Inherited IRA Rules: RMDs, the 10-Year Rule and the Tax Bill

If you inherited an IRA from someone who died in 2020 or later and you are not their spouse, the headline rule is short: you must withdraw the entire balance by 31 December of the year containing the tenth anniversary of the owner's death. Whether you also owe a required minimum distribution in each of the years in between depends on one fact, and only one: whether the original owner had already reached their required beginning date when they died. This page gives both answers, the IRS Single Life Table figures you need to calculate an RMD, the spousal options that no other beneficiary gets, and the penalty for getting it wrong.

The Short Answer

• Ten years, not your lifetime. A beneficiary who is not taking life expectancy payments must empty the account by 31 December of the year containing the tenth anniversary of the owner's death. An owner who died in 2025 means an empty account by 31 December 2035.
• Five people still get to stretch it: the owner's surviving spouse, the owner's minor child, a disabled individual, a chronically ill individual, and anyone not more than 10 years younger than the owner. The IRS calls them eligible designated beneficiaries.
• Annual RMDs inside the 10 years are required only if the owner died on or after their required beginning date. If they died before it, nothing is due until year ten.
• There is no step-up in basis. Every dollar out of an inherited traditional IRA is ordinary income at your own rate.
• The 10% early-withdrawal tax does not apply to distributions taken as a beneficiary, whatever your age.
• Miss an RMD and the excise tax is 25% of the shortfall, cut to 10% if you fix it inside the correction window.
• A non-spouse beneficiary can never roll an inherited IRA into their own. The only legal move is a trustee-to-trustee transfer into an account still titled in the deceased owner's name.
• An inherited Roth IRA has the same 10-year deadline but no annual RMD inside it, and qualified distributions are tax free.

What an Inherited IRA Is

An inherited IRA, sometimes called a beneficiary IRA or a BDA IRA, is the account a non-spouse beneficiary moves the money into. It is not your IRA. It stays titled in the deceased owner's name for your benefit, something like "Jane Doe, deceased, IRA FBO John Doe, beneficiary".

IRS Publication 590-B is blunt about what that means. If you inherit a traditional IRA from anyone other than your spouse, you cannot treat it as your own, you cannot make contributions to it, and you cannot roll any amount into or out of it. You can make a trustee-to-trustee transfer, as long as the receiving account is set up and maintained in the deceased owner's name for you as beneficiary.

That restriction is the single most expensive thing to get wrong, and the section on mistakes below explains why.

Two dates decide almost everything that follows.

The required beginning date is 1 April of the year following the year the owner reached their applicable age. For almost everyone dying now, that applicable age is 73. The full ladder set by the final IRS regulations runs by birth year: age 70½ for those born before 1 July 1949, 72 for those born between then and the end of 1950, 73 for those born from 1951 through 1958, and 75 for those born on or after 1 January 1960.

The 10-Year Rule

Publication 590-B states it in one sentence: the 10-year rule requires IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by 31 December of the year containing the tenth anniversary of the owner's death. The IRS gives its own example, an owner who died in 2025, and its own deadline, 31 December 2035.

Notice what that deadline is not. It is not ten years from the date of death. It is ten calendar years measured from the year of death, which usually buys you a few extra months. An owner who died in February 2025 gives you until the last day of 2035, not February 2035.

The rule applies in two situations:

• You are a designated beneficiary who is not an eligible designated beneficiary, whether or not the owner died before their required beginning date. This is the ordinary adult child, sibling, niece, nephew or friend.
• You are an eligible designated beneficiary who elects the 10-year rule, and the owner died before their required beginning date.

There is also a shorter clock for beneficiaries who are not individuals at all.

The 5-year rule works the same way as the 10-year rule with a shorter fuse: the entire balance out by 31 December of the year containing the fifth anniversary of death. It catches estates and trusts where the owner died before their required beginning date, which is one reason naming an estate as IRA beneficiary is usually a poor idea.

Who Still Gets to Stretch It

Publication 590-B lists five categories, and the list is closed. An IRA beneficiary is an eligible designated beneficiary if they are the owner's surviving spouse, the owner's minor child, a disabled individual, a chronically ill individual, or any other individual not more than 10 years younger than the IRA owner.

Four points that trip people up:

• "Minor child" means the owner's own child. The statute says a child of the employee who has not reached majority. A grandchild does not qualify on age alone, and neither does an adult child.
• Status is fixed at the date of death. The statute is explicit: whether someone is an eligible designated beneficiary is determined as of the date of the owner's death. Becoming disabled two years later does not change your clock.
• The 10-years-younger test can cover a sibling or a partner. A brother three years younger than the owner is an eligible designated beneficiary even though he is nobody's spouse and nobody's child.
• Stretching is not automatic. Publication 590-B notes that most IRA documents require eligible designated beneficiaries to take life expectancy payments unless they elect the 10-year rule, and the election deadline is the earlier of 31 December of the year of the first life expectancy distribution or 31 December of the tenth anniversary year.

The minor child clock

A minor child of the owner takes life expectancy payments until they reach the age of majority. The final regulations fix the age of majority at the individual's 21st birthday, with no state-law variation and no schooling exception.

From that birthday the 10-year rule takes over. The account must be emptied by the end of the calendar year containing the tenth anniversary of the date the child reaches majority, which in practice means the year the child turns 31. Where several of the owner's minor children are beneficiaries, the final regulations measure the deadline from the youngest of them.

When an eligible designated beneficiary dies

The stretch does not pass down. Publication 590-B is clear that the beneficiaries of a deceased beneficiary do not use their own life expectancies. The remaining interest must be distributed within 10 years after the beneficiary's death, or in some cases within 10 years after the owner's death. A successor beneficiary inherits a clock, not a lifetime.

Do You Owe an RMD Every Year Inside the 10?

This is the question with the most bad information attached to it, partly because the answer genuinely changed while everyone was arguing about it. Here is the settled position.

For the first row, Publication 590-B says it directly: if the IRA owner dies before the required beginning date and the 10-year rule applies, no distribution is required for any year before the tenth year.

For the second row, the authority is the final regulation rather than the publication. Treasury Decision 10001 provides that where the owner died on or after their required beginning date, the requirement to take an annual distribution continues to apply for every distribution calendar year until the interest is fully distributed. The preamble spells out the combined effect: those provisions require annual distributions to continue while also requiring full distribution by the end of the calendar year that includes the tenth anniversary of death.

Why so many people think there are no annual RMDs

Because for four years there were not, in practice. The IRS proposed the annual-RMD reading in 2022, the industry objected, and the IRS issued three successive notices, 2022-53, 2023-54 and 2024-35, saying it would not assert the excise tax for a beneficiary RMD missed in 2021, 2022, 2023 or 2024.

The final regulations then took effect for distribution calendar years beginning on or after 1 January 2025. So 2025 was the first year an inherited-IRA annual RMD was actually enforceable, and anything written before mid-2024 describing a blanket "no annual RMDs" rule is describing the relief, not the law.

The practical read of that footnote is uncomfortable. If you skipped four years of distributions under the relief, the money did not disappear; it was pushed into a shorter window, and the year-ten withdrawal is now larger than it would otherwise have been.

How to Calculate the RMD

The calculation itself is one division. The work is in picking the right denominator.

RMD = account balance on 31 December of the previous year ÷ applicable denominator

Beneficiaries use Table I, the Single Life Expectancy table, in Appendix B of Publication 590-B. Owners use a different table, so a figure lifted from a retirement-planning article about your own RMD will be wrong here.

Picking the denominator

• Owner died on or after the required beginning date. Use the greater of your own remaining life expectancy and the owner's remaining life expectancy. Publication 590-B phrases it as the longer of your single life expectancy from Table I or the owner's life expectancy.
• Owner died before the required beginning date and you are an eligible designated beneficiary taking life expectancy payments. Use your own single life expectancy from Table I.
• No designated beneficiary at all. Use the owner's life expectancy, taken at the owner's age on their birthday in the year of death.

Setting the clock, then winding it down

A non-spouse beneficiary does not look the figure up again every year. You take your age on your birthday in the year following the owner's death, read Table I once, and then subtract one for each year that passes. The owner's life expectancy works the same way, starting from their age in the year of death. Only a surviving spouse who remains a beneficiary re-reads the table annually.

A worked example

The IRS publishes one of its own, which is worth quoting because it confirms the table: a beneficiary whose distributions must begin in 2026 and who becomes age 57 in 2026 uses Table I and gets an applicable denominator of 29.8. That matches the table above exactly.

Here is a fuller one. These figures are hypothetical and are there to show the mechanics, not to predict your result.

Look at what that example actually says. Ten annual RMDs of roughly $12,000 come nowhere near clearing $400,000. The minimum keeps you legal; it does not keep you out of a large year-ten withdrawal. Spreading larger voluntary withdrawals across the decade, sized against your own tax bracket, is usually the better plan, especially if you expect your income to fall before the deadline arrives.

If You Inherited From Your Spouse

A surviving spouse has options nobody else has, and the choice is not obvious.

Publication 590-B sets out three routes: designate yourself as the account owner, roll it over into your own IRA (or, to the extent taxable, into a qualified employer plan, a 403(a) annuity plan, a 403(b) plan or a governmental 457 plan), or stay a beneficiary and leave the account as an inherited IRA.

That third row is the whole decision for a younger widow or widower. As a beneficiary you can draw on the account at any age without the 10% additional tax. The moment you elect to treat it as your own, Publication 590-B warns that any distribution you later receive before reaching 59½ may be subject to that tax.

Two further points worth knowing:

• You can elect by accident. You are treated as having chosen to make the IRA your own if contributions are made to it, or if you simply fail to take a beneficiary RMD for a year. That only applies if you are the sole beneficiary with an unlimited right to withdraw.
• You may be able to wait a long time. If the owner died before the year they had to start distributions and you are the sole beneficiary, you are not required to begin until the end of the year in which the owner would have reached their required beginning date. The IRS example is a spouse who died in 2022 at age 65: the survivor takes nothing until 31 December 2030, the year the deceased would have turned 73.

Which life expectancy table a spouse who stays a beneficiary should use is stated two different ways in Publication 590-B (2025), once as Table I and once as Table III, following a 2022 change in the law. That point is genuinely unresolved in the published guidance, so confirm with your custodian which one they apply before you rely on a figure.

Inherited Roth IRAs

The governing sentence is short. Publication 590-B: if a Roth IRA owner dies, the minimum distribution rules that apply to traditional IRAs apply to Roth IRAs as though the Roth IRA owner died before their required beginning date.

Read that against the table in the annual RMD section and the consequence falls out. A Roth owner is always treated as having died before their required beginning date, because Roth owners never have one. So:

• The 10-year deadline still applies. An inherited Roth is not a permanent tax shelter.
• There is no annual RMD inside the 10 years, whatever age the owner reached.
• Because qualified distributions are tax free, the usual play is to leave it invested and take the whole thing in year ten, which is the opposite of the advice for a traditional inherited IRA.

A surviving spouse who is the sole beneficiary of a Roth IRA can either delay distributions until the deceased would have reached age 73 or treat the Roth as their own. And an inherited Roth carries the same 25% excise tax for a missed required distribution as a traditional one.

Inherited 401(k)s and Other Employer Plans

The distribution rules above come from a section of the tax code written for employer plans and then applied to IRAs, so the 10-year rule, the eligible designated beneficiary list and the annual-RMD split all work the same way for an inherited 401(k). Three things differ.

The spousal protection in the first row is statutory, not a plan courtesy. A defined contribution plan must provide that the participant's full vested balance is payable on death to the surviving spouse, unless there is no surviving spouse or the spouse consents in the form the code requires. An IRA owner can name a cousin and never tell anyone; a 401(k) participant cannot.

The third row is the one that costs money. Publication 575 says a distribution paid to a beneficiary other than the surviving spouse is generally not an eligible rollover distribution. The exception is a direct trustee-to-trustee transfer into a traditional or Roth IRA set up to receive it, which is then treated as an inherited IRA. If the plan cuts a cheque to you instead, there is no 60-day fix and the whole amount is taxable in that year.

A surviving spouse, by contrast, can roll a plan distribution over as though they were the employee, into a plan or into their own IRA. If you are moving a 401(k) for your own retirement rather than as a beneficiary, our guide on transitioning a 401(k) to an IRA covers that path.

The Tax Bill and the Penalties

Inheriting money is generally not a taxable event; our guide to inheritance tax covers the general position. A traditional retirement account is the large exception, and it is worth being precise about why.

No step-up in basis

Inherited shares and property get a cost basis reset to their value on the date of death. A retirement account does not. Section 1014 of the code, the provision that creates the step-up, says in terms that it does not apply to property which constitutes a right to receive an item of income in respect of a decedent. An inherited traditional IRA is exactly that.

Publication 559 confirms the effect from the heir's side: a distribution from an inherited traditional IRA is taxable in the year received as income in respect of a decedent, up to the decedent's taxable balance, being their balance at death including unrealised appreciation and income accrued to that date, less any basis from nondeductible contributions.

So every dollar you withdraw is ordinary income, stacked on top of your salary at your own rate. Inheriting a $500,000 IRA in your peak earning years is a very different event from inheriting $500,000 of shares.

The 10% early-distribution tax does not apply

Publication 590-B lists "you are the beneficiary of a deceased IRA owner" among the exceptions to the 10% additional tax, and states elsewhere that assets can be distributed to a beneficiary or an estate after death without either having to pay it. You can be 30 years old and draw the whole account without that penalty. You will still owe the income tax.

The one way to lose that exception is the spousal election described above.

Missing an RMD: 25%, or 10% if you fix it

Section 4974 of the code imposes a tax equal to 25% of the amount by which the required minimum distribution exceeds the actual amount distributed, and the tax is paid by the payee, meaning you. That rate was 50% until the end of 2022.

The same section cuts it to 10% if, during the correction window, you take the missed distribution and file a return reflecting the tax. The correction window closes on the earliest of the date the IRS mails a deficiency notice, the date the tax is assessed, or the last day of the second taxable year beginning after the year in which the tax was imposed. That is a genuinely generous window, and it is worth using.

You report the tax on Form 5329. Publication 590-B also describes a waiver: if the shortfall was due to reasonable error and you have taken or are taking steps to fix it, you can attach a statement of explanation and request that the tax be waived.

Two deductions and adjustments people miss

• Estate tax already paid on the IRA. If the estate paid federal estate tax and part of your distribution is income in respect of a decedent, you can deduct the estate tax attributable to it. Publication 590-B points to this directly. It is rare, because the federal estate tax reaches very few estates, but where it applies the amounts are large.
• The owner's nondeductible contributions. If the deceased had basis in the IRA from nondeductible contributions, that basis stays with the account and part of each distribution is tax free. You cannot pool it with basis in your own IRAs; you file a separate Form 8606 for the inherited account.

The Mistakes That Cost Real Money

Ranked roughly by how expensive they are.

• Rolling an inherited IRA into your own, as a non-spouse. Publication 590-B says you cannot roll amounts into or out of an inherited IRA. Do it anyway and the transfer is treated as a full distribution: the entire account becomes taxable income in one year, and there is no undo. Ask the custodian for a trustee-to-trustee transfer into a correctly titled inherited IRA and confirm the title in writing.
• Taking a cheque from a 401(k) instead of a direct transfer. Same outcome, same lack of a remedy, for the same reason: a payment to a non-spouse beneficiary is generally not an eligible rollover distribution unless it goes directly trustee to trustee.
• Not splitting a shared account in time. Where several people inherit one IRA, the separate accounts are only treated separately for RMD purposes if they are established by the end of the year following the owner's death. Miss that and the oldest beneficiary's life expectancy governs everyone, which shortens the stretch for the younger ones. The designated beneficiary is determined on 30 September of the year following death, so disclaimers and cash-outs need to happen before then.
• Forgetting the owner's final RMD. If the owner died on or after their required beginning date and had not taken that year's distribution, the beneficiaries are responsible for figuring and taking it, in the year of death. Miss it and it is your 25% excise tax, not theirs. If the owner died before their required beginning date, there is no RMD for the year of death.
• Adding inherited RMDs to your own IRA total. You can aggregate RMDs across your own IRAs, and across several IRAs inherited from the same decedent. You cannot mix the two pools, or mix IRAs inherited from different people.
• Waiting until year ten on a traditional account. A decade of deferral followed by one enormous withdrawal can push a whole year of income into the top brackets. Model it before you default to waiting.
• Naming an estate or a plain trust as beneficiary. An estate is not a designated beneficiary, which drops a pre-required-beginning-date account into the 5-year rule. A trust can only work if it meets the see-through conditions. That is professional-advice territory, not a form you fill in at the custodian's website.

Sources & Methodology

Every rule and every table figure on this page was read from the primary source named, not from a secondary summary. Where the wording carries the rule, we quoted it.

• IRS Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs): the 10-year and 5-year rules, the eligible designated beneficiary definition, the required beginning date, the spousal options, the inherited Roth treatment, the Single Life Table in Appendix B, and the 25% and 10% excise tax rates.
• Treasury Decision 10001, 89 FR 58886 (19 July 2024): the final required minimum distribution regulations. The requirement to continue annual distributions where the owner died on or after the required beginning date, the applicable age ladder, the age of majority at 21, the 1 January 2025 applicability date, and the account of the transition relief given by Notices 2022-53, 2023-54 and 2024-35.
• IRS Notice 2024-35: the final year of excise-tax relief for missed beneficiary distributions, and the confirmation that the final regulations were to apply from calendar year 2025.
• IRS Publication 575 (2025), Pension and Annuity Income: the direct trustee-to-trustee transfer route for a non-spouse plan beneficiary, and the surviving spouse's rollover rights.
• IRS Publication 559 (2025), Survivors, Executors, and Administrators: inherited IRA distributions as income in respect of a decedent, and the Roth five-year period measured from the owner's first contribution.
• Internal Revenue Code section 401: the eligible designated beneficiary definition at 401(a)(9)(E), the 10-year substitution at 401(a)(9)(H), the applicable age at 401(a)(9)(C)(v), and the spousal death benefit requirement at 401(a)(11)(B)(iii).
• Internal Revenue Code section 4974: the 25% excise tax, the reduction to 10%, and the definition of the correction window.
• Internal Revenue Code section 1014: subsection (c), which denies the basis step-up to income in respect of a decedent.

Two points we deliberately did not resolve, because the published guidance does not. The applicable age for an owner born in 1959 is left reserved in the final regulations while a separate rulemaking settles it. And Publication 590-B (2025) names both Table I and Table III for a surviving spouse who remains a beneficiary. We have flagged both in place rather than picking an answer.

This article is for general education only and is not tax, legal or investment advice. The RMD walk-through is a hypothetical illustration, not a projection. Inherited retirement accounts interact with plan documents, trust drafting, state law and your own tax position, and a single mistitled transfer can make an entire account taxable in one year. Consult a qualified tax professional before acting on any of this.

FAQ: Inherited IRA Rules

What are the rules for an inherited IRA?
If the owner died in 2020 or later and you are not an eligible designated beneficiary, you must empty the account by 31 December of the year containing the tenth anniversary of the death. You also owe an RMD in each year of that window if the owner had already reached their required beginning date. Every dollar from a traditional account is ordinary income, and there is no step-up in basis.

Do I have to take an RMD from an inherited IRA every year?
Only if the original owner died on or after their required beginning date, which is generally 1 April of the year after they turned 73. If they died before it, no distribution is required in any year before the tenth. An inherited Roth IRA never has an annual RMD inside the 10 years, because a Roth owner is always treated as having died before their required beginning date.

How do I calculate the RMD on an inherited IRA?
Divide the balance on 31 December of the previous year by your applicable denominator from Table I, the Single Life Expectancy table in Appendix B of Publication 590-B. Where the owner died on or after their required beginning date, use the greater of your remaining life expectancy and theirs. Set the figure once, using your age in the year after the death, then subtract one each year.

What is the 10-year rule on an inherited IRA?
It requires beneficiaries who are not taking life expectancy payments to withdraw the entire balance by 31 December of the year containing the tenth anniversary of the owner's death. The IRS gives the example of an owner who died in 2025: the account must be fully distributed by 31 December 2035.

Who is exempt from the 10-year rule?
Eligible designated beneficiaries: the owner's surviving spouse, the owner's minor child, a disabled individual, a chronically ill individual, and anyone not more than 10 years younger than the owner. Status is fixed at the date of death. A minor child's exemption ends at 21, and the 10-year clock then runs from that birthday.

Do you pay taxes on an inherited IRA?
Yes, on a traditional account. Withdrawals are ordinary income at your own rate, because the account is income in respect of a decedent and gets no step-up in basis. Qualified distributions from an inherited Roth IRA are tax free, provided the owner's five-year clock had run before they died.

Is there a penalty for withdrawing from an inherited IRA before 59½?
No. Being the beneficiary of a deceased IRA owner is an exception to the 10% additional tax, at any age. The exception can be lost by a surviving spouse who elects to treat the account as their own, which is the main reason a younger spouse often stays a beneficiary instead.

What happens if I miss an RMD on an inherited IRA?
The excise tax is 25% of the amount you should have taken and did not, reduced to 10% if you withdraw the shortfall and file a return reflecting the tax within the correction window. Report it on Form 5329, and ask for a waiver if the miss was due to reasonable error and you are fixing it.

Can I roll an inherited IRA into my own IRA?
Only if you are the surviving spouse. Any other beneficiary is barred from rolling amounts into or out of an inherited IRA. Moving it means a trustee-to-trustee transfer into an account still titled in the deceased owner's name for your benefit. Doing it the wrong way makes the whole balance taxable in one year.

Are inherited 401(k)s treated the same as inherited IRAs?
The distribution timetable is the same, but three things differ: the surviving spouse is entitled to the whole account unless they consented otherwise in writing, the plan's own terms can force a faster payout than the tax code requires, and a non-spouse beneficiary must use a direct trustee-to-trustee transfer into an inherited IRA rather than taking a payment.

Cite This Page

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“Inherited IRA Rules: RMDs, the 10-Year Rule and the Tax Bill.” Wealthy Pot, 2026. https://wealthypot.com/inherited-ira/