Drawdown - finer points.

Veloflyer

Morning All

I have SIPPs in both HL and Bell and in the near future I am contemplating drawdown. Initially this will be with a view to take the lump sum only, but will morph into drawing an income from the crystallized portion. A couple of Qs if I may

Is this fairly simple to set up and manage the drawdown aspect of a SIPP over HL/Bell's websites? The SIPPs are presently managed by me via their websites and they have been fairly easy to manage so far, but I have not seen anything on their websites which shows how I may manage the drawdown bit of my SIPP in a similar manner. i.e. how to invest the crystallized bit, how to draw from it, how to vary the income etc. I assume there are additional web pages I have not seen yet?

Can I simply move from the invested funds into drawdown at any time with any amount and receive the tax free lump sum when I do so? - assuming I do not exceed the limit - fat chance!

Baldytyke88

I telephoned HL when I cashed in my tax free amount, because I found it confusing. I now have a SIPP and a drawdown account that holds my shares, which I cannot contribute to. I guess I could cash in some shares and withdraw money at any time.

Veloflyer

Yes - I assume there would be 2 separate accounts set up within the SIPP. 1 for the existing invested SIPP, another for whatever I have transferred to drawdown - essentially the crystallized bit.

NoMore

Veloflyer said:

Yes - I assume there would be 2 separate accounts set up within the SIPP. 1 for the existing invested SIPP, another for whatever I have transferred to drawdown - essentially the crystallized bit.

Note not all providers do two separate pots for crystallised and uncrytalissed instead they do notional split whereby a percentage of your whole pot is assigned as crystallised. I do not know how a bell or hl do it but something to be aware of. 

ColdIron

With HL when you apply for drawdown you will get an extra account with your SIPP - 'SIPP Income Drawdown'. They will crystallise some or all of your cash (you may need to sell some of your investments) and move it into the drawdown account and you take 25% tax free. You can then invest in whatever you like in the same way as your did in your SIPP. You could leave it there until you want to take a regular income. You instruct them with the amount and frequency, monthly or whatever. This will be taxable and trigger the MPAA

I can't speak for AJ Bell but it will be broadly similar

Veloflyer

Note not all providers do two separate pots for crystallised and uncrytalissed instead they do notional split whereby a percentage of your whole pot is assigned as crystallised. I do not know how a bell or hl do it but something to be aware of.

Noted and thanks - I'm assuming there would be some web facility to assign amounts and allocate funds as and when to the crystallized amount?   

MallyGirl

https://forums.moneysavingexpert.com/discussion/6638144/platform-allowing-management-of-crystallised-and-u-crystallised-pots
AJ Bell seems to use the notional percentage split method according to the above thread

NoMore

Veloflyer said:

Note not all providers do two separate pots for crystallised and uncrytalissed instead they do notional split whereby a percentage of your whole pot is assigned as crystallised. I do not know how a bell or hl do it but something to be aware of.

Noted and thanks - I'm assuming there would be some web facility to assign amounts and allocate funds as and when to the crystallized amount?   

No that’s not how notional split works, you just choose to invest your whole portfolio how you wish and a percentage of the total will be assigned as crystallised further crystallisation will increase this percentage. 

It can take a while to get your head round it so unless aj bell do it this way I wouldn’t worry about it at the moment. 

Veloflyer

With HL when you apply for drawdown you will get an extra account with your SIPP - 'SIPP Income Drawdown'. They will crystallise some or all of your cash (you may need to sell some of your investments) and move it into the drawdown account and you take 25% tax free. You can then invest in whatever you like in the same way as your did in your SIPP. You could leave it there until you want to take a regular income. You instruct them with the amount and frequency, monthly or whatever. This will be taxable and trigger the MPAA

I can't speak for AJ Bell but it will be broadly similar

 Aha - that makes things clearer - many thanks. I assume I'll have access to some sort of web page to manage the crystallized bit as you suggest.

I assume I can crystallize whenever with whatever amount from the uncrystallised portion - with the lump sum - until all the uncrystallised bit is exhausted.

ColdIron

Veloflyer said:

 Aha - that makes things clearer - many thanks. I assume I'll have access to some sort of web page to manage the crystallized bit as you suggest.

Yes, you will have 2 accounts instead of just the 1 on the dashboard that you are familiar with, they operate in the same way. You might, for instance, use growth funds in the SIPP and income producing ones in the new one if you want, with or without a cash buffer to smooth monthly withdrawals. It's up to you

I assume I can crystallize whenever with whatever amount from the uncrystallised portion - with the lump sum - until all the uncrystallised bit is exhausted.

Yes but it's not instant, you wouldn't want to do it every month

Veloflyer

ColdIron said:

Veloflyer said:

 Aha - that makes things clearer - many thanks. I assume I'll have access to some sort of web page to manage the crystallized bit as you suggest.

Yes, you will have 2 accounts instead of just the 1 on the dashboard that you are familiar with, they operate in the same way. You might, for instance, use growth funds in the SIPP and income producing ones in the new one if you want, with or without a cash buffer to smooth monthly withdrawals. It's up to you

I assume I can crystallize whenever with whatever amount from the uncrystallised portion - with the lump sum - until all the uncrystallised bit is exhausted.

Yes but it's not instant, you wouldn't want to do it every month

Excellent - and no I will not be doing it every month. Intention is initially withdraw enough from the uncrystallized bit to live off the lump sum for a year or so, (hopefully) do this for few years, then draw income from the crystallized bit.