Inherited IRA Quick Reference (2026)
📋 Inherited IRA Rules: Quick Answer
- Surviving spouse: Can roll over to their own IRA or treat it as their own. Most flexible rules.
- Non-spouse "eligible designated beneficiary": Minor children (until majority), disabled/chronically ill individuals, and heirs less than 10 years younger. Can still stretch RMDs over their lifetime.
- Everyone else (non-eligible designated beneficiaries): Must empty the account within 10 years. Annual RMDs required if the original owner had reached RMD age.
- Key tax trap: A large pre-tax inherited IRA can push heirs into the highest tax brackets each year. Plan withdrawals strategically across the 10 years.
The 10-Year Rule: What It Means in Practice
If you inherit a pre-tax IRA (Traditional IRA, 401k) from someone who was not your spouse (and you don't qualify as an "eligible designated beneficiary"), you must withdraw all funds from the inherited IRA by December 31 of the 10th year following the year of the owner's death.
The IRS finalized regulations in 2024 clarifying a critical detail: if the original owner had reached their required beginning date (April 1 of the year after turning 73), heirs must also take annual RMDs during the 10-year period in addition to emptying the account by year 10. This applies to deaths after December 31, 2019.
If the original owner had not yet reached RMD age, there are no annual RMD requirements, you just need to empty the account by year 10. In this case, you have flexibility to choose when to take distributions within the 10-year window.
Tax Planning: How to Minimize the Tax Hit
The biggest inherited IRA mistake is doing nothing and then taking a large distribution in year 10, potentially adding $200,000+ of ordinary income in a single year and paying 32–37% federal tax on it.
The optimal strategy is to spread withdrawals evenly across the 10 years, targeting a specific marginal tax bracket:
- Map out your income: Each year, determine how much room you have before hitting the next tax bracket
- Fill the bracket: Withdraw inherited IRA funds to fill your current bracket without entering the next one
- Coordinate with other income: Low-income years (job loss, early retirement, major deductions) are ideal for larger distributions
- Roth consideration: If you inherited a Roth IRA, there are no income taxes on qualified distributions, but you still must empty the account within 10 years
Example: A 45-year-old inheriting a $500,000 pre-tax IRA. Annual income: $90,000 (24% bracket starts at ~$100,000 for single filers). They could take $10,000/year from the inherited IRA at 22%, totaling $100,000 over 10 years, far better than a $500,000 lump sum taxed at 35–37%.
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