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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The Pentagon Spokesman said the US-led international coalition against "Daesh" was carrying out a "systematic withdrawal of US troops" from Syria.
It analyzes the various retirement income tools, various retirement income strategies: Systematic withdrawal plans (SWP); and bucket (time segmentation) strategies, the role of Social Security, as well as the benefits of using income annuities and life insurance.
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.
The problem with systematic withdrawal planning is that it only projects income needs through one's life expectancy.
Second, the technology will be able to show how a systematic withdrawal strategy will impact guaranteed benefits and cash value.
systematic withdrawal plan (SWP) designed to have a high probability
Mr Nixon announced what he called a systematic withdrawal of Guard officers yesterday.
You cannot have multiple folios and use options such as systematic withdrawal or systematic transfer and daily, weekly or fortnightly dividends.
If you're willing and able to structure and administer a systematic withdrawal program independently, you may be able to replicate many of the advantages of a distribution fund with a well-diversified portfolio.
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.S.

Full browser ?