In Karl’s scenario, which ARF withdrawal by end of 2020 would avoid an imputed distribution given the March 2020 AMRF withdrawal?

• A. €2,600
• B. €3,600
• C. €4,000
• D. €6,000

Answer: (D)

The key idea here is how imputed distributions work for an ARF that originated from an AMRF. When funds are moved from an AMRF into an ARF, tax rules require a minimum withdrawal in the year to satisfy the AMRF’s return, calculated as a percentage of the AMRF value (commonly 4%). If the actual ARF withdrawals in that year are less than this imputed minimum, the shortfall is treated as a deemed (imputed) distribution for tax purposes. If you withdraw at least the imputed minimum, there is no imputed distribution for that year.

In Karl’s case, after the March 2020 AMRF withdrawal, the imputed minimum for the year is €6,000. To avoid an imputed distribution by end of 2020, the ARF withdrawal needs to be at least €6,000. Withdrawing €6,000 meets the requirement, while smaller amounts do not.