Martin is aged 68 and has an ARF valued at €500,000 at 30 November 2020. He has no other ARFs or vested PRSAs. He took a withdrawal of €5,000, before taxes, from his ARF in March 2020. What additional withdrawal, before taxes, must Martin take from his ARF before the end of 2020, to avoid an imputed distribution applying to his ARF for 2020?

• A. €5,000
• B. €10,000
• C. €15,000
• D. €20,000

Answer: (C)

In an ARF, you must take a minimum withdrawal each year to avoid an imputed distribution. The minimum is 4% of the ARF’s value at year end.

Here, the ARF value for 2020 is €500,000, so the minimum withdrawal is 0.04 × 500,000 = €20,000. He already withdrew €5,000 earlier in the year, so the additional amount needed to meet the minimum is €20,000 − €5,000 = €15,000.

Therefore, the required extra withdrawal before year-end is €15,000.Withdraw more than the minimum would still avoid imputed distribution, but €15,000 is the exact amount needed to reach the minimum.