inherited ira rules and the 10 year rule

In short

A friend of mine lost her father last spring, and a few weeks later she got a letter about an account she had never heard of. If you have inherited an IRA, you are likely in the same spot, grieving and handed a pile of rules at once. Most people who inherit an IRA from someone who was not their spouse must empty the account by the end of the tenth year after the owner died. Some heirs get more time, and the plan paperwork will say which group you belong to. Taking money out of a traditional IRA adds to your taxable income, so the timing of those withdrawals matters. Some heirs must also take a yearly withdrawal during the ten years, and missing one brings a penalty. Slow down, retitle the account the right way, and talk with a tax professional before you move a dollar.

The whole of it

What it is

I once watched my uncle sit at his kitchen table, staring at a form from a brokerage, and say plainly that nobody had ever taught him this. He was right. Nobody teaches it. An inherited IRA is a retirement account that passes to a beneficiary after the owner dies. The beneficiary is the person named on the account's paperwork to receive it.

If you are the heir, the account does not become yours to treat like your own IRA, unless you are the spouse. A spouse has special choices, including rolling the money into a personal IRA. Everyone else keeps the money in a separate account that carries the deceased owner's name along with yours. Rolling it into your own IRA is not allowed for a non spouse, and getting this wrong can make the whole balance taxable at once.

The ten year rule comes from a federal law called the SECURE Act, passed in 2019, and a follow up law passed in 2022. Before then, many heirs could stretch withdrawals over their whole lifetime. Now most must finish within ten years. The IRS explains the details in Publication 590-B, which covers distributions from IRAs, and it is worth keeping a copy handy.

How it works

You have probably seen the words ten years and thought that you had a decade to do nothing. That is only sometimes true. The account must be empty by December 31 of the tenth year after the owner's death. Whether the heir must also take money out in years one through nine depends on one fact: whether the owner had already reached the age when required withdrawals begin. That age is 73 for 2024 (source, checked 9/27/2026).

If the owner died before that age, the heir generally has no yearly minimum. The heir can wait and take it all in year ten, or spread it out. If the owner died on or after that age, the heir must take a yearly withdrawal in years one through nine, and then empty the rest by the end of year ten. The IRS has changed how it applies this point in recent years, so check Publication 590-B and the current year's guidance before relying on memory.

Not every heir falls under the ten year rule. The law names a group called eligible designated beneficiaries. These are a surviving spouse, a minor child of the owner, a disabled or chronically ill person, and someone not more than ten years younger than the owner. These heirs may still use a lifetime stretch. A minor child gets that only until reaching the age of majority, and then the ten year clock starts.

Traditional and Roth accounts behave differently. Money pulled from a traditional IRA counts as ordinary income and is taxed that year. Money from a Roth IRA is usually tax free if the owner's account met the five year holding test. Even so, a Roth still follows the ten year deadline. The deadline is the same. The tax bill is not.

The numbers, and where to find yours

Your own situation hides in a few documents. Start with the date of death, since the ten years count from the year after that date. Next, find the account balance on the date of death, which the custodian will report. The custodian is the bank or brokerage holding the account. Then look at the beneficiary form on file, which says who inherits and in what share.

Three official figures matter here. The age when required withdrawals begin is 73 for 2024 (source, checked 9/27/2026). The penalty rate on a missed yearly withdrawal is the current figure, which the official source publishes each year. A tax bracket depends on total income, and the brackets for this year are listed at the current figure, which the official source publishes each year. The site fills in each verified figure with its source and date, so look there rather than trusting a number from memory.

The custodian also sends Form 1099-R each January for any year money came out. The IRS Publication 590-B, Distributions from Individual Retirement Arrangements, remains the primary source for all of it.

A worked example

Let me tell you about a woman named Dana. Her father, Walt, died at age 68 with a traditional IRA worth $400,000. Dana, age 45, was the named beneficiary. She is not a spouse, not disabled, and not within ten years of her father's age. So the ten year rule applies to her.

Walt died before the age when required withdrawals begin, so Dana has no yearly minimum. She does have a deadline. She must empty the account by the end of the tenth year after his death.

Dana could wait and take all $400,000 in year ten. That would be a poor idea, and here is why. The money would pile onto her income in one year and could push her into a high bracket. Suppose her salary is $90,000. Adding $400,000 makes her income that year $490,000. A big share of that would be taxed at the higher rates.

Now picture a gentler path. Say she spreads it evenly. Ten equal withdrawals of $40,000 come to $400,000 in total. Each year her income would be $90,000 plus $40,000, which is $130,000. Her top rate stays far lower than in the lump sum case. Of course, the account also grows. If it earns 5 percent a year, the balance rises, so her real yearly withdrawal would be larger than $40,000. A rough check is to take the starting balance of $400,000 and divide by 10 years. That gives $40,000 a year before any growth.

Dana does not have to pick equal amounts. She might take less in years when her pay is lower and more in years when it is higher. Planning the order is the whole game. A tax professional can run the numbers on her real bracket.

Where it goes wrong

I have seen good people trip on this, and it is rarely from carelessness. The rules are tangled. Here are the common ways it goes sideways.

The first is rolling an inherited IRA into your own IRA when you are not the spouse. The IRS treats that as a full withdrawal, and the entire balance becomes taxable income that year. A trustee to trustee transfer into a properly titled inherited account does not count as a withdrawal, which is why the IRS treats that route differently.

The second is missing a yearly withdrawal when one is required. The penalty is the current figure, which the official source publishes each year of the amount that should have come out, and the IRS may reduce it if the heir corrects the mistake promptly. Form 5329 is the form used to report it.

The third is waiting until year ten with no plan. A big lump sum can bring a surprise tax bill. Nobody likes surprises from the IRS.

The fourth is assuming the beneficiary form does not matter. It controls who inherits. An ex spouse listed years ago still gets the money. Check it.

The fifth is forgetting the account must be retitled. The custodian must put the account in the deceased owner's name for the benefit of the heir. Skipping that step can cause real trouble.

Questions to answer before you leave this page

Do you know whether the person who passed away was already past the age when required withdrawals start, since that decides whether yearly minimums apply to you? Are you a spouse, a minor child, a disabled or chronically ill heir, or someone close in age to the owner, because those heirs may have more time than ten years? Has the custodian retitled the account as an inherited IRA, and does your name appear on it the right way? Is the account traditional or Roth, and what will each withdrawal do to your taxable income that year? Have you written down the last day of the tenth year so the deadline cannot slip past you? And have you sat down with a tax professional to map out which years you will take money, so you are choosing the plan instead of the plan choosing you?