MRD stands for Minimum Required Distribution: the amount you have to withdraw each year from most tax-deferred retirement accounts once you reach a certain age. It’s the same thing the IRS and most financial institutions now call an RMD, or Required Minimum Distribution. The older “MRD” label still shows up on account statements, plan documents, and some brokerage platforms, but the rule behind both names is identical.
Why the Withdrawal Is Required
Money inside a traditional IRA or 401(k) grows without being taxed year to year. In exchange, federal law requires you to eventually pull that money out and pay income tax on it. The rule comes from 26 U.S.C. § 401(a)(9), which says a qualified retirement plan must begin distributions no later than a “required beginning date.”1Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
The starting age has moved over the years. It used to be 70½. The SECURE Act of 2019 raised it to 72. Then SECURE 2.0 raised it to 73 for anyone reaching that age in 2023 or later, and it is scheduled to rise again to 75 in 2033.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
Which Accounts Have an MRD
The rule applies to accounts funded with pre-tax dollars. The IRS lists these types as subject to MRDs:3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
- Traditional IRAs
- SEP and SIMPLE IRAs
- 401(k), 403(b), and 457(b) plans
Roth IRAs are the main exception. If you are the original owner, you never have to take a distribution from a Roth IRA during your lifetime.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) Starting in 2024, SECURE 2.0 also eliminated MRDs for designated Roth accounts inside employer plans, so Roth 401(k)s and Roth 403(b)s now work the same way. Inherited accounts of any kind, including inherited Roths, follow their own distribution rules covered below.
How the Amount Is Calculated
You need two numbers. The first is the fair market value of your account on December 31 of the prior year. The second is a divisor from the IRS Uniform Lifetime Table (Table III in Publication 590-B) that matches your age. Divide the balance by the divisor and you have your MRD for the year.5Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
A quick example. If you are 73 and your IRA held $265,000 on December 31, you divide $265,000 by the age-73 divisor of 26.5. Your MRD for the year is $10,000.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) You run this calculation every year because both the balance and the divisor change.
There is one alternative. If your sole beneficiary is a spouse more than 10 years younger than you, you use the Joint and Last Survivor Table instead, which produces a larger divisor and a smaller required withdrawal.5Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
If you hold multiple IRAs, you calculate the MRD for each one separately but can take the total from a single IRA. Multiple 401(k) accounts do not work that way: each plan’s MRD has to be taken from that plan.5Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
When You Have to Take It
The regular deadline is December 31 each year. Your very first MRD is the one exception: you can delay it until April 1 of the year after you turn 73.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
That delay has a cost. If you push the first withdrawal into the following year, you’ll end up with two taxable distributions in the same calendar year: the delayed first one plus the regular MRD due that December 31. Both land on the same tax return and can push you into a higher bracket.6Internal Revenue Service. April 1 Final Day to Begin Required Withdrawals from IRAs and 401(k)s
To actually take the withdrawal, contact the custodian holding the account. Most institutions let you schedule the distribution online as a bank transfer or a mailed check, and you can ask the custodian to withhold federal and state income tax directly from the payment.
How the Distribution Is Taxed
An MRD from a pre-tax account is taxed as ordinary income in the year you receive it. For 2026, federal rates range from 10% to 37%.7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The withdrawal stacks on top of your other income, including wages, Social Security, and pensions, and is taxed at your marginal rate. It does not get the lower capital gains treatment.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) If any of your traditional IRA contributions were made with after-tax money, the portion of your withdrawal tied to those contributions isn’t taxed again.
The Penalty for Missing One
If you take out less than you were supposed to, the IRS charges an excise tax on the shortfall under 26 U.S.C. § 4974. The current penalty is 25% of the amount you should have withdrawn.8Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans Before SECURE 2.0, it was 50%.
The penalty drops to 10% if you fix the shortfall during a “correction window” that generally runs about two years from when the penalty was triggered.9Cornell Law School. 26 USC 4974 – Correction Window The IRS may waive the penalty entirely if the shortfall came from a reasonable error and you’re working to correct it. You request the waiver by filing Form 5329 with a letter explaining what happened.10Internal Revenue Service. Instructions for Form 5329
If You’re Still Working
If you’re still employed at 73 and participate in your current employer’s retirement plan, you can delay MRDs from that specific plan until the year you retire. The exception doesn’t apply if you own 5% or more of the business, and it doesn’t cover IRAs or 401(k) balances left at former employers.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs Those accounts follow the standard age-73 timeline regardless of your work status.
Inherited Accounts Have Different Rules
When you inherit a retirement account, your distribution rules depend on your relationship to the original owner and when they died. A surviving spouse can treat the account as their own or roll it into their own IRA. A handful of other categories, including minor children of the owner, disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the owner, can stretch withdrawals over their own life expectancy.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)
Most other beneficiaries, including adult children, fall under the 10-year rule for accounts inherited after 2019: the account has to be emptied by the end of the 10th calendar year after the owner’s death.11Internal Revenue Service. Transition Relief and Guidance Relating to Certain Required Minimum Distributions If the original owner had already begun taking MRDs, the beneficiary also has to take annual withdrawals during those 10 years rather than waiting until the end. That annual requirement took effect in 2025 for accounts inherited after 2019.12Internal Revenue Service. Retirement Topics – Beneficiary
Inherited Roth IRAs follow the same distribution timeline as inherited traditional IRAs, but qualified withdrawals are generally tax-free, and the 10% early withdrawal penalty doesn’t apply to distributions taken by a beneficiary after the owner’s death.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)