Inherited IRA Rules: 10-Year Rule, Annual RMDs, and Tax Strategies (2026)

Who this guide covers

This guide applies to people who inherited a traditional IRA (pre-tax) or Roth IRA from an account owner who died after December 31, 2019. If the original owner died before 2020, different rules—the stretch IRA or 5-year rule—apply to your situation. The new rules also differ from inherited 401(k) planning, which has important distinctions around mandatory withholding and direct rollover mechanics.

Beneficiary type determines everything

Your distribution options split sharply based on your relationship to the deceased and whether you qualify as an Eligible Designated Beneficiary (EDB).

Most adult children, siblings, and non-family beneficiaries fall into the last row. The 10-year rule applies, and the critical question is whether annual RMDs are also required during that window.

The 10-year rule and when annual RMDs apply

The SECURE Act created the 10-year rule: non-EDB beneficiaries must fully distribute the inherited IRA by December 31 of the tenth year following the account owner's death.¹ The law sets only the outer deadline. You could take nothing in years 1–9 and deplete the account in year 10, or spread distributions evenly, or take larger amounts early when your income is lower.

Annual RMD amounts for non-EDB beneficiaries whose decedent died after their RBD use the Single Life Expectancy Table (IRS Publication 590-B, Appendix B, Table I), based on the beneficiary's age in the year after the account owner's death. The divisor decreases by one each subsequent year.

Critical difference from a 401(k): no mandatory withholding

When you receive a distribution from an inherited traditional IRA, no automatic federal income tax withholding is applied unless you request it. Unlike an inherited 401(k)—where 20% mandatory withholding applies to any non-direct-rollover distribution under IRC §3405(c)—inherited IRA distributions are subject only to voluntary withholding.

The default withholding rate for IRA distributions is 10%, but beneficiaries may elect to withhold more, withhold less, or waive withholding entirely on Form W-4R. This flexibility is useful for tax planning—but it creates a common trap: beneficiaries who waive withholding receive the full distribution, spend it, and then owe the full tax bill at filing without having set aside a reserve.

How to open an inherited IRA correctly

Inherited IRAs must be opened and titled precisely. Errors in titling or transfer method can cause the IRS to treat the entire balance as an immediate taxable distribution with no remedy.

Required account title

The inherited IRA must be titled to reference both the deceased owner and the beneficiary. A common format: "[Decedent's Name], deceased [date of death], IRA for benefit of [Your Name]." The exact format varies by custodian, but the account must remain in the decedent's name for benefit of the beneficiary. The IRA cannot be re-titled as your own account unless you are the surviving spouse.

Direct trustee-to-trustee transfer only

Non-spouse beneficiaries have no 60-day rollover option for inherited IRAs.⁴ If the existing custodian sends you a check (even if it's made payable to a new custodian and you forward it), the rules may treat it as a distribution. The correct method is always a direct trustee-to-trustee transfer: the existing custodian wires the balance directly to the receiving custodian's account on your behalf. Initiate the new inherited IRA at the receiving institution first, get the transfer instructions, then submit the transfer request to the current custodian.

Surviving spouse options

Surviving spouses have the most flexibility of any beneficiary category.

• Roll to own IRA. The surviving spouse can roll the inherited IRA into their own IRA at any time. Once rolled over, RMDs follow the spouse's own schedule—not starting until their own Required Beginning Date. This is typically the right move if the spouse will not need the money before age 59½ and wants to defer RMDs as long as possible.
• Keep as inherited IRA. If the surviving spouse is under 59½ and needs access to the funds, keeping the account as an inherited IRA can be valuable. Distributions from an inherited IRA are not subject to the 10% early withdrawal penalty under §72(t) regardless of the beneficiary's age. Once the spouse reaches 59½, they can roll the inherited IRA into their own IRA.
• Timing matters. Rolling to a spouse's own IRA converts the account to the spouse's own RMD rules, including the Required Beginning Date based on the spouse's own age. If the deceased owner was older and had already begun RMDs, keeping the account as inherited may allow the surviving spouse to use their own (longer) life expectancy, reducing the annual minimum.

Inherited Roth IRA rules

Roth IRAs have no Required Beginning Date during the original owner's lifetime—owners never had to take RMDs. This has a significant downstream effect on inherited Roth IRAs.

• No annual RMDs for non-EDB beneficiaries. Because the Roth IRA owner had no RBD, the "decedent died after their RBD" trigger in T.D. 10001 cannot be met. Non-EDB beneficiaries of an inherited Roth IRA face the same 10-year deadline but no annual RMD requirement during years 1–9.
• Distributions are income-tax free provided the original Roth IRA was qualified at the time of distribution. A Roth IRA distribution is qualified if the account was at least 5 years old. The 5-year clock for inherited accounts starts when the original owner first established any Roth IRA—not when you inherited it.⁵
• Non-qualified Roth distributions (account less than 5 years old) are still free of the 10% penalty for inherited accounts, but the earnings portion is subject to income tax.
• Surviving spouse option. A surviving spouse who rolls an inherited Roth IRA to their own Roth IRA restarts no clocks—the 5-year period from the original owner's first contribution continues uninterrupted.

Multiple beneficiaries: the separate account deadline

When an IRA names multiple beneficiaries, they share a single inherited account unless they divide it. Each beneficiary can establish their own separately titled inherited IRA—allowing each to apply their own life expectancy factor and distribution schedule independently.

To qualify for separate treatment, the account must be divided into separate inherited IRAs by December 31 of the year following the decedent's death.⁶

If the deadline passes with the account still undivided, all beneficiaries are subject to the most restrictive set of rules: typically the shortest 10-year window based on the youngest eligible designated beneficiary among the group.

Practical consequence: if an IRA names both a spouse and adult children as equal beneficiaries, missing the separation deadline eliminates the spouse's option to roll their share to their own IRA until the entire account is handled as a group. Act before December 31 of the year after the owner's death.

Tax strategy during the 10-year window

For non-EDB beneficiaries of a traditional IRA, the 10-year window is the primary tax planning opportunity. Every dollar withdrawn is ordinary income at your marginal rate. The goal is to time withdrawals to minimize the total tax paid across all ten years.

Bracket spreading

If you are currently in the 22% or 24% bracket, spreading distributions evenly across ten years keeps more income at those rates. A beneficiary who inherits a $500,000 IRA can take $50,000 per year—manageable at moderate income levels—rather than triggering a single $500,000 distribution at the 37% rate in year 10.

Front-loading in low-income years

If your income varies significantly year to year—career transition, business sale, early retirement—take larger distributions in lower-income years and smaller ones in higher-income years. This is especially relevant if you have inherited IRA distributions and expect income to rise as you age.

IRMAA exposure

For beneficiaries over 63 (whose Medicare premiums are set two years in advance), large inherited IRA distributions can push modified adjusted gross income above the IRMAA thresholds. In 2026, the first IRMAA tier begins at $109,000 (single) / $218,000 (MFJ), adding $81.90/month per person to Part B premiums.⁷

Planning distributions to stay below a tier boundary can save $978–$4,916 per person per year in Medicare premiums.

Roth conversion interaction

If you have your own pre-tax IRA, required distributions from an inherited IRA increase your MAGI in those years, which can limit or eliminate the value of a simultaneous Roth conversion strategy. Coordinate the two schedules. See the Roth conversion after a windfall guide for the full framework.

State income tax on inherited IRA distributions

Inherited IRA distributions are subject to state income tax in most states, just as ordinary IRA distributions are. There is no step-up in basis and no state-level exclusion in most jurisdictions. States with no income tax—Florida, Texas, Nevada, Washington, Wyoming, South Dakota, Tennessee, Alaska—do not tax these distributions. High-tax states such as California (13.3%), New York (10.9%), and New Jersey (10.75%) apply their top rates to inherited IRA income above the applicable brackets.

Six states impose inheritance taxes, though retirement accounts often have special treatment: Maryland, Nebraska, New Jersey, Kentucky, and Pennsylvania impose inheritance taxes, but some exempt accounts inherited by children or close relatives. Iowa phased out its inheritance tax entirely as of 2025.

First-year inherited IRA checklist

1. Identify your beneficiary category. Spouse, EDB, or non-EDB determines your entire distribution framework. If the IRA named multiple beneficiaries, verify the titling and whether a separate account election is still available.
2. Determine whether the owner died before or after their RBD. If you are a non-EDB and the owner died after their RBD, annual RMDs are required starting in year 1. The RBD is April 1 of the year after age 73 or 75 depending on birth year.
3. Open the inherited IRA with correct titling before the first distribution. Contact the existing custodian and a receiving custodian. Initiate a direct trustee-to-trustee transfer—never request a check.
4. Split into separate accounts if there are multiple beneficiaries. December 31 of the year after the owner's death is the deadline. Miss it and all beneficiaries share the least-favorable distribution rules.
5. Plan your 10-year distribution schedule. Model the annual distributions against your expected income in each year. Front-load in lower-income years; back-load if income drops later. Stay below IRMAA tier boundaries if applicable.
6. Set up withholding or estimated tax payments. Do not waive withholding without having a separate tax reserve. Elect a withholding rate equal to your expected marginal rate, or make quarterly estimated payments by the due dates.
7. Coordinate with your CPA and advisor. The 10-year window interacts with your overall tax plan—Roth conversions, IRMAA management, Social Security timing, and existing retirement account RMDs. A financial advisor specializing in windfall and retirement income planning can model all of these together.

Get matched with a sudden-wealth advisor

An inherited IRA often arrives alongside other estate assets—inherited taxable accounts, real property, life insurance, or trust distributions. Coordinating the tax plan across all of them while managing your own retirement account distributions requires a specialist. Tell us your situation and we will match you with a fee-only advisor who works with inherited wealth.

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