North County San Diego
I inherited my parent's IRA. What is the 10 year rule?
The deadline is probably later than you have been told. The yearly requirement in between is the part almost everyone gets wrong.
The deadline is probably later than you have been told. The yearly requirement in between is the part almost everyone gets wrong.
If you inherited a parent's IRA and the death was after 2019, the account has to be empty by December 31 of the year containing the tenth anniversary of the death. Whether you also have to take something out in each of the years before that depends on a single fact: whether your parent had already started their own required distributions.
If they had, you owe a withdrawal every year as well as the final deadline. If they had not, you can leave it untouched for nine years and empty it in the tenth.
That distinction is the part almost every article gets wrong. The IRS spent four years waiving the penalty while it settled the question. That relief ended, and the yearly requirement has been enforced since 2025.
Nearly every explanation says the account must be emptied "within ten years of death" or "by the tenth anniversary." Both are wrong, and both would have you liquidating the account early and paying tax sooner than you need to.
The regulation sets the deadline as the end of the calendar year that contains the tenth anniversary. So the month your parent died does not matter. Only the year does.
Which is what most articles would have you work from.
The end of the calendar year that contains that anniversary. Nine extra months, and they are usually worth having.
26 CFR 1.401(a)(9)-5(e)(2). The same rule is stated in IRS Publication 590-B.
This applies to deaths after December 31, 2019. If your parent died in 2019 or earlier, none of this reaches you. You are still under the older rules and can stretch withdrawals across your own life expectancy.
This is the question to answer before anything else, because the two answers produce completely different obligations. It is not about your age or your income. It is about where your parent was in their own retirement when they died.
The reasoning behind it is simple once you see it. The law says money already being paid out has to keep coming out at least as rapidly as before. If your parent had started, that clock was already running and your inheritance does not stop it. If they had not started, there is no clock to continue.
When the rules were being finalised, commenters argued that the ten year deadline should be the only requirement. Treasury declined, saying a plain reading of the statute did not support it and nothing suggested Congress intended distributions to stop for up to nine years.
Treasury Decision 10001, published at 89 FR 58886 on July 19, 2024, applying to distribution years beginning on or after January 1, 2025.
If you inherited in 2020 or 2021 and were told there was nothing to do until year ten, you were not misinformed at the time. The rule was genuinely unsettled, and the IRS said each year that it would not charge the penalty for a missed annual withdrawal.
Notice 2022-53.
Notice 2023-54.
Notice 2024-35. No further notice followed.
Two things about that relief are commonly misread, and both matter.
They excused the penalty on the missed yearly withdrawals only. They never moved the ten year deadline. Someone who inherited in 2020 still has to have the account empty by the end of 2030, and the skipped years did not buy more time.
They also were not permanent. There is no notice covering 2025 or later. If your parent died on or after the age at which their own distributions had begun, you have had a real yearly obligation since 2025.
The law calls them eligible designated beneficiaries. They can still spread withdrawals across their own life expectancy, the way everyone could before 2020. Your status is fixed as of the date of death.
With options nobody else has, covered further down.
A child of the person who died, not any minor. Not a grandchild, niece or nephew.
Measured against a strict standard. A Social Security disability determination as of the date of death satisfies it automatically.
Requires certification from a licensed health care practitioner.
Measured by birth dates. This is the category that catches a sibling or a long term partner.
The regulations set the age of majority at the twenty first birthday for this purpose, regardless of what your state says and regardless of whether the child is still in school. At that point the ten year clock starts and the account must be emptied by the end of the year containing the tenth anniversary of that birthday, which in practice is the year they turn 31.
26 CFR 1.401(a)(9)-4(e)(3). An earlier proposal that extended the status to age 26 for a student was dropped from the final rules.
If a beneficiary who was stretching dies before the account is emptied, whoever inherits next gets ten years from that second death.
Most of this page is written for an adult child. If you inherited from your husband or wife the rules are materially different, and the difference is worth money.
A surviving spouse who is the sole beneficiary can treat the account as their own. That ends the inherited account entirely. It becomes your IRA, with your beneficiaries, your timetable, and no ten year anything. You can also roll it into an IRA you already hold. Nobody other than a spouse may do either of those things.
Treating it as your own is usually right, but not always. If you are under 59 and a half and may need the money, leaving it as an inherited account keeps withdrawals free of the early withdrawal tax. Make it your own and that protection goes away.
There is also an election that lets a surviving spouse be treated as the deceased owner for distribution purposes, which can delay the start and lower the annual amount. Parts of it still sit in proposed rather than final regulations, so it is worth advice rather than a form.
If your husband or wife died recently, the account is one of several decisions with deadlines attached, and some of the others matter more. The survivor benefit decision is one of them, and we worked through it in Should I take Social Security at 62 or wait? We would rather talk the rest through than have you act on a web page.
This is the single most expensive error available to you, and it is made by people trying to be organised.
You cannot roll an inherited IRA into your own IRA. The law specifically denies it to anyone who is not the surviving spouse. If you take the money out intending to move it somewhere tidier, it is not a rollover. It is a distribution of the entire account, taxable in full, in that one year, with no sixty day window to put it back.
A parent's IRA arriving as one lump of ordinary income, on top of what you already earn in your fifties or sixties, lands in your highest brackets. The ten year rule exists precisely so you can spread it. Collapsing it into a single year gives away the only real advantage you have.
The correct mechanism is a direct transfer between custodians, with the receiving account still titled in your parent's name for your benefit. The title matters. An account retitled into your own name alone has been distributed, whatever anybody intended.
Where several people inherit one account, each can be treated separately only if the account is actually divided into separate inherited IRAs by December 31 of the year after the death.
If any one beneficiary is not in those five exempt categories, and the account has not been split, the whole group is treated as having no exempt beneficiary. A sibling who qualified because they are disabled, or because they are within ten years of your parent's age, loses the ability to stretch and falls onto the ten year clock with everyone else.
26 CFR 1.401(a)(9)-4(e)(2)(i) and 1.401(a)(9)-8(a)(1). A separate and earlier date, September 30 of the year after death, fixes who the beneficiaries are, which is the deadline that matters if anyone intends to disclaim.
Splitting also lets each of you choose your own withdrawal pattern. One sibling may be at peak earnings and want to wait. Another may have a low income year and want to take more now. Held as one account, you are forced into the same schedule.
Miss a required withdrawal and the tax is 25% of the amount you should have taken. It falls on you, not the account.
Correct it promptly and that drops to 10%. You have to actually take the missed amount and file the return reporting it, both inside a correction window that generally runs about two years but can close sooner if the IRS assesses the tax or issues a notice first.
Where the failure was a reasonable error and you are fixing it, the penalty can be waived outright. It is requested on Form 5329 with a short statement of what happened. People who discover a missed year while reading something like this page are frequently in exactly that position.
IRC 4974(a) and (e). The 25% figure replaced an older 50% penalty for tax years beginning after 2022. Some IRS web pages still show the old number.
The ten year deadline still applies. The yearly requirement never does.
The reason is structural. A Roth owner never had to take distributions in their lifetime, so they can never have died after starting them. For this purpose the rules treat every Roth owner as having died before that point, which puts you permanently in the easier of the two cases above.
You can leave an inherited Roth completely alone for nine years, let it grow, and take the whole thing in year ten. Distributions after the owner's death are qualified, so in the normal case nothing is taxable.
There is a five year holding period that governs whether the growth comes out tax free. If your parent opened their first Roth very recently, ask before assuming the whole withdrawal is free of tax.
Inherited shares of stock get their value reset at death. A retirement account does not. The law excludes it specifically, so every dollar that was going to be taxable to your parent is taxable to you.
Not capital gains. It stacks on top of your salary at your highest rate, which is why the order and size of withdrawals across the ten years is the whole game.
The 10% additional tax for withdrawals before 59 and a half does not apply to a beneficiary. Your age is irrelevant to it.
Put those three together and the planning problem is clear. You have a fixed amount of ordinary income that must be recognised inside a fixed window, and you control the timing. That is it. Taking an equal tenth each year is the default people fall into, and it is rarely the best answer, particularly if you plan to retire during those ten years.
Deciding how much ordinary income to accept in a given year is the same problem we worked through from the other direction in How much should I convert to a Roth this year? The arithmetic of filling a bracket without spilling into the next one is identical.
The line only matters against your own figures. Our planning tool projects your income year by year, so you can see which years sit under it, which do not, and what it costs either way. Run my numbers
The Retirement Readiness Check is an interactive planning tool provided by MoneyGuide. Results are illustrative estimates based on the information you enter and on assumptions used by the software provider. They will vary with those assumptions, do not constitute a complete financial plan, and are not a prediction or guarantee of any outcome. An adviser must review your complete circumstances before providing any recommendation.
Worth connecting to what you just read: the year you claim Social Security changes where your conversion ceilings sit. A larger benefit is more income. Half of it counts toward the threshold that determines how much of your Social Security is taxable. Starting earlier means a smaller benefit but more years of it, and usually more pressure on your IRA in the meantime. We cover that in detail on do I pay taxes on Social Security?
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For most people who inherit an IRA from someone who died after 2019, the entire account must be withdrawn by December 31 of the calendar year containing the tenth anniversary of the death. It is not ten years from the date of death. A parent who died in March 2021 gives a deadline of December 31, 2031.
Only if the original owner had already reached the age at which their own required distributions began. In that case you must take an annual amount in years one through nine and still empty the account by the end of the tenth year. If the owner died before that point, nothing is required until the tenth year. The IRS waived the penalty on those annual amounts for 2021 through 2024, and began enforcing the requirement in 2025.
No. Only a surviving spouse may do that. For anyone else the law denies rollover treatment, so taking possession of the money is a full distribution of the account, taxable in that one year, and it cannot be reversed. To move an inherited IRA to a different custodian, use a direct trustee to trustee transfer and keep the account titled in the deceased owner's name for your benefit.
Five categories, fixed as of the date of death: the surviving spouse, a minor child of the account owner, someone disabled, someone chronically ill, and anyone not more than ten years younger than the owner. These are called eligible designated beneficiaries and they may still spread withdrawals over their own life expectancy. A minor child's exemption ends at the twenty first birthday, after which the ten year clock begins.
25% of the amount you should have taken, charged to you rather than the account. It drops to 10% if you take the missed amount and file the reporting return within the correction window, which generally runs about two years but can end sooner. Where the failure was a reasonable error and is being corrected, the penalty can be waived entirely by request on Form 5329.
Withdrawals from an inherited traditional IRA are ordinary income to you in the year you take them, taxed at your own rates on top of your other income. There is no step up in basis for a retirement account, so nothing is sheltered by the death itself. The 10% early withdrawal tax does not apply to a beneficiary regardless of age.
Yes, the account must still be emptied by the end of the tenth year, but no annual withdrawal is ever required in the years before that. Because a Roth owner never had to take lifetime distributions, the rules treat them as having died before that point, which removes the annual requirement. Distributions after the owner's death are normally tax free, subject to a five year holding period on the account.
Divide it into separate inherited IRAs by December 31 of the year following the death. If you do not, and any one beneficiary is not in the exempt categories, the whole group is treated as having no exempt beneficiary, so a sibling who could have stretched withdrawals loses that ability. Splitting also lets each beneficiary choose their own withdrawal timing instead of sharing one schedule.