Options for taking your first minimum required distribution (MRD)

IRAs and other types of tax-deferred retirement accounts were designed to encourage Americans to save for retirement. At age 73*, you switch gears because you're required to start withdrawing a certain amount from your retirement accounts each year. That amount is called a minimum required distribution, or MRD (also known as a required minimum distribution, or RMD).

Compare these two deadline options and their tax implications before withdrawing your first MRD.


MRD rules apply to tax-deferred retirement accounts:

  • Most 403(b) and 401(k) and plans, including all of UC's plans—including the 403(b), 457(b), and DC Plan.
  • Traditional, rollover, simple, and SEP IRAs.
  • Most small-business accounts (Keoghs).

SECURE 2.0 reduces the penalty for failing to take an MRD from 50% to 25%. If an individual misses all or part of their MRD, they can request the penalty be reduced to 10% if timely corrected within two years of the correction window by (a) taking their missed amount and (b) filing a corrected tax return within the applicable period. Individuals should consult with a tax advisor if they believe that you may owe an excise tax on a missed minimum required distribution.

  • In general, your MRD amount is calculated by dividing your tax-deferred retirement account balance as of December 31 of last year by your life expectancy factor.
  • If you have accounts in more than one UC plan, then your MRD must be calculated separately for each account and taken from each account.
  • If you have multiple IRAs, then your MRD must be calculated separately for each IRA account, but you can withdraw the total of all your MRDs from a single account or any combination of IRA accounts.

Keep in mind that the IRS taxes MRDs as ordinary income. This means that withdrawals will count toward your total taxable income for the year, which may push you into a higher tax bracket. Being pushed into a higher tax bracket may impact the taxes you pay for your Social Security or Medicare. Be sure to talk to your tax advisor about taking your first MRD.

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The deadline for taking your MRD is December 31 each year. For your first MRD, and only your first, you may delay taking a distribution until April 1 of the year after you turn 73.

For example, if you turned 73 in June of this year, you have 2 choices:

  • You can take your first MRD by December 31 this year.
  • You can delay taking your first MRD until April 1 next year (the year after you turn 73).

If you choose to delay, you'll have to take your first and second MRD in the same year, which may push you into a higher tax bracket.

If you're still working, you may qualify for an exception from taking MRDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small-business account. If you meet all of the requirements, you can delay taking an MRD from the account until April 1 of the year after you retire.


To understand how delaying your first MRD impacts your taxes and future MRDs, review your options and consider speaking with your tax advisor.

Consider these two options for Eli, a hypothetical UC retiree.

  • Eli will turn 73 this year.
  • Eli has $300,000 the UC DC Plan.
  • Eli’s life expectancy factor for this year is 27.4 based on the IRS Uniform Lifetime Table for someone age 70 years old.
  • For the purposes of this example, assume the value of Eli’s UC DC Plan account remains constant.
OPTION 1    
All income gained in one tax year
MRD #1
Funds withdrawn 
next year
MRD #2
Funds also
withdrawn next year

Considerations for option 1:

  • Eli’s account balance was higher when the second MRD was calculated because Eli didn’t take out the first MRD.
  • Eli’s second MRD is $413.75 more.
  • Eli’s taxable income for one year would be two MRDs totaling $22,269.75, which will more likely push Eli into a higher tax bracket.

OPTION 2    
MRD #1
Funds withdrawn 
this year
All income spread
over two tax years
MRD #2
Funds withdrawn 
next year

Considerations for option 2:

  • Eli’s first and second MRD amounts are the same ($10,949.00).
  • Eli’s taxable income would only be one MRD ($10,949.00) per year, which still has the potential to push Eli into a higher tax bracket, but not as likely as option 1.

To determine which option is best for you, talk with a tax advisor about your personal tax situation.