systematic withdrawal plan

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Systematic withdrawal plan

A provision of certain mutual funds to pay out to the shareholder specified amounts after specified periods of time.

Systematic Withdrawal Plan

A way to receive regular payments from an annuity, mutual fund, or other investment vehicle. One way of conducting a systematic withdrawal by selling one's interest in an investment vehicle slowly over time and keeping the cash from the sales. This reduces the risk that the investor will sell all of one's interest at once and receive a lump sum payment when the market is in a downturn. Systematic withdrawals may occur automatically, such as in Social Security or in some retirement plans.

systematic withdrawal plan

See withdrawal plan.

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References in periodicals archive ?

Further, sources question whether a sponsor that encourages retirees to remain in the plan has an obligation to offer systematic withdrawals and/or retirement income options.

Best Interest in Mind

While plan sponsors may not want to embrace a product solution, they may allow systematic withdrawals from their plans to help participants create an ongoing income, with regular distributions made to mirror paychecks.

Income Solution Usage Stagnant

Interestingly, according to the survey, the majority of employers currently prefer lifetime income education and planning tools, and partial or systematic withdrawals during retirement over more effective solutions such as insurance-backed products, annuities or other managed payout options.

U.S. employers slow to offer annuities and insurance-backed products

This includes all switches, systematic withdrawals and systematic transfers.

Is Your Fixed Income Investment Risk-free?

If there were such a thing as a "default" income planning strategy, systematic withdrawals might be it.

Systematic withdrawals: an income strategy every advisor must learn

to commit to systematic withdrawals of, for example, 4% of their account

Tontine pensions

And those with defined contribution plans usually elect to receive lump sum distributions or take systematic withdrawals rather than convert their payouts to annuities.

American risk

For example, as the authors of The 4 Percent Rule Is Not Safe in a Low-Yield World point out in their 2013 Journal of Financial Planning paper, in today's current bond market environment, the legitimacy of the 4 percent initial withdrawal strategy for retirement income "may be a historical anomaly, and clients may wish to consider their retirement income strategies more broadly than relying solely on systematic withdrawals from a volatile portfolio."

An annuity renaissance: once scorned the investing public, annuities of all types are gaining favor with advisors as an important piece in the retirement income puzzle

He went on to note four ways that retirees can convert savings into an income stream: systematic withdrawals, a managed distribution fund, partial annuitization at age 65 or annuitization at age 80.

The distribution dilemma: current retirees receive income for sources that future retirees won't be able to count on

The client takes systematic withdrawals from the asset, pays applicable income tax, and gifts the after-tax proceeds to an ILIT, which purchases life insurance on the client.

The case for wealth transfer planning using life insurance

The American Benefits Council has weighed in on the topic, asserting lifetime income products are important tools for participants, but that most retiring employees generally don't select lifetime income options like annuities, guaranteed minimum withdrawal products, systematic withdrawals and longevity insurance.

No wrong way to a guarantee

There is also the choice of making systematic withdrawals, which the annuitant can start or stop as needs change.