Sarah is aged 69 and has an ARF. Any withdrawal she takes from her ARF will be liable to: (i) income tax (ii) USC (iii) PRSI:

• A. (i) only
• B. (i) and (ii) only
• C. (ii) and (iii) only
• D. (i), (ii) and (iii)

Answer: (B)

Withdrawals from an ARF are treated as income for tax purposes. The money taken out is added to the year’s other income and is subject to income tax. It also attracts USC, since USC applies to most forms of income, including pension withdrawals. PRSI, however, is charged on earned income (like wages and self-employment) and not on pension withdrawals, so ARF draws do not incur PRSI. Therefore, the withdrawals will be liable to income tax and USC, but not PRSI. This is why the best choice includes (i) and (ii) only.