Is it possible to set up automatic montly security sales in a Fidelity account?

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PrettyCoolWorkshop
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Is it possible to set up automatic montly security sales in a Fidelity account?

Post by PrettyCoolWorkshop » Tue Feb 26, 2019 12:18 pm

My mom will soon be needing a set-up where she sells some stocks monthly to pay for her cost of living. Is it possible to automate this, so that every month a certain dollar amount will be sold and then the proceeds will be transferred to her bank account? Preferably using a Fidelity brokerage account.

Are there any "gotchas" about this? i.e. if the stock craters, she would have to manually sell more, etc.
Be greedy and fearful. All the time.

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PrettyCoolWorkshop
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by PrettyCoolWorkshop » Tue Feb 26, 2019 2:01 pm

Sorry to dump a customer service question on you guys. I ended up contacting fidelity directly to ask the same question through their online chat.

Fidelity has a webpage to set up automatic scheduled withdrawals. This webpage is mostly intended for withdrawing from your cash/core position, and may also be used to withdraw from your mutual fund positions. I wanted to be able to withdraw from ETF's, such as IVV, and stocks.

After chatting with Fidelity, they confirmed that it is only possible if you set it up through cash/core Fidelity mutual funds. However, there is an additional wrinkle to this. The setup page has the two options:

"In the event of insufficient funds, how would you like us to process your withdrawal?

1. Withdraw from any eligible money market, core, bond, or equity fund positions
2. Withdraw from my money market or core position only.

So, in accordance with option 1, it may be possible that they will liquidate a random fund for you if needed. If you only hold the particular funds you want liquidated in that account, there would be no problem. I have yet to confirm this.
Be greedy and fearful. All the time.

Murgatroyd
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by Murgatroyd » Tue Feb 26, 2019 2:28 pm

I believe the key word under point #1 is ELIGIBLE. To probably mean only Fidelity brand funds.

megabad
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by megabad » Tue Feb 26, 2019 4:24 pm

You asked if there were any drawbacks. The primary ones I can envision is that this seems like a tax nightmare and a rebalancing nightmare to me (assuming a taxable account). If it were me, I would just transact manually maybe once per year. That way it is easier to keep track of the tax impacts and rebalancing. It is pretty easy to give someone access and authority to make transactions for a relative.

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PrettyCoolWorkshop
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by PrettyCoolWorkshop » Wed Feb 27, 2019 11:05 am

Murgatroyd wrote:
Tue Feb 26, 2019 2:28 pm
I believe the key word under point #1 is ELIGIBLE. To probably mean only Fidelity brand funds.
This is likely true, that only fidelity mutual funds would be eligible. I'll confirm this soon.
Be greedy and fearful. All the time.

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PrettyCoolWorkshop
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by PrettyCoolWorkshop » Wed Feb 27, 2019 11:07 am

megabad wrote:
Tue Feb 26, 2019 4:24 pm
You asked if there were any drawbacks. The primary ones I can envision is that this seems like a tax nightmare and a rebalancing nightmare to me (assuming a taxable account). If it were me, I would just transact manually maybe once per year. That way it is easier to keep track of the tax impacts and rebalancing. It is pretty easy to give someone access and authority to make transactions for a relative.
Thankfully, my mom's medical expenses + standard deduction exceed her income by a good bit, so her taxable income is 0, basically regardless of whether we set up this withdrawal scheme. So it would be a good way to max out "time in the market."
Be greedy and fearful. All the time.

ralph124cf
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by ralph124cf » Wed Feb 27, 2019 11:31 am

PrettyCoolWorkshop wrote:
Wed Feb 27, 2019 11:07 am
megabad wrote:
Tue Feb 26, 2019 4:24 pm
You asked if there were any drawbacks. The primary ones I can envision is that this seems like a tax nightmare and a rebalancing nightmare to me (assuming a taxable account). If it were me, I would just transact manually maybe once per year. That way it is easier to keep track of the tax impacts and rebalancing. It is pretty easy to give someone access and authority to make transactions for a relative.
Thankfully, my mom's medical expenses + standard deduction exceed her income by a good bit, so her taxable income is 0, basically regardless of whether we set up this withdrawal scheme. So it would be a good way to max out "time in the market."
Even with zero taxable income, you still have to "show your work" for the IRS. It sounds like you would be selling small lots of several stocks monthly, possible from lots with different basis, and certainly at different prices. The feds want to see what you have done. If this is in a 401(k) or an IRA, this is not a problem, since everything that comes out is fully taxable and you do not have to report the sales within the tax deferred vehicle. If it is in a taxable account it will be a royal pain.

Also, if these are individual stocks, there will be a commission for every transaction, taxable or tax deferred.

Ralph

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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by PrettyCoolWorkshop » Wed Feb 27, 2019 11:45 am

ralph124cf wrote:
Wed Feb 27, 2019 11:31 am
PrettyCoolWorkshop wrote:
Wed Feb 27, 2019 11:07 am
megabad wrote:
Tue Feb 26, 2019 4:24 pm
You asked if there were any drawbacks. The primary ones I can envision is that this seems like a tax nightmare and a rebalancing nightmare to me (assuming a taxable account). If it were me, I would just transact manually maybe once per year. That way it is easier to keep track of the tax impacts and rebalancing. It is pretty easy to give someone access and authority to make transactions for a relative.
Thankfully, my mom's medical expenses + standard deduction exceed her income by a good bit, so her taxable income is 0, basically regardless of whether we set up this withdrawal scheme. So it would be a good way to max out "time in the market."
Even with zero taxable income, you still have to "show your work" for the IRS. It sounds like you would be selling small lots of several stocks monthly, possible from lots with different basis, and certainly at different prices. The feds want to see what you have done. If this is in a 401(k) or an IRA, this is not a problem, since everything that comes out is fully taxable and you do not have to report the sales within the tax deferred vehicle. If it is in a taxable account it will be a royal pain.

Also, if these are individual stocks, there will be a commission for every transaction, taxable or tax deferred.

Ralph
Tracking lots is an amount of headache I am fine with dealing with. If I did this, I would set it up to use fidelity fee free etfs (assuming it is possible), unless I find that the tax situation is fine with using fidelity mutual funds (which, given the tax situation I described above, may not suffer from a tax perspective. the majority of my mom's holdings are in a taxable brokerage account).
Be greedy and fearful. All the time.

RetiredAL
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Re: Is it possible to set up automatic montly security sales in a Fidelity account?

Post by RetiredAL » Wed Feb 27, 2019 1:28 pm

OP,

I only use this for my Retirement Accounts, but it does list my Brokerage Account, so I assume it works the same for it.

When logged into Fidelity: https://moneymovement.fidelity.com/ftgw ... /awSummary

I have this function set up on my Retirement IRA's. When you create a plan, they tell you what items are eligible for auto withdrawals and you can select which to use. My non-Fidelity ETF's do not show as eligible. All that I see in the list are my core cash and Fidelity Funds. I suggest you create a trial plan, and then cancel it before you save it, just to see how it works.

I personally fund a Spending Bucket ( Short Term Treasury Fund ) that holds 18 month's of withdrawals. (added:) This funding is done as part of my re-balancing plan and is subject to market valuation concerns. It did not occur this last January and I will re-visit this in March.

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