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How can I exclude an account from withdrawals?
How can I exclude an account from withdrawals?

This article outlines why you may want to exclude your accounts from automatic withdrawals and how to use the Exclude feature

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

As of September 2021, you can now opt for certain accounts to be excluded from automatic withdrawals. In order to understand why this may be useful, we'll first go over the Planner's Expense Hierarchy and how expenses are covered within the tool.

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Expense Hierarchy

The Planner uses the following hierarchy to fund all expenses (unless otherwise earmarked, e.g. by My Plan > Money Flows):

  1. Income (this is income already coming into your plan, such as work income, Social Security, etc.)

  2. Taxable Savings (such as the taxable savings section of My Plan > Accounts and Assets)

  3. Tax-Deferred Accounts (traditional IRAs and 401(k)s, 403(b)s, etc.)

  4. Roth Accounts

  5. HSAs

The Planner will first attempt to fund a given expense using income. If that is not enough, it will draw down from taxable savings. If all of your taxable savings are depleted, it will go higher up the food chain and finally resort to modeling debt.

Within each category, the Planner chooses accounts based on their rates of return. The Planner will first draw down the lowest RoR accounts and then move upwards.

So how does the Exclude from Withdrawals feature play into all this?

Uses For Excluding From Withdrawals

For an account that is excluded from withdrawals, that account will not be considered when attempting to pay for a given expense. Even if the account is fully funded and there are no other accounts available to pay an expense, the account will not be tapped and lifetime debt will instead be modeled.

IMPORTANT: Excluding an account from withdrawals does NOT exclude it from manual withdrawals, only from our automatic withdrawals based on the Expense Hierarchy. Using My Plan > Money Flows to direct money out of an excluded account not only works but allows for much more control over your Plan.

This can be helpful if you are earmarking money for a very specific cause or expense, or if you are attempting to model a special account type that does not allow for withdrawals. For example, you can use this feature to set up a savings account (which is usually the first account type to be depleted) that will ONLY be used to pay for a down payment on a home. There are a few sections in the Planner that allow for such control:

  1. The down payment fields within My Plan > Home and Real Estate

  2. The One-Time Expenses and Disbursements sections of My Plan > Expenses and Healthcare

  3. And, most importantly, the Transfers section of My Plan > Money Flows

You can use the Exclude feature to model account types such as 529s (i.e. college savings accounts) in conjunction with the Disbursements section of My Plan > Expenses and Healthcare to model qualified education expenses.

How to Exclude an Account From Withdrawals

To create a new account that is excluded from withdrawals

Step 1: Navigate to My Plan > Accounts and Assets
​Step 2: Open the Savings section

Step 3: Press on "Add an account +"

Step 4: Select the account type you wish to add (in this case, I'll be making a taxable savings account to pay for my dream car)

Step 5: Decide if you want to manually enter or link your account (I will be manually entering)

Step 6: Fill out the account details to the best of your ability. Remember that rates of return are nominal, not real

Step 7: Press "Yes" when asked to exclude this account from your withdrawal strategies

Step 8: Press "Next: Contributions"

Step 9: Decide if you want to set up recurring or one-time contributions. At this point, you have successfully created an account that is excluded from automatic withdrawals

How to Exclude an Existing Account From Withdrawals

Step 1: Navigate to My Plan > Accounts and Assets
​Step 2: Open the Savings section

Step 3: Press the ✎ (pencil) icon to edit your desired account

Step 4: Find the "Exclude this account from your withdrawal strategies?" field and select "Yes"

Step 5: Press "Save." You have successfully excluded an existing account from automatic withdrawals

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