An inherited IRA used to be something you could stretch over your whole life.
Not anymore. Since 2020, most heirs who aren’t a spouse have to empty the account within ten years. Then the IRS’s final rules, in full effect since 2025, added a twist many heirs miss. Depending on the age of the person who died, you may also have to take money out every year.
Which rule applies to you
| If you are | The rule |
|---|---|
| The surviving spouse | The most options: roll it into your own IRA, or keep it as an inherited IRA and take life-expectancy withdrawals |
| A minor child of the owner | Life-expectancy withdrawals until 21, then the 10-year clock starts |
| Disabled or chronically ill | Life-expectancy withdrawals |
| Not more than 10 years younger than the owner | Life-expectancy withdrawals (often a sibling or partner) |
| Anyone else, such as an adult child or grandchild | The 10-year rule: empty the account by December 31 of the tenth year after the death |
| An estate, charity or some trusts | Different rules, often faster. Work with the estate attorney. |
The annual withdrawals many heirs miss
It depends on whether the person who died had reached their required beginning date. That’s generally April 1 of the year after they reached their RMD age, 73 for most people today.
They died before that date
You must empty the account within 10 years, but you don’t have to take anything in years 1 through 9.
They died on or after that date
You must take an annual required withdrawal in years 1 through 9, and empty the account by the end of year 10.
The IRS waived penalties for missed annual withdrawals from 2021 through 2024 while it finalized these rules. From 2025 on, they’re enforced. The ten-year deadline itself never moved: if you inherited in 2020, the account must be empty by the end of 2030.
If you’re the surviving spouse
- You can roll the IRA into your own. Withdrawals then follow your age, and you can name your own beneficiaries.
- If you’re under 59½ and need the money, keeping it as an inherited IRA lets you withdraw without the 10% early-withdrawal penalty. You can still roll it into your own later.
- Choosing between these is a timing decision worth getting right. It’s hard to reverse.
Inherited Roth IRAs
A Roth IRA also has to be emptied within ten years by most non-spouse heirs, but there are no annual required withdrawals, and qualified withdrawals are tax-free.
For many heirs, the smart move is to let it grow and withdraw near the end of year ten.
Planning the taxes
Withdrawals from a traditional inherited IRA are taxed as ordinary income. A $600,000 inherited IRA emptied in one year can push an heir into the top brackets.
Spread over ten years, the same money may be taxed at much lower rates.
- Look at your income for the next ten years: a sabbatical, retirement or a business sale changes the best year to withdraw.
- Take more in lower-income years, less in high ones, and always at least the required amount.
- Withholding can be set on each withdrawal so April isn’t a surprise.
- Charitably inclined heirs who are 70½ or older can make qualified charitable distributions from an inherited IRA.
- Federal tax, spread evenly
- $119,000
- Federal tax, all in one year
- $168,229
- Even withdrawal each year
- $60,000
Mistakes that are expensive
- Cashing out right away and paying tax on all of it in one year
- Waiting until year ten when annual withdrawals were required all along
- Moving the money into your own IRA by mistake when you’re not a spouse. A non-spouse heir can’t roll it over, and the move can be taxable.
- Forgetting to name your own beneficiaries on the inherited account
How Morrowgate helps. Greg works out which rule applies, then builds a ten-year withdrawal plan with your CPA around your own income, so the tax is spread instead of stacked. Inherited accounts are titled correctly and held in your name at Fidelity, with Schwab available.
Questions heirs ask
Do I have to take money out of an inherited IRA every year?
Only if the person you inherited from had reached their required beginning date, or if you’re using life-expectancy withdrawals. Otherwise you just have to empty it within ten years.
What happens if I miss a required withdrawal?
An excise tax of 25% of the amount you should have taken, reduced to 10% if you correct it promptly. Ask your CPA about requesting a waiver for reasonable cause.
Can I put an inherited IRA into my own IRA?
Only a spouse can. Anyone else must keep it as a separate inherited IRA, titled in the deceased owner’s name for your benefit.
Is an inherited Roth IRA taxable?
Qualified withdrawals are generally tax-free. Most non-spouse heirs still must empty it within ten years, but no annual withdrawals are required.
Where this guidance stops
This article is general education on inherited IRA withdrawal rules: how the rules and the options generally work.
It is not tax, legal or investment advice, and nothing here is a recommendation for your situation. Rules change and outcomes turn on the facts, which is why a CPA and an attorney look at a family’s own numbers before anything is done.
Sources
- IRS: Retirement topics, beneficiary
- IRS: Required minimum distributions for IRA beneficiaries
- IRS Notice 2024-35 (relief for 2024)