense need, the Planner will fund the remaining expenses with distributions based upon a your Withdrawal Strategy and a using our Optimized Traditional Withdrawal Order as below.
Taxable Savings
Tax-Deferred Accounts
Roth Accounts
HSAs
Within each category, the growth rate on accounts will influence the order of withdrawals. Accounts with the lowest growth rate will be used first, allowing accounts with higher growth rates to continue to grow for the longest period of time. 529 savings are not included in the withdrawal sequence and must be explicitly disbursed as one-time withdrawals.
Due to this feature, in most cases, drawdown amounts are not something you would define manually. You do have the ability to add additional distributions from investment accounts by adding transfers from those accounts to an after tax account.
The Withdrawal Order includes RMDs and the Planner models RMDs in accordance with IRS protocols. That is, the specific RMD amount is determined by dividing the prior year-end account balances by a life expectancy factor as determined by the IRS and withdrawn. If your RMDs are in excess of your expenses, they will be added to your Excess Income.
It's important to note that your accounts likely have a variety of tax treatments. As a result, when the planner withdraws from a particular account, your tax modeling will be impacted. Excluding accounts from the withdrawal strategy, or entering one-time expenses, disbursements, and transfers will also impact your tax modeling.
Because the Planner includes your taxes in your expense modeling, any changes to your tax modeling will impact your expenses. It is an inevitable circular process you'll want to be aware of as you work on your plan and make adjustments.
Note: If you are seeing savings drawdowns on the Lifetime Retirement Projection charts beyond your modeled expenses this is because estimated taxes are based on the income of the year prior and actual tax liability of the current year is reconciled in January of the following year. If you don't have enough income in January to cover one-time expenses and estimated taxes applied at the beginning of the year the tool will borrow from your savings in January (savings drawdown) and replenish your savings with excess income saved throughout the year. You can see this in the Insights > Surplus-Gap Chart below.
Custom Withdrawal Order
You now have the ability to customize the order of your retirement withdrawals in Planner Plus per account based on when you expect make withdrawals and better manage your tax brackets in retirement.
To use the Customized Withdrawal Order feature
Navigate to the section labeled Withdrawal Order and Press ✎ (pencil) to edit
Choose Customized tab
Reorder your accounts and hit "Save"
You can immediately see changes to your out of savings age, estate value and lifetime taxes. And, assess charts showing withdrawals by type and account.
Toggle back to the Traditional account order whenever you want
Excluding accounts from the withdrawal strategy
You have the ability to override the Planner's default order of withdrawals by excluding accounts from your withdrawal strategy.
If you excluding an account from your withdrawal strategy, the account will NOT be used for the following:
In calculations that use liquid retirement savings to generate income estimates
In automated withdrawal strategies to cover expenses
In Required Minimum Distribution (RMD) estimates
In the Roth Conversion Explorer
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 your withdrawal strategy 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.
How do I exclude an account from my withdrawal strategy?
Use the pencil icon to edit an account and press "Yes" when asked "Exclude this account from your withdrawal strategies?"
How do I model manual withdrawals?
There may be scenarios when you want to manipulate your cash flow to influence the transfer and withdrawal of assets. Manual withdrawals can be used to model scenarios, including:
Intentional 401k/IRA withdrawals at any age
Deferred salary withdrawals
Inherited IRA Required Minimum Distributions (RMDS)
529 withdrawals
HSA withdrawals
Transferring money from one account to another account
Transferring money after the death of the first spouse
Transferring money to pay down debt and mortgages
Step 1; Head over to the Money Flows section of My Plan
Step 2 Open the Transfers section
Step 3: Press on "Add a Transfer +"
Step 4: Select the account for the withdrawal
Step 5: Select the account/selection for the deposit
Step 6: Enter the amount in future dollars
Step 7: Decide if this is a one-time or annual transfer
Step 8: Enter when the transaction will take place
Step 9: Enter notes (optional)
Step 10: Press Save when complete
