We are trying to determine what withholding rules apply to MRDs. We are having a debate as to whether the withholding rules for non-periodic distributions (10% optional) applies , or if the annuity and periodic payments withholding rules (married with 3 dependents) applies.

Any help would be greatly appreciated.

Mandatory withholding applies to amounts that are eligible for roll over that are not rolled over. The MRD is not eligible for rollover so you don't have to withhold at the higher rate.

The 10% voluntary withholding would generally be used unless the payee doesn't want any withholding. If the payments are being made as an annuity, voluntary withholding is detemined like regular payroll withholding using marital status and exemptions.