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Originally Posted by Bestwifeever
We have never had stocks or bonds outside of retirement accounts, so we are blissfully ignorant about the mechanics of how they work in terms of generating income instead of gains being reinvested. Do typical retirement funds (not funds for saving for retirement, but for using in retirement) generate dividends that are sent to you periodically? Or do you have to sell holdings to generate income? If you start out with a couple of years' worth of $ in a money market fund, how do you replenish that? And in terms of taxes--are they withheld as or do you make quarterly payments? Are taxes due only on withdrawals as we take them? Is there a book you could recommend about how to access your retirement $?
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I am not certain on what you are really asking. IF you are talking about regular assets, e.g. stocks, bonds, mutual funds, and ETFs, held in a taxable account outside your IRA, you can structure them any way your wish in a brokerage account. If you want to receive/use the income from these investments, then set them up without the dividend re-investment programs. That way, the income generated from the investments (dividends and interest) will simply be deposited to your brokerage account and you can EFT them out of the brokerage account monthly, quarterly, or however you wish. Depending on brokerage, you might be able to set it up so they EFT the income to your bank account automatically monthly or quarterly.
If this is not sufficient income, you then decide on what portion of what investments you sell on a regular basis to provide the income you wish. Those sales will generate capital gains and/or capital losses. All income you receive is taxable in the year you receive it and the tax rate depends on whether it is qualified dividend income, interest income, or captal gains. Some one else will have to respond on withholding taxes and/or quarterly installment payments since I am not familiar with the US tax system.
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