If you inherit an IRA from someone other than your spouse, you generally must empty it by December 31 of the 10th year after the year of death: for a death in 2025, by December 31, 2035. If the owner had already reached their required beginning date, usually April 1 of the year after they turned 73, you must also take a minimum every year along the way. The IRS waived those yearly amounts for 2021 through 2024 and has required them since 2025. Every withdrawal from a traditional inherited IRA is taxed as income, so when you take it matters. In the example below, spreading a $500,000 IRA evenly over ten years costs about $45,000 less in federal tax than taking it all in one year.
Which rule applies to you
| You are | The rule |
|---|---|
| The owner’s spouse | You can treat the IRA as your own, roll it into your own IRA, or stay a beneficiary. See our guide for widows and widowers |
| The owner’s minor child | Yearly withdrawals based on your life expectancy until you turn 21, then 10 more years to empty it |
| Disabled or chronically ill | Yearly withdrawals over your life expectancy |
| Not more than 10 years younger than the owner | Yearly withdrawals over your life expectancy |
| Any other person, such as an adult child or grandchild | The 10-year rule |
| An estate, a charity or a trust that doesn’t qualify | Generally the 5-year rule if the owner died before their required beginning date |
The IRS calls the first four groups “eligible designated beneficiaries.” The final regulations, issued in July 2024, set the age of majority for a child at 21. A trust can pass the better treatment through to the people in it only if it meets the IRS rules for trust beneficiaries.
Before or after the required beginning date
Under the 10-year rule, what you must take each year depends on whether the owner had reached their required beginning date when they died.
They died before it. No withdrawal is required in years 1 through 9. You can take as much or as little as you like, as long as the account is empty by the end of year 10.
They died on or after it. You must take a minimum each year, starting the year after the death, based on life expectancy, and still empty the account by the end of year 10. Commenters asked the IRS to drop the yearly requirement. The final regulations kept it, and they apply to required distributions from 2025 onward. Notice 2024-35 extended the waiver of missed yearly amounts through 2024. None of the waivers moved the 10-year deadline. If you inherited in 2021, the account must still be empty by the end of 2031.
A Roth IRA is always “before.” The IRS treats a Roth owner as having died before their required beginning date. There’s no yearly minimum, so many heirs leave an inherited Roth to grow and take it in year 10. Qualified withdrawals are generally tax-free.
The year of death has its own withdrawal. If the owner had a required distribution due in the year they died and hadn’t taken it, the beneficiary must. The penalty is waived automatically if you take it by your tax filing deadline for that year, including extensions, or by the end of the following year if that’s later.
The penalty for missing one is a 25% excise tax on the amount not taken, cut to 10% if you take the missed amount and file a return reporting it within the correction window.
Planning the withdrawals
The rule tells you the latest you can take the money. The planning is about when to take it so the tax is lowest.
Taken all at once, most of the IRA is taxed at 32% and 35%. Spread evenly, each year’s withdrawal lands mostly in the 22% and 24% brackets. The gap here is about $45,000, before state tax. With growth over ten years and a different salary the figures change, but the shape doesn’t: big single-year withdrawals are taxed at higher rates.
What a planner does with that:
- Fill the lower brackets each year. Take enough to use up a bracket you’re already in, rather than a fixed tenth.
- Use your low-income years. A year between jobs, a sabbatical, or the years after you retire and before you claim Social Security can carry larger withdrawals at lower rates.
- Watch the side effects. Higher income can raise Medicare premiums two years later, reduce health insurance credits bought through the marketplace, and change what your children qualify for in college aid. Our guide to going on Medicare covers the income lines.
- Leave the Roth for last. Take traditional IRA money in the lower-tax years and let an inherited Roth grow until year 10.
- Set withholding. Ask the custodian to withhold federal and state tax from each withdrawal, or pay estimated tax, so April doesn’t bring a surprise.
Common mistakes
- Cashing out in the first year. The whole balance becomes taxable income at once.
- Taking a check and trying to roll it over. Only a spouse can roll an inherited IRA into their own. Anyone else must move it by a direct trustee-to-trustee transfer into an inherited IRA kept in the owner’s name for their benefit.
- Assuming nothing is due until year 10 when the owner had already started required withdrawals.
- Missing the owner’s year-of-death withdrawal.
- Forgetting the 10% penalty doesn’t apply. Withdrawals by a beneficiary are exempt from the additional tax on early distributions, so being under 59½ isn’t a reason to wait.
- Leaving several heirs in one account. Ask the custodian to split it into a separate inherited IRA for each person, so each can plan their own withdrawals.
Inherited 401(k)s and 403(b)s follow the same rules, though some plans pay beneficiaries faster than the law requires. Our inheritance guide covers the rest of what you received, and the guide to required minimum distributions covers the owner’s side of the same rules. See RMD and beneficiary designation in the glossary.
Questions to ask a planner
- Had the owner reached their required beginning date, and what’s my minimum this year?
- Was the year-of-death withdrawal taken?
- How much should I take each year, given my own income for the next ten years?
- How will the withdrawals affect my Medicare premiums, tax credits or college aid?
- Will you coordinate with my tax preparer on withholding?
- How are you paid, in dollars a year?
When a fee-only advisor is worth it, and what it costs
For a small inherited IRA, the custodian can calculate your minimum and you can take it evenly. A planner earns their fee when the account is large compared with your income, when you have several inherited accounts, or when your income will change a lot during the ten years. The tax saved can be many times the fee.
| If you want | Option | Typical cost (US median) |
|---|---|---|
| A one-off withdrawal schedule | Hourly | $300 an hour |
| A ten-year withdrawal plan inside a full plan | One-time plan | $2,000 (middle half $845 to $3,600) |
| Yearly updates as your income changes | Ongoing planning fee | $4,500 a year |
These are prices fee-only firms publish on their own websites, from the Wellspent fee report. If an advisor offers to manage the inherited IRA for a percentage, the median is 1% a year, so $5,000 a year on $500,000. Ask what the withdrawal plan costs on its own. A fee-only planner isn’t paid more for keeping the money invested longer.
Where to look
In the public graph, the tax planning and retirement planning specialties fit best, with family wealth transfer for larger estates. Browse retirement planning specialists, advisors for pre-retirees or family wealth transfer specialists. Heirs in their 40s and 50s will find advisors on the mid-life transitions, high earners and pre-retirees pages.