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.
As of June 1st, 2017; Only holdings that are part of the DTC discount plan in the Fidelity accounts will be DRIPped, i.e.; everything held at Fidelity is being DRIPped. I am also DRIPping our joint taxable account at Capital One Investing. So, only the Roth IRA accounts at Capital One Investing are NOT being DRIPped as well as the small Robinhood account I just opened. I am slowly re-setting all Fidelity accounts to hold only DTC-eligible securities. I believe this is the best way to maximize these accounts, at this broker, at this time. The DTC discount plan is not available at Capital One Investing, so a different tactic is being employed where I invest on my schedule, in the holdings I want, as often as I want. The most any of these (AIP) “Automatic Investment Plan” investments will cost is slightly less than $1.00. Sell trades cost $6.95 each. I tried to get them to lower it, but it’s only on our joint account that we still have the old “Costco Promotion” pricing of $10/month for Advantage program and $4.95 sell trades. They offered me some trade credits, instead. C’est la vie!
Part of the cash in our Roth IRA accounts will be withdrawn each month on an ‘as needed’ basis. The available withdrawal amounts are shown on the cash tab on our Google 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 will only be scheduled after the end of each month or on an ‘as-needed’ basis.
- For October, 2017 there were no withdrawals from any accounts as the checking account had a sufficient balance.
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 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 plan to withdraw $0.00 from the account.
In my Roth-P account held at Capital One Investing, I plan to withdraw $0.00 from the account.
In my wife’s Roth-A account held at Capital One Investing, I plan to withdraw $0.00 from the account.
In my IRA-P account, I plan to transfer $0.00 to PandAjoint for a net transfer of $0.00 after 25% tax withholding.
In my Roth-P account held at Fidelity, I plan to transfer $0.00 to PandAjoint for a net transfer of $0.00 after 25% tax withholding.
In my wife’s Roth-A account held at Fidelity, I plan to transfer $0.00 to PandAjoint for a net transfer of $0.00 after 25% tax withholding.
In our PandAjoint account held at Fidelity, I plan to withdraw $0.00 from the account.
In my Robinhood account, I plan to 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 also shown. Withdrawals will be taken monthly as needed. This is subject to change as necessary.
This is the cash balance sheet and YTD withdrawal history (as of this posting);
Withdrawals are calculated after adding the end of the month dividends & interest, and before adding any of the following month’s dividends. Also, calculations based on current balances are shown for next month, but will change due to investing, dividend income, cash transfers, etc.
We need to plan for my wife’s first MRD withdrawal from her TSA in April of 2018, which should be totally covered by dividends for *at least* the first few years.
We might need to plan for my first MRD withdrawal in April of 2025, 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 MRDs are scheduled to start will be $0.00, eliminating the need for any MRDs! There will not be any MRDs for my wife’s IRA (except her TSA!) 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, resulted in huge tax bills for last year and this year, and I will be wihholding 25% from each withdrawal 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 Roth IRA account at Fidelity. Eventually, the remaining shares of ORC will then be transferred to Capital One Investing (ShareBuilder).
- CLM, CRF, FFC, FLC, GOF, GUT, MAV, MHI, PFD, PFO, PHK, PHT, PMF, PML, & PMX are being DRIPped in Fidelity accounts because they may reinvest at a discount!
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.”
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!