How is income drawn from an ARF taxed?

• A. Withdrawals are taxed as income
• B. Withdrawals are tax-free
• C. Taxed as capital gains
• D. Taxed as corporate income

Answer: (A)

With an ARF, withdrawals are taxed as income in the year you take them. Each payment you receive from the ARF is added to your total taxable income for that year and taxed at your marginal income tax rate, with the usual USC and PRSI applying where relevant. The fund’s investments grow free from ongoing tax, and the withdrawals aren’t treated as capital gains or corporate income. This means the money you draw behaves like regular pension income rather than a taxed capital gain or a corporate profit.