Imputed distribution refers to the mandatory withdrawal of at least 4% per annum. This withdrawal is subject to income tax, PRSI and USC. It becomes active at the age of 61 with an increase to a minimum of 5% at the age of 71. If you have a particularly high value fund that goes over the €2,000,000 mark then the initial minimum withdrawal or imputed distribution is set at 6% at the age of 61.
The taxes imposed by the imputed distribution system are in addition to the taxes you suffer when you do eventually make a withdrawal from the ARF, with no tax credit available for offset. In effect, this means your ARF is being taxed twice on the same income. Therefore, it’s in the ARF holders best interest to meet the minimum withdrawals each year.