You Have Ten Years, and the Timing Is the Whole Decision
Inheriting a retirement account used to mean small withdrawals stretched across your lifetime. For most non-spouse beneficiaries that is gone. What replaced it is a ten-year window with almost no rules about pacing inside it — which sounds like freedom and is really a tax decision handed to you without instructions.
- The answer:: The full balance must be out by 31 December of the tenth year following the year of death. A traditional inherited IRA is ordinary income to you as it comes out.
- Who escapes it:: A surviving spouse, a minor child of the deceased, a disabled or chronically ill beneficiary, and anyone not more than ten years younger — these eligible designated beneficiaries keep a life-expectancy schedule.
- The annual-RMD wrinkle:: If the original owner had already started RMDs, you must also take an annual distribution in years one through nine, not just clear the balance by year ten.
- The real cost:: Ten years of your own earnings decide the bill. Emptying it in a single year can push the whole balance through your top bracket.
Where the AI summary above gets this wrong
"If you inherit an IRA you have ten years to take the money out, so just withdraw it in the tenth year."
That's surface-true. Here's what it misses:
- The tenth-year lump sum is usually the worst option — Taking a decade of deferred growth as one distribution stacks it on top of one year of your salary. Ten roughly equal withdrawals usually cost far less tax than one large one, because each stays lower in the brackets.
- Some beneficiaries still owe annual RMDs — The advice to wait assumes nothing is due before year ten. If the original owner had reached their required beginning date, annual distributions are required in years one through nine as well, and skipping them is a penalty rather than a deferral.
- A Roth inherited IRA reverses the advice — An inherited Roth is also subject to the ten-year rule, but qualified withdrawals are tax-free. There, waiting until year ten is genuinely right — the account keeps growing tax-free for the whole decade with no tax cost to delay.
01 What replaced the stretch IRA
For deaths after 2019, most non-spouse beneficiaries inherit under a ten-year rule: the account must be fully distributed by 31 December of the tenth year following the year of death. The old approach, where a beneficiary took small distributions over their own life expectancy, is no longer available to them.
The change was a revenue measure, and it lands hardest on beneficiaries in their peak earning years. A 52-year-old inheriting a large traditional IRA now has to move the entire balance through their tax return during the decade their income is highest.
What did not change is the character of the money. A traditional inherited IRA is ordinary income as it comes out, there is no early-withdrawal penalty at any age, and an inherited Roth remains tax-free on qualified distributions. The ten-year clock applies to both.
Source: Required minimum distributions for IRA beneficiaries
02 Who is exempt, and who only thinks they are
Five categories of eligible designated beneficiary keep a life-expectancy schedule: a surviving spouse, a minor child of the deceased, a disabled beneficiary, a chronically ill beneficiary, and anyone not more than ten years younger than the original owner — which typically covers a sibling or a partner.
Two of those are narrower than they look. The minor-child exception applies to the owner's own children, not grandchildren, and it ends at the age of majority, at which point the ten-year clock starts running anyway. The disability and chronic-illness categories use statutory definitions that are stricter than the everyday meaning of the words.
A surviving spouse has the widest set of options, including treating the IRA as their own — which is why spousal inheritance is a different decision entirely, and why it sits alongside the rest of the annual distribution rules.
Source: Publication 590-B, Distributions from Individual Retirement Arrangements
03 Pacing it, and the trap in years one to nine
Inside the window the pacing is mostly yours, and that is where the money is. Ten roughly level withdrawals keep each year's addition low in your brackets. One withdrawal in year ten stacks a decade of growth onto a single return, and can push the top of it several brackets higher than it needed to go.
There is one hard constraint. If the original owner had already reached their required beginning date, annual distributions must continue in years one through nine as well as the balance clearing by year ten. If they died before that date, no annual distributions are required and only the ten-year deadline binds.
The other planning variable is your own income shape. A gap year — redundancy, a sabbatical, the years between retiring and claiming Social Security — is the cheapest year to take a larger slice, for exactly the reason those years suit conversions.
Shows: the annual tax cost of spreading an inherited account evenly, and how concentrating it into fewer years raises the bill. Ignores: growth inside the account, the bracket creep a large withdrawal causes, IRMAA, and state tax.
Source: Retirement plan and IRA required minimum distributions FAQs
The families I have watched handle this badly did not make a bad decision — they made no decision, and year ten arrived. The account sat untouched because touching it meant paying tax, which feels like a loss, and then the whole balance came out at once into a single tax year. The uncomfortable truth is that with a traditional inherited IRA there is no version where you avoid the tax. There is only a version where you choose the brackets it passes through, and that choice expires quietly.
FAQ
Do I have to take money out of an inherited IRA every year?
That turns on whether the original owner had started their own RMDs. If they had, you must take an annual distribution in years one through nine and clear the balance by year ten. If they died before their required beginning date, only the ten-year deadline applies and the pacing inside it is yours.
Is an inherited Roth IRA also subject to the ten-year rule?
Yes, but the tax consequence is different. The account must still be emptied within ten years, and qualified withdrawals remain tax-free. Because delay costs nothing in tax, waiting until year ten is usually the right answer for an inherited Roth and the wrong one for a traditional account.
Is there a penalty for withdrawing from an inherited IRA before 59½?
No. The 10% early-withdrawal penalty does not apply to inherited IRA distributions at any age. A traditional inherited IRA is still ordinary income, but your age is not part of the calculation.
Sources
Regulator references
- Required minimum distributions for IRA beneficiaries · Internal Revenue Service · 2025Which beneficiaries fall under the 10-year rule and which keep a life expectancy schedule.Last verified: 2026-09-07
- Publication 590-B, Distributions from Individual Retirement Arrangements · Internal Revenue Service · 2025The eligible designated beneficiary categories and how inherited accounts are taxed.Last verified: 2026-09-07
- Retirement plan and IRA required minimum distributions FAQs · Internal Revenue Service · 2025How annual RMDs inside the 10-year window are determined.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.