#HYHRD: The income phase of The Plan #UPDATE for April, 2017

Hi,

patrosenheim

I’m Pat Rosenheim, a.k.a. the PandA Trader.

We are now in the income phase of portfolio management, partially (or totally) withdrawing each month from the available settled cash from earned dividends *only* (leaving all positions and principal untouched, except for trading activity)!

Holdings that are being DRIPped are shown on our Google sheets on the Dividends tab.

(Preferred shares can NOT be DRIPped.)

As of April 1st; Only holdings that are part of the DTC discount plan in the Fidelity joint brokerage and my IRA @ Fidelity will be DRIPped. The only remaining holdings in our Roth IRAs held at Fidelity are the ‘B’ series preferred shares of ARR, which cannot be DRIPped. I also have 145 shares of ORC in my Roth IRA which will be transferred to Capital One Investing.

Some of our holdings at Capital One Investing (ShareBuilder) will be DRIPped if they are down more than 10% until they recover sufficiently.

Part (or ALL) of the cash in our accounts will be withdrawn each month on an ‘as needed’ basis. The available withdrawal amounts are shown on the withdrawals spreadsheet.

Projected checkbook balance for the end of the current month should now be at least $5,000.00 – $10,000.00 but if it’s not within that range then the dividend reinvestment and withdrawals will need to be adjusted. Also, the next few month’s projected EOM balance will also be used to determine if adjustments are necessary. This will provide a greater ‘margin of safety’ and hopefully avoid any unpleasantness. I think planning up to 3 or 4 months in advance should provide a reasonable level of financial security, all things considered.

  • Monthly withdrawals from available (i.e.; settled) cash will be taken.
  • Monthly withdrawals are subject to a minimum withdrawal of $10.00 (imposed by Fidelity, no limit is imposed by the joint or Roth accounts).
    • In case our checkbook balance exceeds above limits, then a deposit to one of our joint accounts will be made instead.
      • In this case, of course that also means there would be no withdrawals that month.
  • Monthly withdrawals will only be scheduled just after the first of each month or on an ‘as-needed’ basis.

So, based on the amount of the checkbook balance at the end of the previous month would determine whether or not I should make a withdrawal on this month. If no withdrawal is warranted, then I will base it on the checkbook balance at the end of the current month. If no withdrawal is warranted, then I will base it on the checkbook balance at the end of the following month, etc. This procedure will also determine if I should make a deposit to the taxable account instead. <Whew!> This could (and did, and probably will again) change…

In our ind-PandA account, I will withdraw $0.00 from the account. There is no tax withholding in this taxable account.

In our PandAjoint account, I will withdraw $370.95 from the account. There is no tax withholding in this taxable account.

In my IRA-P account, I will withdraw $46.77 for a net deposit of $35.08 after 25% tax withholding.

In my Roth-P account held at Fidelity, I will withdraw $113.17 from the account.

In my Roth-P account held at Capital One Investing, I will withdraw $0.00 from the account.

In my wife’s Roth-A account held at Fidelity, I will withdraw $217.35 from the account.

In my wife’s Roth-A account held at Capital One Investing, I will withdraw $0.00 from the account.

Any cash left in the accounts will be allowed to accrue for any upcoming stock purchases and/or withdrawals. The cash balance of each account and the amount available to invest are shown on the cash spreadsheet. The withdrawal amounts are shown on the withdrawals spreadsheet. Withdrawals will only be taken as needed. This is subject to change as necessary.

This is the cash balance sheet and YTD withdrawal history (as of this posting);

Withdrawals

withdrawals

We might need to plan for my first RMD withdrawal in December of 2024, which should be totally covered by dividends for *at least* the first few years. But, if I convert 1/6 of my remaining IRA each year starting in January of 2018, then the balance at the end of the year before my RMDs are scheduled to start will be $0.00, eliminating the need for any RMDs! There will not be any RMDs for my wife’s IRA because I totally converted her holdings to her Roth IRA in 2016.

Of course, we’ll still have our regular recurring monthly charges that will need to be paid, but the withdrawals from the Roth IRAs and individual brokerages should cover that, and we are already taxed on anything that we make in our individual brokerage accounts.

UPDATE: January 1st, 2016 Partial conversions to our Roth IRAs have been initiated on 12/31/15 from our IRA accounts. CYS & ORC positions have been rolled over, and AGNC positions will be next, followed by NYMT and then AI. I also plan to convert my CNSL holdings to my Roth IRA this year, and I also plan to totally convert my wife’s holdings to her Roth IRA this year. I still have a few years to go before RMDs are required and will most likely convert 1/7 of the remaining holding(s) in my IRA each year starting in 2017. This, of course, will result in huge tax bills for last year and this year, and I will be wihholding 25% from each withdrawal beginning this year for upcoming tax bills.

UPDATE: March 24th, 2017 Partial conversion to my Roth IRA has been initiated on 3/24/17 from my IRA account. I am converting 60 shares of ORC, which is approximately 1/7th of the total balance. I also purchased 85 shares of ORC so I am now holding 145 shares in that account at Fidelity. Eventually, the remaining shares of ORC will then be transferred to Capital One Investing (ShareBuilder).

This plan will provide the necessary augmentation of social security to allow us to live quite comfortably on a minimum income.

We met with our tax advisor in mid-2014 and went over this plan. It got a glowing review. The tax advisor is happy, I’m happy, and (most importantly!) my wife is happy. I aim to keep it that way.

But, as I always say; “Hindsight is 20/20, foresight not so much.”

Namaste!

PLEASE TAKE NOTE AND REMEMBER THIS!

I’m not telling anyone to buy anything or giving anyone any advice, because that’s illegal. You see, I have no letters after my name, like RIA, CFA, etc. I SIMPLY DO NOT GIVE ADVICE. I only tell (and show!) what I do. You, like me, are all alone in this.

And remember, always do your own due diligence!

panda_wildePat Rosenheim
(PandA Trader)
High Yield, High Return Dividend
Portfolio
pat@patrosenheim.com
http://www.HYHRD.com
pandawalk

About PandA Trader

I am, I think... "Disobedience, in the eyes of anyone who has read history, is man's original virtue. It is through disobedience and rebellion that progress has been made." -- Oscar Wilde
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