Withdrawal Limits – Placing restrictions on the software’s ability to liquidate assets as needed

Voyant normally takes withdrawals from liquid assets as needed, whenever your client’s future incomes fail to completely meet their annual expenditures. Whenever there is an income gap, assets are drawn upon automatically. The order in which assets are selected for top-up withdrawals is based on a default Liquidation Order, which is set in the software’s Plan Preferences.

Withdrawal Limits give you the option to ringfence certain accounts, either in their entirety or to place certain limits on the software’s ability to liquidate assets as needed. Withdrawal limits can be set, where needed, at the account level, usually under Advanced Settings, on the Withdrawal Limit panel.

Any withdrawal limits (ringfencing) that you set on an account will override any planned withdrawals set on the Planned Withdrawals screen.

 

"As needed" is the default withdrawal limit for most types of accounts

The default Withdrawal Limit for most types of accounts is to allow for withdrawals to be taken “As Needed”. If for example you were to schedule withdrawals of £10,000 annually from an investment account, but your client needs £30,000, the software will withdraw an additional £20,000 to make up the shortfall, provided you haven’t set a withdrawal limit on the account.

We generally recommend that you stick with this default in most cases as doing so will save you time and allow you to avoid artificial future shortfalls.

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UK - Some account types are never subject to as needed withdrawals

There are certain types of accounts in our UK release with special tax treatments that are unavailable for as needed withdrawals. These include most types of trusts (e.g. “other” trusts, bypass and loan trusts), enterprise investment schemes (EISs and Seed EISs), and venture capital trusts (VCTs). These accounts do not have a Withdrawal Limits panel because they are assumed ringfenced by default.

If funds are needed from these special types of accounts, withdrawals must be scheduled on the new Planned Withdrawals screen. Funds could also be transferred out of these trusts and schemes into accounts that do allow as needed withdrawals, such as a savings or general investment accounts.

 

Withdrawing funds from money purchases, drawdown pensions, ARFs/AMRFs

In our UK release, uncrystallised funds in money purchase pensions are normally subject to as needed withdrawals but they must first be considered available for crystallisation. Their availability is controlled on the Money Purchase screen’s new Withdrawal Limits panel.  

The software will assume that the balance of a money purchase becomes available for crystallisation at the owner’s Retirement event. If your client is already retired, the money purchase is assumed to be available for crystallisation as of the beginning of the plan.

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Crystallised pension funds, such as drawdown pensions in the UK and ARFs/AMRFs in Ireland, are considered available immediately for as needed withdrawals.

 

Scheduled Only - Allow only scheduled withdrawals, otherwise ringfencing the asset

A new “Scheduled Only” option has been added to Withdrawal Limits panel that will allow you to limit withdrawals only to those set on the Planned Withdrawals screen. This option could be used when needed to allow the software only to make the withdrawals you’ve scheduled. Additional funds will not be taken as needed from the account. Generally, the default “As Needed” option is recommended, but this new restriction gives you the option to have greater control over the cash flow.

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Related Topics

New in Our December 2018 Release - The Planned Withdrawals Screen

About the Planned Withdrawals screen (how to schedule planned withdrawals)

Scheduling planned withdrawals from pensions

Surplus Withdrawals - What happens to the surplus if I withdraw more than my client needs?

Crystallisation Instructions for Money Purchases (UK)

Withdrawal Limits on Money Purchases and Drawdown Pensions