Withdrawal Strategy

The Asset Withdrawal Strategy is one of three strategies that can be modeled within the Tax Strategies module. This can be found within the Tax > Tax Strategies tab of each client plan. Click the 'Action Items' button at the bottom of the page to open a new drawer, revealing a set of tax strategies that you can model:

The Withdrawal strategy allows you to fully control which tax buckets are pulled from first to fund a client's negative net flows. This strategy ties in closely with the Withdrawal Sequence setting in RightCapital and serves the same function.

The default withdrawal sequence in RightCapital is Taxable, tax-deferred, tax-free. When funding cash flow needs, RightCapital will default to taking money from taxable accounts first, then tax-deferred accounts, and lastly tax-free accounts. The Withdrawal strategy dropdown menu allows you to propose changes to this distribution sequence:

Please note: If you choose the 'Tax-deferred, taxable, tax-free' sequence while a client is under 59.5 years old, RightCapital will pull from the taxable bucket before the tax-deferred in the cash flow projections for the proposed plan.

Changes in withdrawal sequence can be best visualized using the various charts in the Summary and Comparison tabs. By making all other variables the same, you can directly compare two different withdrawal sequences between the Proposed and Reference strategies. You can also mix and match different withdrawal sequences with other tax strategies:

After dialing in a withdrawal strategy within the Tax module, you can then choose to instantly reflect that strategy within any retirement proposal. To apply a tax strategy proposal, visit the Retirement Analysis module and access the action items at the bottom of the screen. On the right side of the action items, isolate the 'Tax Strategy' dropdown, and choose your desired tax proposal. Once you click Refresh in the lower right, details from the Tax Strategies module will flow into the Proposed plan: