If a parent had already started required minimum distributions, an adult child must take yearly withdrawals in years 1 to 9 and empty the account by year 10; the IRS waived the penalty for 2021 to 2024 and the final rules apply from January 1, 2025 (IRS Notice 2024-35, April 2024; final regulations, July 19, 2024).
The rule, and the date that changed
Most adult children who inherit an individual retirement account (IRA) from a parent must empty it by the end of the 10th year after the year of death (IRS Publication 590-B, 2025, checked October 14, 2026). The full rule, and who is exempt, is on our 10-year rule guide. This page is about the steps around it.
The detail many families miss: if the parent had already reached the required beginning date for required minimum distributions (RMDs), the child must also take a withdrawal every year in years 1 to 9. The final regulations, published July 19, 2024, kept that annual requirement and apply to calendar years beginning on or after January 1, 2025 (Treasury and IRS, final regulations, 89 FR 58886, July 19, 2024).
The IRS did not charge the missed-RMD tax for these annual amounts for 2021 through 2024 (IRS Notice 2024-35, April 2024, which also describes the earlier relief). From 2025 on, a missed amount can cost 25% of the shortfall, cut to 10% if corrected in time (IRS Publication 590-B, 2025).
What the parent can do now
- Name a beneficiary on every account. The form, not the will, decides who inherits an IRA. See does a beneficiary override a will.
- Name a contingent beneficiary too. If the only named person has died, the account passes under the custodian's default rule. Ask the custodian what that rule is.
- Avoid naming the estate. An estate is not a designated beneficiary, and if the owner died before the required beginning date the account generally must be paid out within 5 years (IRS Publication 590-B, 2025).
- Consider Roth conversions in low-bracket years. Children still face the 10-year clock on an inherited Roth IRA, but distributions are generally tax-free once the Roth has been open 5 years (same source). This moves the tax from the child's peak earning years to the parent's lower bracket, when that is the case.
- Leave a one-page map. Custodian, account number, beneficiaries and whether this year's RMD has been taken.
What the adult child should do in the first year
- Do not cash out or move the money into your own IRA. A non-spouse beneficiary cannot roll an inherited IRA into their own IRA. A trustee-to-trustee transfer is allowed if the new account stays titled in the parent's name for your benefit (IRS Publication 590-B, 2025).
- Check the year-of-death RMD. If the parent had not taken that year's required amount, it is still due (IRS, Retirement topics: Beneficiary, checked October 14, 2026).
- Split shared accounts. When siblings share one IRA, separate accounts set up by December 31 of the year after death are treated separately for RMDs (IRS Publication 590-B, 2025).
- Find out whether the parent had passed the required beginning date. That decides whether annual withdrawals are required. RMDs start by April 1 of the year after age 73 for most owners today (same source).
- Write a 10-year withdrawal plan with whoever prepares your return. Every dollar from a traditional inherited IRA is taxed as ordinary income in the year withdrawn.
Spreading over 10 years vs the year-10 bomb
Waiting until year 10 is legal when the parent died before the required beginning date. It is often expensive, because a large withdrawal in one year is taxed at higher brackets. In 2026, joint brackets climb from 22% to 24%, 32% and 35% as taxable income passes $211,400, $403,550 and $512,450 (IRS, 2026 inflation adjustments, October 9, 2025).
For heirs who are 63 or older, a big withdrawal can also raise Medicare premiums two years later, because those surcharges use the tax return from two years earlier (SSA, POMS HI 01101.010, checked October 14, 2026). The inherited IRA RMD calculator, at the inherited IRA RMD calculator, shows the annual minimums.
Trusts as beneficiaries, briefly
A trust can be named as an IRA beneficiary, for example to protect a child who has trouble with money or a beneficiary with a disability. Whether the people inside the trust are treated as designated beneficiaries depends on the trust meeting the rules in the final regulations (Treasury and IRS, July 19, 2024). Trusts written before 2020 were often drafted for the old lifetime stretch. If you have one, ask the attorney who drafted it whether it still works under the 10-year rule.
When waiting can make sense
Spreading evenly is not always best. An heir in peak earning years who expects much lower income after retiring in year 6 or 7 may reasonably take only the required minimums early and more later. An heir who is already retired may take more in the early low-income years. The goal is to use lower brackets each year and still empty the account on time. The inherited IRA calculator can help compare paces.
A plain example with numbers
All numbers are hypothetical. An adult daughter and her husband inherit a $600,000 traditional IRA from her mother, who died before her required beginning date, so no annual withdrawals are required. Their own taxable income is $150,000 a year. For simplicity, the table ignores investment growth and uses 2026 joint brackets every year (IRS, October 9, 2025).
| Federal tax on the inherited IRA (hypothetical) | Spread over 10 years | All in year 10 |
|---|---|---|
| Withdrawal each year | $60,000 | $0, then $600,000 |
| Taxable income in a withdrawal year | $210,000 | $750,000 |
| Top bracket reached | 22% | 35% |
| Extra federal tax per withdrawal year | $13,200 | $177,615 |
| Total extra federal tax | $132,000 | $177,615 |
| Difference | $45,615 more |
Spread: $150,000 plus $60,000 is $210,000, still under the $211,400 top of the 22% bracket, so $60,000 x 22% = $13,200 a year, or $132,000 over 10 years.
Year 10: $61,400 at 22% ($13,508), plus $192,150 at 24% ($46,116), plus $108,900 at 32% ($34,848), plus $237,550 at 35% ($83,143) = $177,615. If the mother had died after her required beginning date, annual minimums would be required in years 1 to 9, and the year-10 lump would be smaller but still large.
Red flags
- Someone suggests moving an inherited IRA into your own IRA; for a non-spouse that is not allowed.
- A check is cut to you personally from the inherited account without a plan for the tax.
- No one asks whether your parent had reached the required beginning date before death.
- The plan is to wait and take everything in year 10 without comparing brackets.
- Siblings share one inherited account past December 31 of the year after death.
- The parent's beneficiary form names the estate or names no contingent beneficiary.
- A trust written before 2020 is named as beneficiary and no one has reviewed it since.
- The year-of-death required distribution was never checked.
- Your income will be high for years and no one has modeled a withdrawal schedule.
- Medicare premiums for an heir age 63 or older were not considered before a large withdrawal.
Questions to ask before you sign
- Had my parent reached the required beginning date, and do I owe annual withdrawals?
- Was my parent's required distribution for the year of death taken?
- How should this account be titled so it stays an inherited IRA?
- Can we split the account among siblings before December 31 of the year after the death?
- What is the yearly withdrawal that keeps us in our current bracket?
- Is there a year coming, such as retirement, when withdrawals would be taxed less?
- Will a larger withdrawal raise our Medicare premiums two years later?
- If a trust is the beneficiary, does it still work under the 10-year rule?
- For my parent: should some IRA money be converted to Roth while their bracket is low?
- For my parent: does every account have a current primary and contingent beneficiary?
Read This Before You Sign
A one-page checklist: the red flags in annuity and indexed universal life (IUL) sales, and the questions to ask before you sign anything. Steps for parents and heirs: beneficiary forms, account titling, yearly withdrawals and the 10-year plan. We’ll email it to you.
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Sources
- IRS: Publication 590-B (2025), Distributions from IRAs (checked October 14, 2026)
- Treasury and IRS: Required Minimum Distributions, final regulations, 89 FR 58886 (July 19, 2024)
- IRS: Notice 2024-35, Certain Required Minimum Distributions for 2024 (April 2024)
- IRS: Retirement topics: Beneficiary (updated August 1, 2026)
- IRS: Tax inflation adjustments for tax year 2026, IR-2025-103 (October 9, 2025)
- Social Security Administration: POMS HI 01101.010, Modified Adjusted Gross Income (checked October 14, 2026)
The Retirement Literacy Foundation is a 501(c)(3) public charity. This page is general education, not tax, legal or investment advice. Nothing is sold here, no product is recommended, and RLF accepts no funding from financial companies. Rules and figures change; each one above shows its source and date. Check anything you plan to act on with your state insurance department or a qualified professional who is not paid on the product.