Inherited IRA Rules: How Much You Must Withdraw and When

The Short Answer

If you inherited an IRA from someone who died in 2020 or later, you almost certainly must empty the account within 10 years of their death — and depending on the original owner’s age, you may also need to take withdrawals every single year during that window, not just at the end. Spouses, minor children, disabled or chronically ill beneficiaries, and people close in age to the deceased get more flexible options. Missing a required withdrawal can trigger an IRS penalty, so knowing which category you fall into matters.

Why the Rules Changed

Before 2020, most people who inherited an IRA could “stretch” withdrawals over their own life expectancy — sometimes decades. A 35-year-old who inherited a parent’s IRA might take small required minimum distributions (RMDs) for 45+ years, letting the account keep growing tax-deferred the whole time.

Congress ended that for most heirs with the SECURE Act, effective for deaths on or after January 1, 2020. The trade-off: Congress also raised the age people must start their own RMDs (now 73 for most retirees, rising to 75 for those born in 1960 or later under the SECURE 2.0 Act) and made other retirement-savings changes. For inherited accounts, the stretch strategy survives only for a narrower group called “eligible designated beneficiaries.”

This matters because the rule determines two separate things: when the account must be fully emptied, and whether you owe annual withdrawals along the way. Getting either wrong can mean an unnecessary tax bill or an IRS penalty.

The Two Big Categories of Beneficiary

Eligible designated beneficiaries (EDBs) still get to stretch distributions over their own life expectancy, similar to the old rules. This group includes:

• The surviving spouse
• A minor child of the original account owner (only until they reach age 21, which the IRS’s 2024 final regulations fix as the age of majority regardless of state law — then the 10-year clock starts)
• A person who is disabled, as defined by IRS rules
• A person who is chronically ill, as defined by IRS rules
• Anyone not more than 10 years younger than the deceased account owner

Everyone else — “non-eligible designated beneficiaries” — is subject to the 10-year rule. This covers most adult children, grandchildren, siblings, and friends named as beneficiaries. The entire inherited IRA must be withdrawn by December 31 of the year containing the 10th anniversary of the original owner’s death. There’s no required schedule for how you space out withdrawals within those 10 years — as long as the account hits zero by the deadline — with one major exception, explained below.

There’s also a third bucket: non-designated beneficiaries, meaning an estate, most charities, or many trusts that don’t qualify as “see-through” trusts. These follow older, less generous rules — either a five-year payout (if the owner died before their required beginning date) or distributions based on the deceased’s remaining life expectancy.

The Twist: Annual RMDs Inside the 10-Year Window

This is the part that trips people up. For years after the SECURE Act passed, it wasn’t clear whether non-eligible designated beneficiaries had to take RMDs every year during the 10-year period, or could simply wait and empty the account in year 10. The IRS settled this with final regulations issued in July 2024.

The rule now works like this:

• If the original owner died on or after their required beginning date (the date they were already required to start taking their own RMDs), the beneficiary must take annual RMDs in years 1 through 9, based on their own life expectancy, and then withdraw whatever remains by the end of year 10.
• If the original owner died before their required beginning date, the beneficiary can skip annual withdrawals entirely and simply empty the account by the end of year 10 — no yearly minimum required.

Because this rule wasn’t finalized until 2024, the IRS waived penalties for beneficiaries who missed annual RMDs for 2021 through 2024 under Notice 2024-35 and earlier notices. Starting with the 2025 tax year, that grace period is over — beneficiaries subject to annual RMDs are expected to take them on schedule.

Quick Reference: Who Owes What

Rules for trusts named as beneficiaries are especially technical and depend on the trust’s structure. If an IRA names a trust, it’s worth reviewing the details with a tax professional and checking IRS Publication 590-B for the specific “see-through trust” requirements.

Spouses Get More Choices

A surviving spouse has options no other beneficiary gets:

1. Roll the inherited IRA into their own IRA — the account is then treated as if it were always theirs, using their own RMD age and rules.
2. Remain a beneficiary and take distributions based on their own single life expectancy, recalculated each year, which usually produces smaller required withdrawals than a non-spouse would owe.
3. Under SECURE 2.0, a surviving spouse can also elect to be treated as if they were the deceased owner for RMD purposes in some cases — useful when the deceased spouse was younger and this delays the start of required withdrawals.

Spouses often benefit from rolling the account into their own name once they no longer need the flexibility of remaining a beneficiary, since it simplifies future RMD calculations. There’s generally no strict deadline forcing an immediate decision, but the choice affects how RMDs are calculated for every year after.

A Worked Example

Say your father died in March 2023 at age 76. He had already been taking his own RMDs (his required beginning date, given his birth year, had passed). You are 45 years old and not disabled or chronically ill — so you’re a non-eligible designated beneficiary subject to the 10-year rule.

Because your father died after his required beginning date, you owe annual RMDs for years 1 through 9, calculated using your own single life expectancy factor from the IRS’s Single Life Expectancy Table, then the account must be fully emptied by December 31, 2033 (the end of the 10th year after his 2023 death).

If the inherited IRA held $400,000 at the end of 2023, your first RMD (for 2024) might be roughly $400,000 divided by your life-expectancy factor — for a 46-year-old, that factor is 40.0 under the current IRS Single Life Expectancy Table, producing an RMD of $10,000. Each subsequent year, you recalculate using the account’s new balance and a shortened life-expectancy factor. By year 10, whatever remains — regardless of how the calculations shook out — must come out entirely.

Compare that to a scenario where your father died at age 68, before his required beginning date. In that case, you would owe no annual RMDs at all — you could leave the money invested and simply withdraw the full $400,000-plus in any pattern you like, as long as it’s zero by December 31, 2033.

Taxes and Penalties to Know

Withdrawals from a traditional inherited IRA are taxed as ordinary income in the year you take them, just like the original owner’s withdrawals would have been. Inherited Roth IRAs work differently — qualified withdrawals are typically tax-free, though the same 10-year emptying deadline usually applies to non-eligible designated beneficiaries.

If you miss a required annual RMD, the IRS charges an excise tax under Internal Revenue Code Section 4974 — 25% of the amount you should have withdrawn but didn’t. That penalty drops to 10% if you correct the mistake within two years, a reduction added by SECURE 2.0. You report and calculate this on IRS Form 5329.

Where the Rules Can Vary

The specifics of trust-as-beneficiary situations, multiple-beneficiary accounts, and how state income tax treats inherited IRA withdrawals can all differ by circumstance and by state. Always check the custodian’s own beneficiary distribution rules and IRS Publication 590-B for the current year, and consider consulting a tax professional before deciding on a withdrawal schedule — a single miscalculation can compound over a 10-year window.

Do I have to take money out of an inherited IRA every year?

It depends on when the original owner died relative to their required beginning date for RMDs. If they had already started their own RMDs, most non-spouse beneficiaries under the 10-year rule must take annual withdrawals in years 1 through 9, then empty the account in year 10. If the owner died before that date, no annual withdrawals are required — you just need to empty the account within 10 years.

What happens if I don’t withdraw the full balance by the 10-year deadline?

The IRS can charge an excise tax on any amount that should have been withdrawn but wasn’t — 25% of the shortfall, reduced to 10% if you fix it within two years. You’d calculate this using IRS Form 5329.

Do the 10-year rules apply to inherited Roth IRAs too?

Yes, for most non-spouse beneficiaries the same 10-year emptying deadline applies to inherited Roth IRAs. The difference is that qualified Roth withdrawals are generally tax-free, and because the original owner wasn’t subject to RMDs during their lifetime, beneficiaries typically aren’t required to take annual withdrawals within the 10-year window — because a Roth IRA owner is always treated as having died before their required beginning date, a point the IRS’s 2024 final regulations confirmed.

Sources

• IRS.gov, “Retirement Topics – Beneficiary” (https://www.irs.gov/retirement-plans/retirement-topics-beneficiary)
• IRS.gov, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) (https://www.irs.gov/publications/p590b)
• IRS.gov, “Retirement Plan and IRA Required Minimum Distributions FAQs” (https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs)
• IRS.gov, Form 5329 and Instructions (https://www.irs.gov/forms-pubs/about-form-5329)
• IRS.gov, News Releases on SECURE Act and SECURE 2.0 Act guidance (https://www.irs.gov/newsroom)

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