Why are there assets getting withdrawn when the income is sufficient enough to pay for expenses?

Besides Required Minimum Distributions, which are calculated as needed, sometimes there will be money withdrawn from assets even though the income (or RMD) takes care of the need that year. The reason for this is because all non-taxed deferred assets (savings, investments, reinvested surpluses ) will have taxes owed on the earnings on an annual basis. To pay the taxes, the system will withdraw money from the corresponding assets to pay the taxes. Keep in mind that all surplus reinvested income (income more than the expenses that year), goes to the ‘Checking (Cash on Hand)’ account. This account grows at the effective rate set for the other assets. Growth is taxed on an annual basis.