Drawdown - Tax Free To Taxable Miscalculation?

GSP

Not a great time to have to do this I know, but in the next couple of weeks I intend to withdraw £12k tax free from my pre retirement side of my pension.
This means that £36k will also have to move over to the post retirement taxable fund.

The trouble I can see is that my deposit cash account in my tax free fund only holds £23k. Once the £12k is withdrawn, that means I will have to ‘find’ £25k from my investments which total 15.

I will obviously have my conversation with my IFA, but as this board is here be interesting if anyone has thoughts what they would do, or what I might expect will happen.

All are down, but my inexperienced self reckons he will suggest on deducting money from my ‘best’ performing investment(s) to move over.

Thanks

Novice_investor101

Will your pension providers actually need to sell funds to cash just to move it into the crystallised pot? Some don’t, they just move the right number of fund units over to equal the cash equivalent. 

marlot

When I've crystallised, I only needed the 25% in cash.  The 75% you're keeping crystallised I kept invested.

I'm assuming you're aware of the MPAA (money purchase annual allowance) which kicks in if you draw any of the crystallised funds.

zagfles

As above, there's no requirement to sell funds if you're just moving them to drawdown. Some platforms create a separate crystallised pot, others maintain a crystallised percentage, but I doubt any platform requires you to cash in investments just to move them into drawdown. You may need to choose which investments you move, but you shouldn't need to cash them in. If your platform does require that, I'd be having words with the IFA about why you're on such a rubbish platform!

dunstonh

The trouble I can see is that my deposit cash account in my tax free fund only holds £23k. Once the £12k is withdrawn, that means I will have to ‘find’ £25k from my investments which total 15.

You may find you don't need to sell any units and that they will automatically move to the crystallised segment with only the amount being drawn out being needed as cash.

I will obviously have my conversation with my IFA, but as this board is here be interesting if anyone has thoughts what they would do, or what I might expect will happen.

The IFA will answer it based on the contract you have and the way they do it.  Best let them do their job.

All are down, but my inexperienced self reckons he will suggest on deducting money from my ‘best’ performing investment(s) to move over.

That probably won't be how the adviser recommends it.

GSP

dunstonh said:

The trouble I can see is that my deposit cash account in my tax free fund only holds £23k. Once the £12k is withdrawn, that means I will have to ‘find’ £25k from my investments which total 15.

You may find you don't need to sell any units and that they will automatically move to the crystallised segment with only the amount being drawn out being needed as cash.

I will obviously have my conversation with my IFA, but as this board is here be interesting if anyone has thoughts what they would do, or what I might expect will happen.

The IFA will answer it based on the contract you have and the way they do it.  Best let them do their job.

All are down, but my inexperienced self reckons he will suggest on deducting money from my ‘best’ performing investment(s) to move over.

That probably won't be how the adviser recommends it.

That’s great thanks dunstonh, and all the other replies.

GSP

My IFA has said:

“ I would perform a rebalance so that other fund units sold are repurchased in the post retirement account”.

I haven’t gone back to him yet, but does that sound right?
He mentions ‘other fund units being sold and having to be repurchased’.
Suggestions were he could just move over without having to sell anything?
Thanks

zagfles

GSP said:

My IFA has said:

“ I would perform a rebalance so that other fund units sold are repurchased in the post retirement account”.

I haven’t gone back to him yet, but does that sound right?
He mentions ‘other fund units being sold and having to be repurchased’.
Suggestions were he could just move over without having to sell anything?
Thanks

Which platform is it? It doesn't sound right unless he's moving the drawdown fund to a different platform. If it's the same platform they should be capable of simply moving the units across without selling and rebuying, which might incur transaction fees and possibly cause a loss (or gain) by being out of the market for a short time.

When I partially crystallised I sold enough units to free up the tax free cash, and for the other 75% being moved into drawdown, I just selected the funds I wanted to move/partially move to the drawdown account and they were there the next day.

GSP

zagfles said:

GSP said:

My IFA has said:

“ I would perform a rebalance so that other fund units sold are repurchased in the post retirement account”.

I haven’t gone back to him yet, but does that sound right?
He mentions ‘other fund units being sold and having to be repurchased’.
Suggestions were he could just move over without having to sell anything?
Thanks

Which platform is it? It doesn't sound right unless he's moving the drawdown fund to a different platform. If it's the same platform they should be capable of simply moving the units across without selling and rebuying, which might incur transaction fees and possibly cause a loss (or gain) by being out of the market for a short time.

When I partially crystallised I sold enough units to free up the tax free cash, and for the other 75% being moved into drawdown, I just selected the funds I wanted to move/partially move to the drawdown account and they were there the next day.

It’s all on Aviva.

dunstonh

GSP said:

zagfles said:

GSP said:

My IFA has said:

“ I would perform a rebalance so that other fund units sold are repurchased in the post retirement account”.

I haven’t gone back to him yet, but does that sound right?
He mentions ‘other fund units being sold and having to be repurchased’.
Suggestions were he could just move over without having to sell anything?
Thanks

Which platform is it? It doesn't sound right unless he's moving the drawdown fund to a different platform. If it's the same platform they should be capable of simply moving the units across without selling and rebuying, which might incur transaction fees and possibly cause a loss (or gain) by being out of the market for a short time.

When I partially crystallised I sold enough units to free up the tax free cash, and for the other 75% being moved into drawdown, I just selected the funds I wanted to move/partially move to the drawdown account and they were there the next day.

It’s all on Aviva.

Aviva platform operates on the uncrystallised funds and crystallised funds being in two different accounts.  i.e. AVxxxxxxx-001 and AVxxxxxx-002.  The investments in each can be controlled independently of each other.   So, is the strategy in the two accounts being handled in different ways?

GSP

dunstonh said:

GSP said:

zagfles said:

GSP said:

My IFA has said:

“ I would perform a rebalance so that other fund units sold are repurchased in the post retirement account”.

I haven’t gone back to him yet, but does that sound right?
He mentions ‘other fund units being sold and having to be repurchased’.
Suggestions were he could just move over without having to sell anything?
Thanks

Which platform is it? It doesn't sound right unless he's moving the drawdown fund to a different platform. If it's the same platform they should be capable of simply moving the units across without selling and rebuying, which might incur transaction fees and possibly cause a loss (or gain) by being out of the market for a short time.

When I partially crystallised I sold enough units to free up the tax free cash, and for the other 75% being moved into drawdown, I just selected the funds I wanted to move/partially move to the drawdown account and they were there the next day.

It’s all on Aviva.

Aviva platform operates on the uncrystallised funds and crystallised funds being in two different accounts.  i.e. AVxxxxxxx-001 and AVxxxxxx-002.  The investments in each can be controlled independently of each other.   So, is the strategy in the two accounts being handled in different ways?

No, they are identical in investments and roughly the same % mix given there was bit more % in cash in the pre-retirement tax free fund.