Frequently asked questions (FAQs)



Remember the majority of what we discuss here describes a developing program, but we’d like to provide you with some information about our proposed services.

  • Why are you categorizing my accounts into taxable, tax-deferred and tax-exempt?

    Different types of accounts are taxed in different ways. Taxable (checking, savings, brokerage) generally means you pay taxes as you go and are taxed on interest, dividends and realized capital gains. Tax-deferred (Traditional IRA) generally means you pay when you withdraw, taxed as ordinary income. And tax-exempt (Roth IRA) generally means you’ve contributed with after-tax dollars, so you can withdraw tax-free.

  • How is my proposed monthly withdrawal calculated and can I change it?

    We’re collecting your income and expenses information. If there is a gap in expenses minus income at any point in time, we assume that this is the amount you’ll need to withdraw. Then we divide it by 12 for the monthly amount.

    In the future, when you’re able to set up an automated withdrawal schedule, you’ll be able to change this amount to whatever you like.

  • What about my accounts outside Fidelity?
    We care about your outside accounts for several reasons. They are part of your household’s investment strategy and eventually you may need to withdraw from these accounts to be tax-efficient.
  • When do I need to worry about required minimum distributions (RMDs)?

    In the year you turn 70½, you’ll have to start taking RMDs. If you don’t, there could be a tax penalty of up to 50%.

    When we launch, we’ll help you track and take out your RMDs annually for your accounts managed by us. We’ll also let you know how much to take out of outside accounts by the end of the year so that you’re not penalized.

  • How will you estimate withdrawals tax-efficiently?

    While you were working, you were likely taxed on the salary you earned. The investments you hold in certain accounts, the amounts you withdraw, what you sell, and the timing of those transactions may become the primary drivers of income—and taxes.

    Some retirees dig into their taxable accounts (checking, savings or brokerage) first, but actually, it may be more beneficial for you in the long term to withdraw from all account types in smaller increments. So that means your tax-deferred (Traditional IRA) and tax-exempt (Roth IRA) accounts as well.

    In the future, we’ll be able to work with you by running many simulations to look for tax-efficient ways to draw from your accounts. Taxes are complicated, but we’ll work with you to make it feel easier and less painful.

  • What about inflation?

    We’ll take inflation into account by modeling everything in "real" terms, or today's dollars. It’s incorporated in our calculations of expenses, incomes, and returns. View our methodology for additional details.

  • Which banks will be supported?

    Once our withdrawal capabilities are up and running, all US-based banks will be supported. All you’ll need are your account and routing numbers.

These FAQs do not describe an existing service and Fidelity Investments reserves the rights to modify any portion of this concept. This information is for marketing purposes only and does not constitute an offer of any existing products or services.

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This experience is for people nearing or in retirement who file single or married filing jointly.