What tax implication arises when Karol withdraws from her RRIF next year?

When Karol withdraws from her Registered Retirement Income Fund (RRIF), the tax implication is that the amount withdrawn is generally considered taxable income. In this scenario, if $2,000 of Karol's withdrawal is designated to be taxable in Drew's hands, it likely indicates that there is a specific tax rule or provision applicable to their situation, which involves transferring the tax responsibility to Drew.

Typically, amounts withdrawn from a RRIF are fully taxable to the account holder, which is Karol in this case. However, there might be circumstances, such as certain transfers of assets or specific arrangements made prior to the withdrawal, which result in part of that taxable income being attributed to another party. This type of arrangement might involve spousal transfers or other tax planning strategies that recognize the recipient of benefits (in this case, Drew) is liable for the tax on that portion.

In understanding the tax implications of RRIF withdrawals, it's important to recognize that the taxation generally falls on the individual making the withdrawal unless specific legislative provisions or arrangements dictate otherwise, which seems to apply here, thus making the presented option accurate in this context.