Systematic withdrawal

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.

Systematic withdrawal is a method of receiving income in regular installments from your mutual fund accounts, retirement plans, or annuity contracts.

Generally, you decide how much you want to receive in each payment, and the schedule on which you want to receive the income. Those payments continue until you stop them or you run out of money.

Unlike the alternatives, such as a pension annuity, systematic withdrawal gives you the flexibility to stop payments at any time, adjust the amount you receive, or choose a different way to access your money.

By withdrawing the same amount on a regular schedule, you limit the risk of taking a large lump sum at a time when your account value has dropped because of a market decline.

The chief drawback of this withdrawal method is that there's no guarantee of lifetime income, so it's possible to deplete your account more quickly than the rate at which it's growing. That could mean running out of money.

After you reach 70 1/2, you can use systematic withdrawals as a way to ensure you take out the minimum required distribution (MRD) from qualified retirement accounts and IRAs to avoid the risk of incurring IRS penalties.

References in periodicals archive ?
You can describe to the investor general methods and strategies for managing assets in retirement, such as systematic withdrawal payments, annuitization and guaranteed minimum withdrawal benefits.
The obvious lesson is that this time around there is the need to prepare for smooth and systematic withdrawal of this empire from the world stage.
Second, the technology will be able to show how a systematic withdrawal strategy will impact guaranteed benefits and cash value.
Mr Nixon announced what he called a systematic withdrawal of Guard officers yesterday.
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A distribution fund basically lunciions much like a systematic withdrawal plan.
Use for Dollar Cost Averaging (DCA) plans and Systematic Withdrawal Plans (SWP)
The systematic withdrawal of international troops must be accompanied with strengthening of democratic institutions including the justice system and capacity-building within the Afghan National Security Forces, the statement said, adding governmental bodies, in particular the security forces, and elected institutions of Afghanistan must be purged from criminal perpetrators.
With 303-113 votes, the lawmakers rejected an amendment in the defense bill that would have ended combat operations in Afghanistan by limiting funds only for safe and systematic withdrawal of U.
Also, Shamsudheen points out systematic withdrawal is considered partial redemption.
With all those variables, the flexible options offered by cash value policies--in eluding full surrender of the basis value or a loan, both tax-free, or a systematic withdrawal that "annuitizes" the benefits--can be very attractive.
The FPA research also says that advisors are using more "personalized approaches" to retirement income needs, and are ditching a systematic withdrawal approach.

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