IRA beneficiary rules: how inherited IRA distributions work
Inheriting an IRA from a loved one comes with a complex set of rules that determine how and when you must take distributions. If you’ve recently become an IRA beneficiary—or expect to become one—understanding these rules is critical for avoiding costly tax mistakes and IRS penalties.
The landscape changed dramatically after the SECURE Act took effect for deaths occurring after December 31, 2019. The old “stretch IRA” strategy that allowed beneficiaries to take small distributions over their lifetime is largely gone. SECURE 2.0, enacted in 2022, added further adjustments to RMD ages and timing. Today, the distribution rules you face depend on three key factors: when the original account owner died, what type of beneficiary you are, and whether you inherited a traditional IRA or Roth IRA. The rules for inherited IRAs are determined by whether the account holder died before or after key legislative changes, and the timing of the IRA owner's death dictates which distribution requirements and beneficiary options apply.
Quick overview of IRA beneficiary rules
Before diving into specifics, here’s what every IRA beneficiary needs to understand upfront.
The rules governing inherited IRA assets split into distinct frameworks based on the timing of the account holder's death and beneficiary type. The first question is always: did the original IRA owner die before January 1, 2020, or on or after that date? Pre-2020 deaths follow the old rules, while deaths in 2020 or later fall under the SECURE Act framework.
The second question concerns your relationship to the deceased account holder. Are you an eligible designated beneficiary (surviving spouse, minor child, disabled or chronically ill individual, or someone not more than 10 years younger than the owner)? Or are you a designated beneficiary who doesn’t meet those criteria (like an adult child or sibling)? Or are you a non-designated beneficiary (an estate, charity, or certain trusts)?
The third factor is the account type.
Key takeaways for beneficiaries of owners who died in 2020 or later:
Most non-spouse beneficiaries must empty inherited IRAs by December 31 of the 10th year after the account owner’s death
Annual required minimum distributions may be required during that 10-year period if the owner had already reached their required beginning date
The distribution option you choose as a beneficiary can affect the timing and calculation of required minimum distributions (RMDs) and when taxes are due
Surviving spouses have the broadest options, including treating the IRA as their own, which permanently affects tax timing and RMD schedules
Eligible designated beneficiaries may still use life expectancy payouts, but most eventually transition to the 10-year rule
Important: This article provides general information about IRA beneficiary rules. Tax laws are complex and your situation is unique. Consult a qualified tax advisor for personalized guidance before making distribution decisions.
Key definitions: IRA beneficiaries and RMD basics
Before navigating the specific rules, you need to understand the core terminology you’ll encounter throughout this process.
Beneficiary: The person, trust, charity, or estate named on the IRA beneficiary designation form to receive the account after the owner’s death. This designation typically overrides what’s written in a will, making it critical to keep beneficiary forms updated.
Required minimum distribution (RMD): The minimum amount that must be withdrawn from certain retirement accounts each year. For account owners, RMDs generally start at age 73 in 2024. For beneficiaries, RMD requirements may begin immediately upon inheriting the account, depending on the circumstances.
Required beginning date (RBD): April 1 of the year after the account holder reaches RMD age. For those turning 72 after 2022, the RBD is tied to age 73 under current law. Future legislation may adjust this again—SECURE 2.0 already scheduled age 75 for certain younger individuals.
Designated beneficiary: A living individual named on the beneficiary form who is identifiable as of September 30 of the year following the IRA owner’s death. This status provides access to certain distribution options not available to non-individual beneficiaries.
Eligible designated beneficiary (EDB): A favored subset of designated beneficiaries with extended distribution options.
Non-designated beneficiary: Estates, charities, and certain trusts that don’t qualify as designated beneficiaries. These face the most restrictive distribution schedules.
Traditional IRA: A retirement account funded with pretax dollars (in most cases), where distributions are taxable as ordinary income.
Inherited Traditional IRA: A traditional IRA that is received by a beneficiary after the original account holder's death. Inherited traditional IRAs have specific rules for required minimum distributions (RMDs) and tax treatment, which differ from those for the original account owner. Beneficiaries must follow these rules when handling distributions from an inherited traditional IRA.
Note that while Roth account owners never face lifetime RMDs, beneficiaries typically do.
How IRA beneficiary RMDs are determined
Figuring out your RMD obligations as a beneficiary follows a decision tree. You need to answer three questions in order:
When did the original IRA owner's death occur—before January 1, 2020, or after December 31, 2019? This date sets the starting point for determining which distribution requirements and beneficiary options apply.
Had the IRA owner reached their required beginning date before death?
What type of beneficiary are you?
Here’s how the main rule sets break down:
For IRA owners who died in 2019 or earlier (pre-SECURE Act):
Designated beneficiaries could use life expectancy payouts, stretching distributions over decades
The 5-year rule was an alternative if the IRA owner died before their RBD
These rules still apply to accounts inherited before 2020
For IRA owners who died in 2020 or later (SECURE Act framework):
Most non-spouse designated beneficiaries face the 10-year rule
Eligible designated beneficiaries may still use life expectancy payouts
The IRS has indicated that annual RMDs may be required in years 1-9 if the decedent had reached their RBD
For non-designated beneficiaries:
The 5-year rule applies if the IRA owner died before their RBD
If the IRA owner died after their RBD, distributions are based on the deceased’s remaining life expectancy
One critical point: if the original IRA owner passed away before taking their RMD for that year, the beneficiary must generally take that distribution by December 31 of the year of death. This is separate from the beneficiary’s own RMD obligations, which are determined by the IRA owner's RMD status at the time of death and the applicable RMD rules.
The IRS issued transitional relief through 2024 for certain beneficiaries who didn’t take annual RMDs under the 10-year rule. However, as of 2025, full compliance is expected. Beneficiaries must follow the current RMD rules and are required to begin taking distributions based on the IRA owner's status at death. Always verify current requirements in IRS Publication 590-B.
Decision path to identify your situation:
Determine the date of the original IRA owner's death, as this establishes which set of beneficiary rules and deadlines apply.
Identify whether the IRA owner had reached RMD age (73 in 2024)
Classify yourself as spouse, EDB, non-EDB designated beneficiary, or non-designated beneficiary
Review the applicable section below for your specific rules
Spousal IRA beneficiary rules
Surviving spouses have the widest range of options under both pre-2020 and post-2019 rules. The best choice depends on your age, income needs, tax bracket, and whether you might need access to funds before age 59½.
As a spouse beneficiary, you can generally choose from these options when inheriting a traditional or Roth IRA:
Treat the IRA as your own through a spousal rollover or retitling
Maintain it as an inherited IRA in your name as beneficiary
Take a lump-sum distribution (with full taxation for traditional IRAs)
Disclaim the inheritance so it passes to contingent beneficiaries (limited cases)
These choices are commonly referred to as spousal beneficiary options, and the optimal selection often depends on the timing of the original IRA owner's death.
The timing of the original IRA owner’s death matters significantly. If your spouse died before their required beginning date, you have more flexibility in when distributions must begin. If they died after reaching their RBD, the rules for maintaining an inherited account become more structured.
Treating the IRA as your own
If you treat a traditional IRA as your own:
If you are the sole beneficiary and the surviving spouse, you have the option to treat the IRA as your own, which may provide additional flexibility.
RMDs are based on your age using current rules (age 73 for most in 2024)
You can delay RMDs until you reach your own required beginning date
Early withdrawals before age 59½ may trigger the 10% penalty unless an exception applies
You can name your own beneficiaries
Maintaining an inherited IRA
If you keep it as an inherited account:
You avoid the 10% early-withdrawal penalty on distributions, even if you’re under 59½
This is often advantageous if you need access to funds before reaching 59½
RMD timing depends on whether your spouse died before or after their RBD
You can delay RMDs until the later of December 31 of the year after death or the year your spouse would have turned 73
Spousal beneficiary rules for traditional IRAs (deaths in 2020 or later)
For owners who died after December 31, 2019, surviving spouses inheriting a traditional IRA can:
Roll the assets into their own traditional IRA or eligible employer plan
Keep the account as an inherited IRA and delay RMDs until the later of December 31 of the year after death or the year the deceased would have reached RMD age
Take distributions at any time without early-withdrawal penalties if using the inherited IRA option
SECURE 2.0 added timing flexibility and changed RMD ages. The current age for beginning RMDs is 73, with age 75 scheduled for those born in 1960 or later under existing law.
Example: Sarah, age 55, inherits her husband’s traditional IRA in 2024. Her husband was 62 when he passed away—well before RMD age. If Sarah rolls the IRA into her own name, she won’t need to begin taking RMDs until she turns 73 in approximately 2042. However, if she needs funds before age 59½, she’d face the 10% early withdrawal penalty.
Alternatively, Sarah could keep the account as an inherited IRA. She could access funds immediately without penalty, and wouldn’t need to start RMDs until her husband would have turned 73—giving her significant flexibility. When she reaches 59½, she could then roll the remaining assets into her own IRA if desired.
Spousal beneficiary rules for Roth IRAs
Original Roth IRA owners never have lifetime RMDs. However, spouses inheriting Roth IRAs must still follow beneficiary distribution rules unless they elect to treat the Roth as their own.
If you treat the inherited Roth as your own:
No RMDs during your lifetime
Distributions of earnings are tax-free if any Roth IRA you hold has met the 5-tax-year rule
You can name your own beneficiaries
The account continues growing tax-free
If you keep an inherited Roth IRA:
You may face 10-year or life-expectancy distribution requirements depending on your eligibility status and the owner’s year of death
Distributions are generally tax-free if the original owner’s Roth met the 5-year holding requirement
If the 5-year requirement isn’t met, earnings withdrawn before that mark may be taxable
Example: Michael inherits his wife’s Roth IRA in 2024. She opened the account in 2018, meaning the 5-year clock was satisfied (2018, 2019, 2020, 2021, 2022). Michael can treat the Roth as his own, face no RMDs during his lifetime, and all distributions—including earnings—will be tax-free. If he keeps it as an inherited Roth instead, he’d eventually need to take distributions, but they’d still be tax-free given the satisfied 5-year rule.
Non‑spouse IRA beneficiary rules
Non-spouse beneficiaries—adult children, other relatives, friends, and similar individuals—face stricter payout schedules than spouses. Non-spouse beneficiaries have different withdrawal options and distribution requirements compared to spouses, which can significantly affect how and when they access inherited IRA funds. You cannot treat an inherited IRA as your own, and for deaths in 2020 or later, most fall under the 10-year rule.
Key restrictions for non-spouse beneficiaries of traditional IRAs:
Distributions are taxed as ordinary income in the year withdrawn
You cannot make new contributions to the inherited account
60-day rollovers are not permitted; only trustee-to-trustee transfers between inherited IRAs of the same type
You must retitle the account as an inherited IRA (e.g., “John Smith, deceased, IRA FBO Jane Smith, beneficiary”)
Non-spouse beneficiaries must carefully consider their withdrawal options to manage taxes and comply with distribution rules
For non-spouse beneficiaries of Roth IRAs:
You must follow the same distribution timing rules (5-year, 10-year, or life expectancy for EDBs)
Qualified distributions are generally tax-free, making Roth inheritances particularly valuable
For owners dying in 2020 or later, most non-spouse designated beneficiaries must fully distribute the inherited account by December 31 of the 10th year after the account owner died.
Disclaimer option: Non-spouse beneficiaries can disclaim part or all of an inherited IRA within 9 months of the owner’s death. If you don’t want or need the assets—perhaps because they’d push you into a much higher tax bracket—disclaiming redirects them to contingent beneficiaries or the estate.
Example: Tom, age 45, inherits his mother’s $400,000 traditional IRA in 2024. Under the 10-year rule, he must empty the account by December 31, 2034. He has choices:
Even distribution: Take roughly $40,000 per year, adding that to his taxable income annually
Back-loaded approach: Leave funds invested, potentially growing, and take larger distributions in years 8-10
Strategic timing: Take larger distributions in low-income years (job transition, early retirement) and smaller amounts when income is high
If Tom earns $100,000 annually and takes $100,000 in a single year from the IRA, he could jump from the 22% to the 32% or higher federal bracket on a significant portion. Spreading distributions may keep more money in his pocket.
Eligible Designated Beneficiaries (EDBs)
Under current law for deaths on or after January 1, 2020, eligible designated beneficiaries include:
Surviving spouse (covered above)
Minor child of the decedent (until reaching the age of majority, typically 21 under SECURE 2.0)
Disabled individual as defined under IRC §72(m)(7)
Chronically ill individual meeting IRS medical certification requirements
Any individual not more than 10 years younger than the decedent
Non-spouse EDBs often can stretch distributions over their own life expectancy instead of facing the immediate 10-year rule.
Life-expectancy payout for EDBs:
RMDs must begin by December 31 of the year after the original IRA owner’s death
Annual RMDs are calculated using the beneficiary’s single life expectancy from IRS tables
The life expectancy factor is recalculated or reduced by 1 each subsequent year
Special rules for minor children: Minor children of the decedent can use life-expectancy payments only until reaching the age of majority (age 21 under SECURE 2.0 clarifications). At that point, the 10-year rule kicks in for the remaining balance.
Example: Emma, age 15, inherits her father’s IRA in 2024. She can take RMDs based on her life expectancy until she turns 21 in 2030. At that point, she has 10 more years to empty the remaining assets—meaning full distribution by December 31, 2040. Her total potential deferral period extends significantly compared to adult children who face the 10-year rule immediately.
Note that “minor child” applies only to the decedent’s own children—not grandchildren, nieces, nephews, or stepchildren in most cases.
Designated Beneficiaries (non‑EDBs) and the 10‑year rule
If you’re a designated beneficiary who doesn’t qualify as an EDB—such as an adult child, sibling more than 10 years younger, or a non-relative friend—you fall under the 10-year rule for deaths in 2020 or later.
The 10-year rule requires:
Full distribution of the entire balance by December 31 of the 10th year following the account owner’s death
No new contributions to the inherited account
The ability to take distributions in any amounts and timing within that 10-year window—subject to possible annual RMD requirements
Current IRS position on annual RMDs: Under IRS final regulations issued in July 2024, if the decedent died on or after their required beginning date, designated beneficiaries may need to take annual RMDs in years 1-9, in addition to clearing the account by year 10. If the account owner passed before reaching RMD age, no annual minimums are required—only the year-10 deadline.
Owner Death Timing | Annual RMDs Required? | Final Deadline |
|---|---|---|
Before RBD | No annual RMDs in years 1-9 | December 31 of year 10 |
On or after RBD | Yes, RMDs in years 1-9 | December 31 of year 10 |
Planning tactics for the 10-year rule:
Spread withdrawals across multiple tax years to reduce bracket creep
Coordinate with other income sources (bonuses, investment sales, Social Security timing)
Consider Roth conversions of your own accounts in low-income years to create future tax-free income
Model different withdrawal scenarios with a tax advisor to optimize after-tax results
Non‑designated beneficiaries: estates, charities, and some trusts
Non-designated beneficiaries—those without a life expectancy, such as estates, most charities, and non-see-through trusts—face the most rigid distribution schedules.
If the owner died before their RBD:
The 5-year rule applies: full distribution by December 31 of the 5th year after death
No annual RMD amounts are required in years 1-4, but the account must be empty by year 5
If the owner died on or after their RBD:
Distributions are based on the deceased owner’s remaining life expectancy
Annual RMDs are required, calculated using the owner’s age and IRS tables, with the denominator reduced by 1 each year
The account depletes naturally over the owner’s remaining statistical life expectancy
See-through trusts: Certain “see-through” or “look-through” trusts can qualify as designated beneficiaries if they meet specific IRS requirements. This allows life-expectancy or 10-year treatment for the underlying human beneficiaries. However, the trust must be valid, irrevocable at death, and have identifiable beneficiaries.
Having an attorney draft and review any trust intended as an IRA beneficiary is essential. Poorly structured trusts can inadvertently trigger the harsher 5-year rule or other unfavorable treatment.
The 5‑year rule and 10‑year rule for inherited IRAs
These two timing rules determine how quickly an inherited IRA must be emptied when life-expectancy payouts are unavailable or not chosen.
The 5‑year rule
The 5-year rule applies mainly to:
Pre-2020 deaths where the owner died before their RBD and the beneficiary chose not to use life-expectancy payouts
Non-designated beneficiaries (estates, certain trusts) when the owner died before their RBD
Requirements:
The entire balance must be distributed by December 31 of the 5th year following the owner’s death
No specific annual RMD amounts in years 1-4
Any remaining balance on January 1 of year 6 triggers penalties and tax complications
The 10‑year rule
The 10-year rule applies primarily to:
Designated beneficiaries who are not EDBs, inheriting from owners who died in 2020 or later
EDBs who cease to qualify (such as minor children reaching the age of majority)
Requirements:
Full distribution by December 31 of the 10th year following death
Potential annual RMDs in years 1-9 if the decedent had reached their RBD
Flexibility in timing and amounts within these constraints
Withdrawal strategy comparison
Consider a $500,000 inherited IRA subject to the 10-year rule:
Equal annual withdrawals:
$50,000 per year for 10 years
Adds consistent, predictable income each year
May keep you in a stable tax bracket
Front-loaded withdrawals:
Take larger amounts in early years (perhaps during lower-income years or before Social Security begins)
Leave less to grow, but potentially at lower tax rates
Back-loaded approach (lump sum at year 10):
Maximum tax-deferred growth for 10 years
Risk of massive tax hit in year 10—$500,000+ in a single year could push you into the 35% or 37% bracket
No flexibility if tax rates increase before year 10
Most advisors recommend a balanced approach, taking distributions based on your personal tax situation each year rather than all-or-nothing strategies.
Inherited Roth IRA rules
Although original Roth IRA owners never face lifetime RMDs, beneficiaries usually do. The good news: distribution timing still matters, but the tax result is typically far more favorable than traditional IRA inheritances.
Beneficiary rules for inherited Roth accounts mirror traditional IRA structures:
EDBs can use life-expectancy payouts
Non-EDB designated beneficiaries face the 10-year rule for post-2019 deaths
Non-designated beneficiaries follow the 5-year rule (owner died before RBD) or remaining life expectancy (owner died after RBD)
Tax treatment of inherited Roth distributions:
Contributions are always tax-free to withdraw
Earnings are tax-free if the original owner’s first Roth was opened at least 5 tax years prior to the distribution
If the 5-year rule isn’t satisfied, earnings may be taxable until the requirement is met
Because inherited Roth IRA distributions are usually tax-free, many beneficiaries delay withdrawals until late in the permitted period. This maximizes tax-free compounding—your money continues growing without annual tax drag.
Example: Jennifer, age 40, inherits her father’s Roth IRA in 2024. Her father opened the Roth in 2010, satisfying the 5-year requirement years ago. As a non-EDB designated beneficiary, Jennifer must empty the account by December 31, 2034.
Jennifer can leave the entire balance invested for nearly 10 years, let it grow completely tax-free, then withdraw the full amount in 2034 with zero federal income tax. Alternatively, she could take distributions in years when she has capital losses or other deductions to offset, though with Roth accounts, there’s typically no tax reason to accelerate.
Important: Distributions from another Roth IRA that you own cannot satisfy RMDs from an inherited Roth. Each inherited account has its own separate RMD obligations. You also cannot combine an inherited Roth with your own contributory Roth IRA.
Special issues for multiple beneficiaries and multiple inherited IRAs
When an IRA has several beneficiaries, or you inherit from multiple relatives, additional administrative steps ensure the correct rules apply to each account.
Multiple beneficiaries of a single IRA
When multiple individual beneficiaries inherit a single IRA:
Separate inherited IRA accounts should be established by December 31 of the year following the account holder’s death
Each beneficiary can then use their own applicable life-expectancy or 10-year schedule
If separate accounts aren’t set up in time, the payout schedule may default to the oldest beneficiary’s life expectancy—disadvantaging younger beneficiaries
Example: Three siblings—ages 45, 50, and 55—inherit their mother’s IRA equally. If they split into separate accounts by the deadline, each manages distributions based on their own situation and timeline. If they fail to separate the accounts, all three may be stuck using the 55-year-old’s shorter life expectancy factor.
Consolidating multiple inherited IRAs
Beneficiaries can typically consolidate multiple inherited IRAs only if:
They were inherited from the same decedent
They are the same IRA type (traditional with traditional, Roth with Roth)
They are subject to the same distribution rule set
You cannot combine inherited IRAs with your own contributory IRA accounts. Non-spouse beneficiaries cannot roll inherited assets into their own retirement accounts under any circumstances.
Practical tip
If you inherit IRA accounts from multiple family members, keep them separate. Each has its own RMD calculation, beneficiary designation options, and potential different distribution deadlines based on when each original owner died.
Income tax treatment of inherited IRA distributions
Inheriting an IRA can create substantial taxable income—or minimal tax impact—depending on the account type and your distribution strategy.
Traditional inherited IRAs
For inherited traditional IRAs:
Most distributions are taxed as ordinary income to you in the year withdrawn
There is no 10% early-withdrawal penalty on inherited IRA distributions, regardless of your age
If the original account holder made nondeductible contributions, a small portion of each distribution may be non-taxable (this requires careful tracking of basis)
Example tax impact: You inherit a $300,000 traditional IRA and take $30,000 per year. If you’re in the 24% federal bracket, that’s roughly $7,200 in federal taxes annually—plus state taxes in most states. If you wait until year 10 and take $300,000 at once, you might push into the 35% bracket on a significant portion.
Inherited Roth IRAs
For inherited Roth accounts:
Qualified distributions are entirely tax-free, including earnings, once the 5-year rule is met
Non-qualified distributions may have taxable earnings, but contributions always come out tax-free first under ordering rules
The 5-year clock is based on when the original owner opened their first Roth, not when you inherited
Special situations
If the decedent had employer plan funds or annuity contracts rolled into the IRA, special basis or exclusion rules may apply. Review Form 1099-R from the custodian and any tax records the deceased maintained.
Tax planning considerations
Large inherited traditional IRAs can:
Push you into higher tax brackets
Trigger Medicare premium surcharges (IRMAA) if income exceeds thresholds
Reduce eligibility for certain tax credits or deductions
Interact with capital gains from other investments
Coordinating distribution timing with a tax advisor helps minimize these impacts and keep more money in your pocket over the distribution period.
Next steps for IRA beneficiaries
Now that you understand the rules, here’s how to move from knowledge to action.
Your beneficiary checklist
[ ] Confirm the exact date of death and whether the account owner had taken their RMD for that year
[ ] Obtain and review the IRA beneficiary designation form from the custodian
[ ] Identify your beneficiary category (spouse, EDB, non-EDB designated, or non-designated)
[ ] Determine which timing rule applies (life expectancy, 5-year, or 10-year)
[ ] Decide on a distribution strategy balancing taxes, cash-flow needs, and investment goals
[ ] Set up separate inherited IRA accounts if there are multiple beneficiaries
[ ] Calculate your first RMD if required, and set calendar reminders for future deadlines
Act promptly
Contact the IRA custodian’s beneficiary or estate services team as soon as possible. Some choices—like disclaimers or separate account setups—have strict deadlines that, once missed, cannot be undone.
Gather key documents
Before speaking with a tax advisor or custodian, assemble:
Death certificate
Current account statements
Beneficiary designation forms
Estate documents (will, trust instruments if applicable)
Decedent’s prior tax returns showing any IRA basis
Stay current
Beneficiary rules, RMD ages, and IRS interpretations continue to evolve. The IRS issued significant guidance in 2024, and further clarifications are expected. Reviewing your inherited IRA strategy annually—ideally with a qualified tax advisor—helps ensure your approach remains aligned with current law and your personal financial goals.
Inheriting an IRA involves navigating complex rules, but understanding your options puts you in control. Take the time to identify your beneficiary status, know your deadlines, and develop a withdrawal strategy that minimizes taxes while meeting your needs. With careful planning, you can make the most of the remaining assets while honoring the legacy your loved one left behind.