Anne is aged 72 with an ARF valued at €1,500,000 as of 30 November 2020. If she takes no withdrawal from her ARF in 2020, what notional distribution for income tax purposes will she be deemed to take from her ARF for 2020?

Anne is aged 72 with an ARF valued at €1,500,000 as of 30 November 2020. If she takes no withdrawal from her ARF in 2020, what notional distribution for income tax purposes will she be deemed to take from her ARF for 2020?

• A. €60,000
• B. €90,000
• C. €75,000
• D. €50,000

Answer: (C)

Minimum notional distribution from an ARF is the amount the holder is deemed to take for tax purposes if no actual withdrawal is made. This deemed amount uses a rate that depends on age. In this scenario, the rate applied for a person aged about 72 in 2020 is 5%. Applying that to the ARF value of €1,500,000 gives 1,500,000 × 0.05 = €75,000. So even with no actual cash withdrawal, €75,000 is treated as the income for tax purposes for 2020.

Minimum notional distribution from an ARF is the amount the holder is deemed to take for tax purposes if no actual withdrawal is made. This deemed amount uses a rate that depends on age. In this scenario, the rate applied for a person aged about 72 in 2020 is 5%. Applying that to the ARF value of €1,500,000 gives 1,500,000 × 0.05 = €75,000. So even with no actual cash withdrawal, €75,000 is treated as the income for tax purposes for 2020.