Withdrawals from an ARF or continued PRSA and income from an annuity are subject to income tax and the normal tax credit and income exemption limits will apply.
Due to recent legislation introducing an annual tax† to be paid on the value of an ARF, called an 'imputed distribution', if no income is drawn from the ARF in a tax year, the owner is deemed to have withdrawn 4% of its value and is liable to income tax on that amount.
If the total value of all ARFs and continued PRSAs is in excess of €2,000,000, the level of imputed distribution is 6%.
Any income or encashment taken from the ARF or AMRF during the year will reduce the deemed withdrawal for the purpose of calculating tax.
If the withdrawal equals or is greater than the deemed withdrawal, tax is payable only on the actual amount withdrawn for that year.
The 'imputed distribution' rule doesn't currently apply to AMRFs, or continued PRSAs for the first €63,500.
It is however possible to withdraw up to 4% from an AMRF on a voluntary basis.
† This amount was reduced to 4% with effect from 1 January 2015 for AMRF holders aged 60 to 70.