Luke, aged 62, as of 30 November 2020 has an AMRF valued at €50,000 with ABC Life Co and an ARF valued at €100,000 with a different QFM. He withdrew €1,000 from AMRF in July 2020. What minimum withdrawal, before taxes, must he take from his ARF before the end of 2020 to avoid an imputed distribution applying to his ARF for 2020?

• A. €5,000
• B. €4,000
• C. €3,000
• D. €6,000

Answer: (B)

The minimum annual withdrawal from an ARF to avoid an imputed distribution is based on age and ARF value. For someone in their early 60s, the rule is to withdraw a set percentage of the ARF value at the start of the year. At age 62, the required rate is 4%. With an ARF of €100,000, the minimum amount to withdraw in 2020 is 4% of €100,000, which is €4,000.

Withdrawals from an AMRF don’t count toward meeting the ARF’s minimum withdrawal, so the €1,000 taken from the AMRF in July doesn’t reduce the ARF requirement. Therefore, to avoid an imputed distribution for 2020, he must withdraw at least €4,000 from the ARF before the end of the year. Any amount up to or beyond €4,000 would satisfy the rule, but €4,000 is the minimum needed.