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How to withdraw from multiple accounts?
Old 03-29-2017, 01:34 PM   #1
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How to withdraw from multiple accounts?

Hi all,
We should be withdrawing from our accounts in about a year and I am wondering how we do it. The main question is, if we want to withdraw 2% or 4% from our accounts, do we take the same percentage from every account or is it ok to just pick an account and take x% that = the percentage from all the accounts? Also, Hubby is 66 and I am late 50's, so I am thinking we work on his 401k first. Here are some numbers just as an example:

500K Husband 401k
500K My 401 K
100K Husband IRA
50K Me Taxable account (bonds)
100k CDs.

So total savings of $1,250,000. Is it ok to take $50,000 (4%) from hubby's 401k? If not, what is the best way to structure a withdrawal.

TX!!
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Old 03-29-2017, 01:43 PM   #2
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As you may not be 59-1/2 yet, you will not want to incur the 10% penalty (unless you retired from your work after 55 and can tap 401k without the penalty). If that's the case, you will want to withdraw from your hubby's account as he is older. Choose any one as you wish. Once you are past 59-1/2, you have even more freedom.

It is only when one gets above 70 and has to do RMD that it makes a difference. And I believe the RMD applies to each spouse individually. And each account may be subject to individual RMDs.

See: https://www.irahelp.com/slottreport/...on-one-account.


PS. We also have multiple IRAs and 401k's, left over from multiple jobs. My plan is to deplete the smaller ones first and close them. This way, I consolidate my accounts, and also save on the account transfer fee which may be $75-100, plus the hassle of the paperwork.
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Old 03-29-2017, 01:45 PM   #3
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I am retired from work.
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Old 03-29-2017, 01:47 PM   #4
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I personally would have all interest, dividends, and capital gains swept into money market accounts in each account. Then take what you need from those cash piles each year. If you need more than you get from the cash, I would draw from various accounts according to what puts me in a more advantageous tax situation. For example, if you are going to stay in the 15% tax bracket, you could draw from tax advantaged accounts (IRAs, 401ks) paying less in tax than what you saved when you put it in. Another option would be selling stocks in after tax accounts to capture the 0% capital gains below the 15% bracket. Games like these can be fun.
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Old 03-29-2017, 01:51 PM   #5
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I just saw Harley's post. That's another twist.

Quote:
Originally Posted by CountryGal View Post
I am retired from work.
If you retired from work after 55, you can withdraw without penalty immediately.

If you retired from work at 54 say, then you will have to wait till 59-1/2, the same as with IRA.
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Old 03-29-2017, 04:05 PM   #6
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The smartest play is to draw from your husband's accounts.
Then, when they are completely depleted, kick him out!
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Old 03-29-2017, 04:27 PM   #7
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That would make him joyless as well as penniless.
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Old 03-29-2017, 04:34 PM   #8
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As Hubby will hit RMD age first, it would make sense to spend from his accounts first, to lower his RMD at 70.5.

I would spend down his IRA before RMD's, soley to simplify his RMD's being from one account later. But, this could depend on your investment options.

I personally follow Harley's method of putting all dividends, interest and CG's into cash, then pulling from that, but that is just a "feel good" if you are invested for total returns, though it makes it simpler to pull the funds, as you do not need to sell anything. If you want to take out 2-4% of the total nest egg, only from Hubby's account, you will probably need to sell some of the time.
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Old 03-29-2017, 06:56 PM   #9
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Keep an eye on your asset allocation. If you're like us, the asset allocation is managed on a total basis and various accounts have different concentrations. So if, for example, you draw on an account that is primarily equities and do not draw on an account that holds bond, you could find yourself slowly reducing the % of your allocation that is in equities. You may not want to do that.
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Old 03-30-2017, 06:50 AM   #10
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I think https://i-orp.com/ is a great resource for determining the best order to withdraw from various accounts.
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Old 03-30-2017, 08:26 AM   #11
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Quote:
Originally Posted by OldShooter View Post
Keep an eye on your asset allocation. If you're like us, the asset allocation is managed on a total basis and various accounts have different concentrations. So if, for example, you draw on an account that is primarily equities and do not draw on an account that holds bond, you could find yourself slowly reducing the % of your allocation that is in equities. You may not want to do that.
I'd go even farther and say that you should use your withdrawals as part of an annual asset allocation re-balancing.
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Old 03-30-2017, 10:03 AM   #12
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Originally Posted by harley View Post
I personally would have all interest, dividends, and capital gains swept into money market accounts in each account. .
Harley - is this something I need to do manually or is it typically a setting within the financial account web site?
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Old 03-30-2017, 10:04 AM   #13
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Originally Posted by joylesshusband View Post
The smartest play is to draw from your husband's accounts.
Then, when they are completely depleted, kick him out!
Ha! Not going to happen. I am sure any divorce settlement would then take from my stash.
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Old 03-30-2017, 10:06 AM   #14
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Quote:
Originally Posted by OldShooter View Post
Keep an eye on your asset allocation. If you're like us, the asset allocation is managed on a total basis and various accounts have different concentrations. So if, for example, you draw on an account that is primarily equities and do not draw on an account that holds bond, you could find yourself slowly reducing the % of your allocation that is in equities. You may not want to do that.
Aside from the last two accounts which are just cash or bonds. We have the AA about the same in each of the 401k's and IRA.
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Old 03-30-2017, 10:32 AM   #15
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Quote:
Originally Posted by CardsFan View Post

I personally follow Harley's method of putting all dividends, interest and CG's into cash, then pulling from that, but that is just a "feel good" if you are invested for total returns, though it makes it simpler to pull the funds, as you do not need to sell anything. If you want to take out 2-4% of the total nest egg, only from Hubby's account, you will probably need to sell some of the time.
Yes. How easy it is to forget that money is fungible.
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Old 03-30-2017, 11:15 AM   #16
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Aside from the last two accounts which are just cash or bonds. We have the AA about the same in each of the 401k's and IRA.
You should consider them all one account for the purpose of asset allocation re-balancing.
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Old 03-30-2017, 11:24 AM   #17
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Keep in mind should the stock market tank a lot, that is the year or two that you will want to take from CD's or bonds, leaving the stocks time to recover in value, or you will end up selling a lot of extra stocks for the same amount of money.
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Old 03-30-2017, 01:25 PM   #18
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Quote:
Originally Posted by CountryGal View Post
Harley - is this something I need to do manually or is it typically a setting within the financial account web site?
In my experience it's an option at each financial institution. Like with Vanguard, you log into your account and somewhere in the settings for each account you can set whether to sweep the funds into a MM account or reinvest them. I had mine all set to reinvest, so when I retired I went in and changed them all to go into the MM.
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Old 03-30-2017, 02:42 PM   #19
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You should consider them all one account for the purpose of asset allocation re-balancing.
Hence, my addiction to Quicken because I can see all stock positions in his/her multiple IRA's, 401k's, Roth, after-tax accounts, Treasurydirect accounts, etc...

It would be a heck of lot of work to transcribe all account records into my own spreadsheet. It is particularly true because the way I buy stocks. When I find an interesting company or sector, I tend to buy here and there in various accounts wherever I see some free cash. Without seeing the whole thing in front of me, I forget how many shares of a stock I have bought.
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Old 03-30-2017, 03:47 PM   #20
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Since we look at AA and asset adequacy across all accounts, then from a perspective of AA it doesn't matter... when you rebalance you'll just do it in one or more accounts depending on the circumstances.. in your case from where to draw has a tax management implications since withdrawals from the taxable accounts will have much lower tax implications than withdrawals from tax-deferred accounts.

If the 401ks are very different, let's say one has horrible and expensive investment options and the other has very good and inexpensive investment options, then that might result in it being best to do earlier withdrawals from the less desirable 401k.

Given your disparate ages I would think you would do withdrawals from his accounts first to reduce them before RMDs kick in in 4 1/4 years, and then focus on yours.
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