Inherited IRA Withdrawal Rules: Beneficiary Types, RMDs, and Taxes

If you inherited an IRA, when and how you can take the money out depends on who you are to the deceased and when they died. Under the inherited IRA withdrawal rules created by the SECURE Act, most non-spouse beneficiaries who inherited on or after January 1, 2020 must empty the account within 10 years of the owner’s death.¹ Surviving spouses have more flexible choices, a small group of “eligible designated beneficiaries” can still stretch withdrawals over their lifetimes, and estates or charities follow a separate five-year or life-expectancy schedule. Traditional IRA withdrawals are taxed as ordinary income; qualified Roth withdrawals are tax-free. The 10% early withdrawal penalty does not apply to any inherited IRA.

Which Beneficiary Category You Fall Into

The IRS sorts inherited IRA beneficiaries into four groups, and your withdrawal schedule follows from which one you’re in.

Surviving spouse. Widest set of options. A spouse can roll the account into their own IRA, keep it titled as inherited, or use a SECURE 2.0 election to be treated as the deceased owner for distribution purposes.

Eligible designated beneficiary (EDB). Federal law gives this status to a short list of individuals:²

The account owner’s own minor children, until age 21 (not grandchildren)
Individuals who are disabled
Individuals who are chronically ill
Anyone not more than 10 years younger than the deceased owner

EDBs can spread withdrawals over their own life expectancy instead of squeezing them into 10 years.

Non-eligible designated beneficiary (NEDB). Every other individual beneficiary, including adult children, siblings, and friends. NEDBs are subject to the 10-year rule with no life-expectancy stretch.

Non-designated beneficiary. When an estate, charity, or non-qualifying trust inherits, the 10-year rule does not apply. These beneficiaries follow the older five-year or owner-life-expectancy framework.³

One boundary worth naming up front: if the original owner died before January 1, 2020, the old stretch rules still govern. Everything below about the 10-year rule applies to deaths on or after that date.¹

The 10-Year Rule for Non-Spouse Beneficiaries

For an NEDB, the entire inherited account must be distributed by December 31 of the year containing the 10th anniversary of the owner’s death.⁴ If the owner died in 2024, the account must be empty by the end of 2034.

What happens inside those 10 years depends on whether the owner had already reached their “required beginning date” (RBD) — the April 1 following the year they hit RMD age. Under current law, RMD age is 73 for owners born 1951 through 1959 and 75 for those born in 1960 or later.⁵

If the Owner Died Before Their Required Beginning Date

No annual withdrawals are required during the first nine years. You can take as much or as little as you want in any year, as long as the balance reaches zero by the end of year 10.⁴

Waiting until the final year for one lump sum is allowed but usually costly. Concentrating an entire IRA balance into a single tax year can push you into a higher bracket. Spreading withdrawals across the full window typically produces a better result.

If the Owner Died On or After Their Required Beginning Date

This is where the rule tightens. You must take annual required minimum distributions in years one through nine, calculated using your own life expectancy from the IRS Single Life Expectancy Table, and the remaining balance still has to come out by the end of year 10.¹

The IRS waived penalties for missed annual distributions from 2021 through 2024 while finalizing the regulations.⁶ The final rules took effect January 1, 2025. The waiver is over. If this describes your situation, you should be taking annual distributions now.

Options for a Surviving Spouse

A surviving spouse has three paths, and the right one turns on age and cash-flow needs.

Roll It Into Your Own IRA

You can retitle the inherited account in your own name or roll the assets into an existing IRA of yours.⁴ Once it’s your own IRA, RMDs don’t start until you reach your own RMD age, and you can keep contributing. The catch: withdrawals before age 59½ are subject to the standard 10% early withdrawal penalty. If you’re younger than 59½ and might need the money, a rollover can be expensive.

Keep It Titled as an Inherited IRA

Distributions from an inherited IRA are exempt from the 10% early withdrawal penalty regardless of your age.⁷ Required distributions can generally be delayed until the date the deceased owner would have reached their RBD, so you can pull money out penalty-free while deferring anything you don’t need.

This isn’t a locked-in election. A spouse who starts with an inherited account can later roll it into their own IRA, for example after turning 59½. The reverse doesn’t work: once you roll inherited funds into your own IRA, you cannot convert them back.⁴

Elect to Be Treated as the Deceased Owner

Starting in 2024, SECURE 2.0 added a third option. A surviving spouse can elect to be treated as the deceased owner for distribution purposes, taking RMDs over their own life expectancy using the more favorable Uniform Lifetime Table while keeping the account as inherited. When the owner died before their RBD, this election happens automatically as long as the spouse keeps the account inherited.

The Life-Expectancy Stretch for EDBs

EDBs are the only non-spouse individuals who can still stretch inherited IRA withdrawals across their own lifetime. Annual distributions must begin by December 31 of the year after the owner’s death, calculated by dividing the prior year-end balance by the beneficiary’s factor from the IRS Single Life Expectancy Table.⁴

An EDB can also elect the 10-year rule instead of the life expectancy method if the owner died before their RBD.⁴

Minor Children of the Owner

Only the owner’s own children qualify, and the cutoff is age 21 rather than 18.² Grandchildren and stepchildren don’t. While the child is under 21, they can use the life-expectancy method. Once they turn 21, EDB status ends and a fresh 10-year clock starts. A child who inherits at age 5 can therefore stretch distributions for up to 26 years: 16 years of life-expectancy payments followed by the 10-year window.

When an Estate, Charity, or Non-Qualifying Trust Inherits

The SECURE Act’s 10-year rule does not apply to entity beneficiaries.³ If the owner died before their RBD, the entity must empty the account by December 31 of the fifth year after the owner’s death, with no required withdrawals before then. If the owner died on or after their RBD, the entity takes annual distributions based on the deceased owner’s remaining life expectancy, which usually stretches longer than five years because that factor decreases by one each year.

What Happens if You Die Before Emptying the Account

When a beneficiary dies mid-window, their own beneficiary — the successor beneficiary — inherits the balance, and the successor’s timeline depends on the original beneficiary’s status.

If the original beneficiary was an NEDB on the 10-year rule, the successor doesn’t get a fresh 10 years. They step into the original timeline, measured from the account owner’s death.⁸ Owner dies in 2021, first beneficiary dies in 2026, successor has until the end of 2031.

If the original beneficiary was an EDB using life expectancy, the successor gets a new 10-year period measured from the EDB’s death.⁸

How Inherited IRA Withdrawals Are Taxed

Traditional Inherited IRAs

Withdrawals from an inherited traditional IRA are taxed as ordinary income in the year you receive them. The amount is added to your adjusted gross income and taxed at your marginal rate, the same as wages. The custodian reports each distribution on Form 1099-R.⁹

Roth Inherited IRAs

Qualified distributions from an inherited Roth IRA are entirely tax-free, including earnings. A distribution qualifies if the original owner made their first Roth contribution at least five tax years before the withdrawal.³ The clock runs from the owner’s first contribution, not from the date of inheritance, so most inherited Roth IRAs already meet the test. If the five years haven’t been satisfied, the owner’s original contributions still come out tax-free, but earnings are taxable.

Roth beneficiaries follow the same 10-year or life-expectancy schedules as traditional IRA beneficiaries. The distributions may be tax-free, but the deadlines are identical.

No 10% Early Withdrawal Penalty

Distributions from any inherited IRA are exempt from the 10% additional tax that normally applies to withdrawals before age 59½, regardless of your age.⁷ The exemption only lasts while the account remains titled as inherited. A surviving spouse who rolls the funds into their own IRA loses it.

What It Costs to Miss a Required Distribution

Missing an RMD triggers a 25% excise tax on the shortfall — the difference between what you should have withdrawn and what you actually took.¹⁰ SECURE 2.0 cut this from the previous 50%, but 25% is still steep.

The penalty drops to 10% if you correct the miss within a defined window. That window runs from the date the tax is imposed until the earlier of an IRS notice of deficiency, an IRS assessment, or the last day of the second tax year after the year you missed the distribution.¹⁰ A 2026 miss generally has to be corrected by the end of 2028.

You report and pay the excise tax on Form 5329.¹¹ If you qualify for the reduced rate, you still file the form but calculate at 10%. The IRS won’t tell you when you’ve missed a distribution. Tracking your deadlines and amounts is on you.

1
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
2
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
3
Internal Revenue Service. Retirement Topics – Beneficiary
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Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
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Congressional Research Service. Required Minimum Distribution (RMD) Rules for Original Owners
6
Internal Revenue Service. Notice 2024-35 – Certain Required Minimum Distributions for 2024
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Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
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Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
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Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
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Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. About Form 5329, Additional Taxes on Qualified Plans