Leaving an IRA to Your Children: How the 10-Year Rule Changes the Math
Short answer: If you die in 2020 or later, most adult children who inherit your IRA must empty it by the end of the 10th year after your death (IRS, checked October 14, 2026). The withdrawals are taxed at their rates, often in their peak earning years. An inherited Roth IRA follows the same 10-year deadline, but withdrawals are generally tax-free. Whether converting now helps your family comes down to one comparison: your tax rate on a conversion today versus your children's likely rate later.
The stretch IRA is gone for most heirs
Under the old rules, a child who inherited an IRA could spread withdrawals over their own lifetime. That was the "stretch IRA": small yearly withdrawals, small yearly tax, decades of growth.
The SECURE Act of 2019 ended that for most heirs when the owner dies after December 31, 2019. Now a beneficiary who is not an "eligible designated beneficiary" must empty the account by December 31 of the year that holds the 10th anniversary of the death (IRS Pub. 590-B). For a death in 2025, that is December 31, 2035.
Eligible designated beneficiaries can still stretch: a surviving spouse, the owner's minor child (until adulthood), a disabled or chronically ill person, or someone not more than 10 years younger than the owner (IRS). Most adult children are not on that list.
Dying before or after your required beginning date
The timing of your death changes your children's yearly rules. Your required beginning date is the April 1 deadline for your own first required minimum distribution (RMD).
| If the owner dies | What a non-spouse adult heir must do |
|---|---|
| Before the required beginning date | Empty by the end of year 10. No withdrawal is required before year 10. |
| On or after the required beginning date | Take a yearly RMD in years 1 to 9 and empty by the end of year 10. |
The IRS did not enforce the yearly withdrawals from 2021 to 2024, and its final rules apply starting in 2025 (IRS Notice 2024-35; IRS Pub. 590-B). So the slow, small-withdrawal approach many heirs used is no longer the default.
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Carol and Jim's $1,000,000 question
This is a hypothetical example using 2026 federal tax figures. Carol and Jim are both 63, retired, and have not claimed Social Security yet. They live on $40,000 a year from their $1,000,000 traditional IRA. They have two married children. One household earns $150,000 a year, the other $200,000.
Path 1: leave the IRA as it is. Each child inherits $500,000. We assume the account earns 5% a year and each child withdraws the same amount every year so it is empty after 10 years. That is $64,752 a year each, or $1,295,046 for both children over 10 years.
We figured each child's added federal tax by comparing their joint return with and without the withdrawal, using the 2026 standard deduction of $32,200 and 2026 brackets (IRS).
| Hypothetical, 2026 federal rules | Child earning $150,000 | Child earning $200,000 |
|---|---|---|
| Yearly inherited IRA withdrawal | $64,752 | $64,752 |
| Added federal tax per year | $14,246 | $14,669 |
| Federal tax per inherited dollar | 22.0 cents | 22.7 cents |
| Added federal tax over 10 years | $142,460 | $146,690 |
| With an assumed 5% state income tax | 27.0 cents per dollar | 27.7 cents per dollar |
Together, the children would pay $289,150 in added federal tax over 10 years ($142,460 plus $146,690), plus $64,752 more at an assumed 5% state rate. State rates vary, and some states have no income tax. If Carol and Jim die after their required beginning date, the children also face yearly minimums, though at these withdrawal amounts the minimums are already covered.
Path 2: convert some of it now. If Carol and Jim convert $100,000 to a Roth IRA this year, their federal tax goes from $780 to $13,140. That is $12,360 of added tax, or 12.4 cents per converted dollar, even though the top part of the conversion is taxed in the 22% bracket.
| Parents convert $100,000 now | Children inherit traditional IRA | |
|---|---|---|
| Who pays | Carol and Jim | The two children |
| Federal tax per dollar | 12.4 cents (top bracket 22%) | 22.0 to 22.7 cents (top bracket 22% to 24%) |
| Shows up on this year's return | Yes: $12,360 | No: $289,150 over 10 years, later |
That is the number that does not show up on this year's return. In this hypothetical, it is $12,360 now for one year's conversion versus $289,150 later, spread across the children's returns, for the whole account.
These are not perfect apples to apples. Converting the whole $1,000,000 at this pace would take about 10 years, and some of those years would be taxed higher. The children's incomes, the state they live in, and tax law can all change. A tax professional can model the full path for your family.
The Roth defense: how it works and when it often fits
The idea is simple. You pay the tax on the conversion now, at your rate, so your children do not pay it later at theirs.
- Heirs still face the 10-year deadline. An inherited Roth IRA must be emptied within 10 years too, but the IRS treats a Roth owner as dying before the required beginning date, so there are no yearly minimums in years 1 to 9 (Treas. Reg. 1.408A-6; IRS Pub. 590-B).
- Withdrawals are generally tax-free. Distributions to a beneficiary are qualified once the 5-year period since the owner's first Roth contribution has passed (IRS Pub. 590-B).
- Lower-bracket years are the usual window. The gap between retirement and RMD age, roughly 60 to the early 70s, is often when income is lowest. That is common, not a rule.
Run the numbers year by year with the Roth conversion calculator and the Roth conversion checklist.
What can make a conversion cost more than it looks
Medicare premiums two years later. Medicare's income-related monthly adjustment amount (IRMAA) uses your income from two years earlier. In 2026, it starts when modified adjusted gross income (MAGI) is over $218,000 for a joint return, using 2024 income (CMS). A conversion at 63 or later can raise premiums at 65 or later. Carol and Jim's $140,000 MAGI stays below that line. See the IRMAA two-year lookback.
Social Security taxes. After you claim benefits, conversion income can make more of your benefit taxable. See how much Social Security is taxable.
Paying the tax from the IRA. If the tax comes out of the converted money, less ends up in the Roth. Many people model paying it from savings instead.
Which account to spend first
Not every account is taxed the same way at death. A taxable brokerage account generally gets a new cost basis equal to its value on the date of death (IRS Pub. 551), so heirs may owe little capital gains tax on growth during your life. Traditional IRA money does not get that reset (26 U.S.C. 1014(c)). Your children pay income tax as they withdraw it.
That is why the order you spend from matters. Spending some IRA money first, in low-bracket years, and leaving taxable accounts to heirs can reduce the family's total tax. The withdrawal sequencer compares orders.
If you give to charity
A qualified charitable distribution (QCD) sends IRA money straight to a charity from age 70½, up to $111,000 in 2026 (IRS). It counts toward your RMD and is not taxable income. A charity named as an IRA beneficiary also pays no income tax on what it receives, so some families leave traditional IRA dollars to charity and other assets to children. See how QCDs work.
How to decide, step by step
- List each account by type: traditional, Roth, and taxable. Note the balance of each.
- Check that every beneficiary form is current, including backup beneficiaries.
- Estimate your children's tax bracket in their peak earning years, and the state they live in.
- Estimate your own bracket for each year until RMD age, including Medicare and Social Security effects.
- If your rate is lower than theirs, model partial conversions that stay under the IRMAA lines and your chosen bracket.
- Decide which accounts to spend first, and review the plan every year.
This is education, not tax or legal advice. A tax professional can model your family's numbers.
These numbers change every year
The IRMAA brackets, the standard deduction and the senior deduction are all adjusted annually, and the 2027 figures are published late in 2026. The one exception is the Social Security taxation thresholds, which have not moved since 1983 and are not expected to.
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Model a Roth conversion year by year
See how much you could convert in a year and what it adds to your tax bill.
Open the Roth conversion calculator →Sources
- IRS: Retirement plan and IRA required minimum distributions FAQs (checked October 14, 2026)
- IRS: Publication 590-B (2025), 10-year rule and Roth IRA distributions (checked October 14, 2026)
- IRS: Retirement topics, beneficiary (checked October 14, 2026)
- IRS: Notice 2024-35, certain required minimum distributions for 2024 (checked October 14, 2026)
- IRS: Tax inflation adjustments for tax year 2026 (checked October 14, 2026)
- CMS: 2026 Medicare Parts A and B premiums and deductibles (checked October 14, 2026)
- IRS: Publication 551 (12/2025), Basis of Assets, inherited property (checked October 14, 2026)
- Cornell LII: 26 U.S.C. 1014 and Treas. Reg. 1.408A-6 (checked October 14, 2026)
Frequently asked questions
Is the stretch IRA dead?
For most heirs, yes. If the owner died after 2019, most non-spouse beneficiaries must empty an inherited IRA within 10 years. Spouses, minor children of the owner, disabled or chronically ill heirs, and heirs not more than 10 years younger can still stretch.
What is the SECURE Act 10-year rule?
Most beneficiaries who are not eligible designated beneficiaries must withdraw the entire inherited account by December 31 of the year that contains the 10th anniversary of the owner's death.
How can I reduce the taxes my children pay on my IRA?
Common approaches are partial Roth conversions in lower-income years, spending IRA money before taxable accounts, and giving to charity from the IRA. Which one fits depends on your tax rate compared with your children's.
Do my children pay tax on an inherited Roth IRA?
Generally no, as long as the Roth has met the 5-year rule. They still must empty it within 10 years, but they have no yearly minimums before then.
Does an IRA get a step-up in basis at death?
No. A traditional IRA does not get a step-up in basis, so heirs pay income tax on withdrawals. Taxable brokerage accounts generally do get a step-up to the value on the date of death.
Want to run these numbers for your own situation?
The Retirement Literacy Foundation runs free retirement classes on Social Security timing, taxes in retirement, and how to turn savings into income. No products are sold at our classes.
The Retirement Literacy Foundation is a 501(c)(3) nonprofit. This guide is general education, not individualized tax, legal or investment advice. Rules change with legislation and IRS and SSA guidance, and the right move depends on your situation. Check anything you plan to act on with SSA, the IRS or a qualified tax professional.
Hans Goldstein, EA
Founder & Executive Director · Retirement Literacy Foundation, a 501(c)(3) non-profit
Admitted to practice before the IRS
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