How to schedule Planned Withdrawals **Adviser Go, all regions**

Voyant normally takes withdrawals as needed from liquid assets 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.

Expense fulfillment and Liquidation Order

Since the software will attempt to cover future expenses automatically, you don’t have to specify payment sources for future expenses or even schedule future withdrawals from accounts. Voyant will handle this for you, which is enormous time-saver, allowing you to focus on presenting your advice rather than getting bogged down in minutiae of charting out future cash flow.

If however, you want to take a more hands-on approach to setting your clients’ future income strategy, Planned Withdrawals  is a powerful tool to help you do so. Planned withdrawals can be used to illustrate the tax efficiencies of certain drawdown strategies, especially in retirement.

Planned Withdrawals are entered and managed from one easy to access section called “Planned Withdrawals”.  

How to Schedule Withdrawals Step-by-Step

To enter a new  Planned Withdrawal, make sure you are in Dashboard and then click on the + button in the bottom right of the screen. Then select the Planned Withdrawal tile.

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Select the account you want to make the planned withdrawal from

The Available Accounts option is located  under the entry details and it is good practice to go here and select the account(s) first as it releases additional fields for certain accounts e.g. pensions. This field shows a list of all the liquid assets (present and future) available in the plan. The pensions in this list might include present or future money purchases and drawdown pensions (in our UK release), ARFs/AMRFs (in our Ireland release).

You select an account listed in Available Accounts by double clicking it or dragging and dropping into  Selected Accounts

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You can select and move any number of accounts from the left field to the right if you intend to set up withdrawals that are to be taken from multiple accounts. When moved, accounts will be added to the list of Selected Accounts in descending order.

If you intend to set up a specific liquidation order using the “Total” withdrawal option (more about this in a moment), then you can alter the order of the accounts by selecting the account and using either the up or down arrows.

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Now scroll back up to the Basic Entry fields. 

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Enter the name of the Planned Withdrawal, as you want it to appear in Lets See>Cashflow.

Type

The following options are available, select the most appropriate from the dropdown.

The following options will vary based on the type of account

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All Available = Will in most cases withdraw the entire balance from the selected account(s) in a single year, provided the account selected is not a product with rules that limit withdrawals or preserve a minimum balance. ARFs/AMRFs in Ireland, for example, have rules that ring-fence minimum balances in certain circumstances, which might prevent the total balance from being withdrawn.

All Available could be used to schedule the future liquidation of an account. 

You could also go to the account itself and apply a Withdrawal Limit of “Scheduled Only”. This means the account would remain ring fenced and cannot be tapped for as needed income, until it is liquidated, as per instructions on the Planned Withdrawals screen.

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Note – Setting a withdrawal limit of “Do not allow” and then scheduling a future transfer of 100% of the account balance is another, perhaps better method for scheduling the liquidation of an asset. Transferring funds out of the maturing account and into savings or another investment will preserve the balance, whereas withdrawals scheduled from the Planned Withdrawals screen will usually be assumed spent, if not scheduled to be saved or transferred.

% of Account Value = Withdraws the percentage specified from the overall balance of the account.

Fixed with Inflation = Withdraw a fixed annual amount escalated annually by the inflation rate. The inflation rate is set in the Plan Settings. 

Fixed without Inflation = Withdraw a fixed annual amount with no inflation.

If you make an entry in either of the fixed withdrawal fields, both will be populated. This is a convenient feature that allows you to easily toggle indexing with inflation on or off for future withdrawals.

There are two options for fixed withdrawals scheduled from multiple accounts, Total and Each. These options are explained later.

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Dividend Income = Withdraws only dividend income paid annually to an account. Dividends are an option for Investments. Dividend Yield is set for an Investment under Growth in the Dividends field.

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Max without penalty = Withdraws the maximum available without a tax penalty for certain products. This option is intended primarily for use in setting tax deferred withdrawals from bonds (life funds) in our UK release.

Please Note - This option is not designed to calculate withdrawals up to the client’s personal allowance. If you select this option for an account type that has no rules regarding withdrawal allowances, the result will be the liquidation of the entire account.

When this option is selected for a bond (life fund) in our UK release, the tax deferred allowance of 5% per annum of original principal will be withdrawn annually. Planned withdrawals from the bond will cease once the original principal is fully withdrawn.  

Please Note - If your client hasn’t withdrawn their tax deferred allowance (e.g. the bond was purchased in 2018 but no withdrawals have been taken to date) the total available tax deferred allowance to date will be withdrawn in the first planned withdrawal. The software will then adjust subsequent withdrawals down to the regular 5% of original principal original principal until the original principal is fully withdrawn.  

For Bonds, it may be preferable to chose Fixed Without Inflation and enter an amount that is 5% of the original principle.

 

Distribution Type

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Total = An option for fixed withdrawals, which becomes relevant only when multiple accounts are selected. When Total is selected, the specified withdrawal amount will be taken annually from the first account in Selected Accounts list until that account is depleted. The software will then move on to take withdrawals from the next account in the list and so forth.  

The Total option could be used to effectively set an account-by-account liquidation schedule. For example, if your clients have numerous pensions and they would prefer for a certain pension to be liquidated first, before moving on to the next, simply enter a Total annual planned withdrawal amount. Then select the pensions that will be the sources of these future withdrawals and alter the order of the accounts by selecting the account and using either the up or down arrows.  The first pension in the list of Selected Accounts  will be the first to be liquidated, after which the software will move to the second account in the list and so on.

Understand that the software’s Liquidation Order will still govern how the software takes any additional funds whenever incomes and planned withdrawals do not fully cover planned expenditures.

 

Each = An option for fixed withdrawals, which becomes relevant only when multiple accounts are selected. When Each is selected, the amount specified will be withdrawn simultaneously from each of the accounts in Selected Accounts list.

For example, rather than taking income from a single pension before moving on to the next, which is how the software’s default liquidation order would work, a couple could schedule withdrawals of £12,500 from his pension and hers. Doing so might be more tax efficient as it would utilise each person’s annual allowance. The Each option allows both withdrawals to be managed in one convenient entry on the Planned Withdrawals screen.

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Pension Strategy (UK money purchases only)

Two options are available to set how incomes will be taken from money purchases in our UK release. These are UFPLS and Flexible Access Drawdown and they determine whether an element of taxable income will be included in each withdrawal or if withdrawals are to be taken entirely from the pension owner’s tax-free cash allowance.

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Flexible Access Drawdown (FAD) = Allows scheduled withdrawals from money purchases to be taken from the client’s tax-free cash allowance first. The total withdrawal amount specified will be tax free. With each amount withdrawn tax free, an additional 75% is crystallised and moved into a linked drawdown account, which he software creates automatically.

Please Note – The Flexible Access Drawdown option can only work if the amount you are withdrawing is less than the pension’s overall tax-free cash allowance, which is normally 25% of the pension’s balance. For example, if you were to schedule a withdrawal of 50% or 100% of a pension’s total balance, the software will withdraw this amount. It will not limit withdrawals to only the tax-free allowance since the amount scheduled clearly exceeds it. Your client will receive a combination of taxable and tax-free cash, effectively an UFPLS withdrawal, even if you have the Flexible Access Withdrawal selected as the withdrawal strategy.

UFPLS = The software’s default for as needed withdrawals taken from money purchases. Withdraws a mix of taxable and tax-free monies.

 

Recurring =Withdrawals can now be easily set to begin and end for discreet time periods on the Time panel.

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You can schedule a one off planned withdrawal by choosing NO from the drop down. To set the timing, choose the Timing option (left if the screen)  and then drag and drop the event into the Withdrawal Timing box.

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To schedule a recurring planned withdrawal, select YES from the drop down.  You will get a prompt to up date the timing which will take you to the Timing screen or you can click on Timing on the left of the screen.

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To schedule the start and end of the withdrawals, drag and drop the events into the Withdrawal Starts and End boxes.

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Note – There is no need to leave the Planned Withdrawals Timing screen if you need to add a new event to the timeline to schedule the beginning or end of withdrawals. Simply double click the relevant year on the timeline and create a new event which you can set as the start or end event. 

 

Stepping Future Withdrawals Up or Down

Planned withdrawals can be stepped up or down (increased or decreased) if changes need to occur within the time-span over which the withdrawals are scheduled. The overall timing of planned withdrawals is set in Timing.

The Basic Rules of Stepping:

There are a few basic rules about steps to bear in mind when stepping planned withdrawals or anything else in your client cases.  

- Steps are always scheduled using events on the planning timeline. Events can be added to the timeline whenever a step is needed.

- Steps can only be scheduled in the years between the planned withdrawal’s start event  and end event,  as set in Timing. You cannot step a planned withdrawal in the year that it is scheduled to begin or end. Steps can only occur in the years between.

- The initial amount entered for the planned withdrawal sets the total first-year withdrawal. 

- Withdrawals will stop (provided the accounts are not depleted beforehand) in the year set by the end event in Timing. There is no need to step withdrawals down to zero to end them.

- You cannot step a withdrawal multiple times in a single year – one step per year maximum.

- Only a recurring withdrawal could be stepped. There is no concept of stepping a one-off withdrawal.

 

How to Schedule a Future Step in Planned Withdrawals

With these basic rules in mind, to schedule a future step in planned withdrawals:

1. On the Planned Withdrawals screen select Steps (left hand side) and then click on Add Step

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2. In Basics, enter details of what the planned withdrawal will be e.g. the change in the amount.

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Note – The Fixed w/ Inflation withdrawal option indexes future withdrawals with inflation. The withdrawal amount you enter will be an inflated one if withdrawals begin in the future. The same goes for steps. The future stepped amount you enter will be an inflated amount when the future withdrawals are increased or decreased.  

3. Select Timing and then drag and drop the event at which the step/change in withdrawals is to occur into the Step Occurs box. Click on Save.

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A Summary of the change will appear. Click on Save again.

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 Note – There is no need to leave the Steps Timing screen if you need to add a new event to the timeline. Simply double click the relevant year on the timeline and create a new event which you can set as the start event for the step.

 

Viewing Planned Withdrawals

The Planned Withdrawals you have entered appear on the Dashboard. You can view, edit and delete them from here.

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