I’m Pat Rosenheim, a.k.a. the PandA Trader.
We are in the income phase of portfolio management, partially (or totally) withdrawing each month from the available settled cash in our Roth IRA accounts. We are also depositing money weekly into our taxable accounts @ M1Finance, and monthly into our taxable account @ Fidelity.
I am changing the way withdrawals are made. First, DRIP will be enabled on ALL positions in our accounts at Fidelity. We also have accounts at M1Finance.com and DRIP is not supported there, dividends add to the cash balance which is automatically invested anytime the balance exceeds $10.00. Since some positions are expected to DRIP or reinvest distributions at a discount, it only makes sense to accumulate those positions. If a withdrawal is warranted, some holdings may be sold at potentially higher rates than they were acquired, resulting in more holdings being retained and thus, more retained earning power. This is a break from my prior practice of letting dividends accumulate as cash in each account and then withdrawing from that cash. I believe this will allow more value to be extracted from every investment.
Part of the cash in our Roth IRA accounts may be withdrawn each month on an ‘as needed’ basis.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(s) 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. This *was* a good plan, but isn’t going *exactly* as originally thought. Still we *should* be able to meet our current obligations in the short term, and in the intermediate term we should begin to exceed our current obligations. Long-term goals are to maintain weekly deposits into our accounts @ M1Finance at current levels unless and until dividends begin to cover the investments. For the monthly deposits into our Fidelity account, I expect that to continue for a while.
- Monthly withdrawals from available (i.e.; settled) cash may be taken.
- Monthly withdrawals will only be scheduled after the end of each month or on an ‘as-needed’ basis.
- Weekly deposits into our accounts @ M1Finance have been initiated @ $10.00/wk for my taxable account and $25.00/wk for our joint taxable account.
- Monthly deposits into our joint taxable account @ Fidelity have been initiated @ $25.00/mo.
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 joint PandA account, I plan to withdraw $0.00 from the account.
In my RothP account, I plan to withdraw $1,250.00 from the account.
In my wife’s RothA account, I plan to withdraw $1,250.00 from the account.
This is the cash balance sheet and YTD withdrawal history (as of this posting);
Withdrawals are calculated after adding or estimating the end of the month dividends & interest, and before adding or estimating 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 have a plan for my wife’s RMD withdrawals from her TSA on November 15th of each year, and it is automatically withdrawn with 0% withheld for Federal Income Taxes.
Of course, we’ll still have our regular recurring monthly charges that will need to be paid, but the withdrawals from the Roth IRAs should cover that, and we are already taxed on anything that we make in our individual brokerage account.
- To the best of my knowledge; ARCC, BGH, BST, BXMX, CEN, CPTA, CSQ, DIAX, DNP, ECC, FFC, FLC, FTF, GOF, GUT, HTD, LDP, MAV, MHI, NEWT, NRO, NZF, OXLC, PDI, PDT, PFD, PFO, PHK, PHT, PMF, PML, PMX, RFI, RNP, RQI, SAR, UTF, & UTG are DTC discount eligible for DRIP in Fidelity accounts because they *may* reinvest at a discount! (Status @ Chase, Merrill Edge, Charles Schwab, & TDAmeritrade is the same, but you have to *call* and ask to speak with a *Licensed Agent* @ Charles Schwab.)
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!