Karl, aged 65, has an ARF and an AMRF with ABC Life Co. He has no other ARFs or vested PRSAs. In March 2020 he withdrew €1,400, before taxes, from his AMRF. If his ARF is valued at €100,000 at 30th November 2020, what level of withdrawal, before taxes, must Karl take from his ARF before the end of 2020 to avoid an imputed distribution applying to his ARF for 2020?

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

Answer: (A)

The principle being tested is how the annual minimum withdrawal from an ARF is determined to avoid an imputed distribution. In Ireland, you must take a minimum withdrawal each year from your ARF, equal to 4% of its value at the relevant date (here, 30 November of the previous year). Amounts you withdraw from the AMRF in the same year can be counted against that minimum, reducing how much you need to take from the ARF.

For Karl, 4% of the ARF value of €100,000 is €4,000. He already took €1,400 from his AMRF in March 2020, so this amount offsets part of the required ARF withdrawal. Therefore the ARF withdrawal needed to avoid an imputed distribution is €4,000 − €1,400 = €2,600.

If he withdrew €2,600 from the ARF before year-end, the combined withdrawals would meet the required minimum and no imputed distribution would apply. Withdrawals significantly above this threshold would satisfy the rule as well, but the question asks for the amount needed to avoid imputation.