Inherited IRA withdrawal rules
With an Inherited IRA, you may either need to take annual distributions no matter what age you are when you open the account or may be required to fully distribute the assets in the account within a specified number of years, or in some cases a combination of both. These rules don't apply if you've simply transferred another IRA to your own IRA but are specific to Inherited IRAs.
This guidance is also for situations where the IRA account holder died after 2019, and therefore the rules under the SECURE Act apply. You can also review additional information in our Inherited IRA Brochure (SECURE Act compliant).
If the account holder died before 2020, and therefore is not subject to the changes in the SECURE Act, you can learn about distributions options in our Inherited IRA Brochure that covers scenarios prior to the SECURE Act.
Please also note that the below options are for individuals that are specifically named as the beneficiary on the decedent's IRA account. If you are named as the beneficiary in an estate, you should consult your estate executor or trustee.
Spousal options
If you inherit a Traditional, Rollover, SEP, or SIMPLE IRA from a spouse, you have several options, depending on whether your spouse died before or after their required beginning date to start taking Required Minimum Distributions (RMDs). Most commonly, those who inherit an IRA from a spouse transfer the funds to their own IRA.
Note: If the original account holder did not take an RMD in the year of death and they were required to, an RMD must be taken from the account by 12/31 of the year the original account holder died.
Traditional IRA: Spouse inherits before RMD date
If your spouse (the account holder) died before their RMD required begin date, these are your choices:
Account type:
You transfer the assets into your own existing or new IRA.
Money is available:
At any time, but a penalty will apply to withdrawals made before you reach age 59½.
Other considerations:
- Only available if you are the sole beneficiary.
- IRA assets can continue growing tax-deferred.
- If you are under age 59½ you'll be subject to the same distribution rules as if the IRA had been yours originally, so you cannot take distributions without paying the 10% early withdrawal penalty—unless you meet one of the IRS penalty exceptions.
- You may designate your own IRA beneficiary.
Account type:
You transfer the assets into an Inherited IRA held in your name.
Money is available:
RMDs are mandatory, and you have the option to postpone distributions until the later of:
- The year in which the decedent would have attained age 73, or
- 12/31 of the year following the year of death.
Distributions must begin no later than 12/31 of the year the account holder would have reached 73.
Other considerations:
- Your annual distributions are spread over your single life expectancy, which is determined by your age in the calendar year following the year of death and reevaluated each year.
- If multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death; otherwise, distributions will be based on the oldest beneficiary.
- RMDs are mandatory and you are taxed on each distribution.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-deferred.
- You may designate your own IRA beneficiary.
Account type:
You transfer the assets into an Inherited IRA held in your name.
Money is available:
At any time up until 12/31 of the tenth year after the year in which the account holder died, at which point all assets need to be fully distributed.
Other considerations:
- You are taxed on each distribution.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-deferred for up to ten years.
- You may designate your own IRA beneficiary.
Account type:
None. All assets in the Traditional IRA are distributed to you.
Money is available:
All at once.
Other considerations:
- You will pay income taxes on the distribution all at once.
- You will not incur the 10% early withdrawal penalty.
- You may move to a higher tax bracket depending on the amount of the distribution and your current income level.
Traditional IRA: Spouse inherits after RMD date
If your spouse (the account holder) had already reached their required beginning date to start taking RMDs (age 73 and over):
Account type:
You transfer the assets into your own existing or new IRA.
Money is available:
At any time, but a penalty will apply to withdrawals made before you reach age 59½.
Other considerations:
- Only available if you are the sole beneficiary.
- IRA assets can continue growing tax-deferred.
- You must take an RMD for the year of death (if the account holder did not already take it).
- If you are under age 59½ you'll be subject to the same distribution rules as if the IRA had been yours originally, so you cannot take distributions other than RMD for the year of the death without paying the 10% early withdrawal penalty.
- You may designate your own IRA beneficiary.
Account type:
You transfer the assets into an Inherited IRA held in your name.
Money is available:
You must begin taking an annual RMD over your life expectancy beginning no later than 12/31 of the year following the original account holder's death.
Note: If the original account holder did not take an RMD in the year of death, an RMD must be taken from the account by 12/31 of the year the original account holder died.
Other considerations:
- Your annual distributions are spread over your single life expectancy (determined by your age in the calendar year following the year of death and reevaluated each year) or the deceased account holder's remaining life expectancy, whichever is longer.
- If there are multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death; otherwise, distributions will be based on the oldest beneficiary.
- RMDs are mandatory and you are taxed on each distribution.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-deferred.
- You may designate your own IRA beneficiary.
Account type:
None. All assets in the Traditional IRA are distributed to you.
Money is available:
All at once.
Other considerations:
- You will pay income taxes on the distribution all at once.
- You will not incur the 10% early withdrawal penalty.
- You may move to a higher tax bracket depending on the amount of the distribution and your current income level.
Roth IRA: Spouse inherits
If you are inheriting a Roth IRA as a spouse, you have several options—including opening an Inherited IRA.
Account type:
You transfer the assets into your own existing or new Roth IRA.
Money is available:
At any time, but earnings generally will be taxable until you reach age 59½ and the five-year holding period has been met.
Other considerations:
- Only available if the spouse is the sole beneficiary.
- You'll be regulated by the same distribution rules as if the Roth IRA had been yours originally; normally early withdrawal penalties may still apply.
- You may designate your own IRA beneficiary.
Account type:
You transfer the assets into an Inherited Roth IRA held in your name.
Money is available:
RMDs are mandatory and you have the option to postpone distributions until the later of:
- When the decedent would have attained age 73, or
- 12/31 of the year following the year of death.
Other considerations:
- Distributions are spread over the beneficiary's single life expectancy.
- If multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death in order to use your own single life expectancy; otherwise, distributions will be based on the life expectancy of the oldest beneficiary.
- Distributions may be taken without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-free.
- You may designate your own beneficiary.
Account type:
The assets are transferred into an Inherited Roth IRA held in your name.
Money is available:
At any time up until 12/31 of the tenth year after the year in which the account holder died, at which point all assets need to be fully distributed.
Other considerations:
- Distributions may be taken during that period without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-free for up to ten years.
- You may designate your own beneficiary.
Account type:
None. All assets in the Roth IRA are distributed to you.
Money is available:
All at once.
Other considerations:
If the account is less than five years old at the time of the account holder's death, earnings are taxable.
Non-spousal options
If you, as an individual, inherited an IRA from someone other than your spouse, there are different withdrawal rules depending upon the type of beneficiary you are (an Eligible Designated Beneficiary or a Designated Beneficiary).
Furthermore, if the beneficiary is a non-individual like an estate, trust, or entity, other rules apply.
Eligible Designated Beneficiaries (that are not the spouse) include:
- Minor children of the original account holder (decedent)
- Those who are chronically ill
- Those who are permanently disabled
- Those who are not more than 10 years younger than the original account holder (i.e. – a sibling or friend who is age 60 when the account holder was age 69)
If you satisfy one of these above criteria, look below in the section titled "Eligible Designated Beneficiary options (other than a spouse)" to determine your distribution requirements.
Designated Beneficiaries
If you do not meet the requirements to be considered an Eligible Designated Beneficiary, and the account holder died after 2019, you will be considered a Designated Beneficiary and you will be required to:
- Fully distribute all assets by the end of the tenth year after the year the account holder died
- If the account owner had reached their required beginning date to start taking RMDs before they died, you will also be required to continue to take RMDs during the 10-year period
Note: If the original account holder did not take an RMD in the year of death and they were required to, an RMD must be taken from the account by 12/31 of the year the original account holder died.
Eligible Designated Beneficiary options (other than a spouse)
If you inherit a Traditional, Rollover, SEP, or SIMPLE IRA and are an Eligible Designated Beneficiary (other than a spouse) you have several withdrawal options.
Traditional IRA: Non-spouse inherits before RMD date
If the account holder died before their required beginning date to start taking RMDs, these are your choices:
Account type:
You transfer the assets into an Inherited IRA held in your name.
Money is available:
RMDs must begin no later than 12/31 of the year after death.
Other considerations:
- Your annual distributions are spread over your single life expectancy, which is determined by your age in the calendar year following the year of death and reevaluated each year.
Note: If the Eligible designated Beneficiary is the minor child of the deceased account holder, the life expectancy method of distribution is no longer available when the child turns age 21. At that point, the distribution option is required to switch to the 10-year method below and all remaining assets need to be distributed by the end of the 10th year after the minor turns age 21.
- If multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death; otherwise, distributions will be based on the oldest beneficiary.
- RMDs are mandatory and you are taxed on each distribution.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-deferred.
- You may designate your own IRA beneficiary.
Account type:
The assets are transferred into an Inherited IRA held in your name.
Money is available:
At any time up until 12/31 of the tenth year after the year in which the account holder died, at which point all assets need to be fully distributed.
Other considerations:
- You are taxed on each distribution.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-deferred for up to ten years.
- You may designate your own IRA beneficiary.
Account type:
None. All assets in the Inherited IRA are distributed to you.
Money is available:
All at once.
Other considerations:
- You will not incur the 10% early withdrawal penalty.
- You may move to a higher tax bracket depending on the amount of the distribution and your current income level.
Traditional IRA: Non-spouse inherits after RMD date
If the account holder died after their required beginning date to start taking RMDs, these are your choices:
Account type:
You transfer the assets into an Inherited IRA held in your name.
Money is available:
RMDs must start by 12/31 of the year after death.
Note: If the original account holder did not take an RMD in the year of death, an RMD must be taken from the account by 12/31 of the year the original account holder died.
Other considerations:
- Your annual distributions are spread over your single life expectancy (determined by your age in the calendar year following the year of death and reevaluated each year) or the deceased account holder's remaining life expectancy, whichever is longer.
Note: If the Eligible Designated Beneficiary is the minor child of the deceased account holder, the life expectancy method of distribution is no longer available when the child turns age 21. At that point, the distribution option is required to switch to the 10-year method below and all remaining assets need to be distributed by the end of the 10th year after the minor turns age 21.
- If there are multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death; otherwise, distributions will be based on the oldest beneficiary.
- RMDs are mandatory and you are taxed on each distribution.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-deferred.
- You may designate your own beneficiary.
Account type:
None. All assets in the IRA are distributed to you.
Money is available:
All at once.
Other considerations:
- You will pay income taxes on the distribution all at once.
- You will not incur the 10% early withdrawal penalty.
- You may move to a higher tax bracket depending on the amount of the distribution and your current income level.
Roth IRA: Non-spouse inherits
If you inherit a Roth IRA and are considered to be an Eligible Designated Beneficiary (other than a spouse) you have several withdrawal options:
Account type:
You transfer the assets into an Inherited Roth IRA held in your name.
Money is available:
- RMDs are mandatory and distributions must begin no later than 12/31 of the year following the year of death.
- Distributions are spread over the beneficiary's single life expectancy.
Note: If the Eligible Designated Beneficiary is the minor child of the deceased account holder, the life expectancy method of distribution is no longer available when the child turns age 21. At that point, the distribution option is required to switch to the 10-year method and all remaining assets need to be distributed by the end of the 10th year after the minor turns age 21.
Other considerations:
- If multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death in order to use your own single life expectancy; otherwise, distributions will be based on the life expectancy of the oldest beneficiary.
- Distributions may be taken without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-free.
- You may designate your own beneficiary.
Account type:
The assets are transferred into an Inherited Roth IRA held in your name.
Money is available:
At any time up until 12/31 of the tenth year after the year in which the account holder died, at which point all assets need to be fully distributed.
Other considerations:
- Your distributions can be spread over time, but all assets must be withdrawn by 12/31 of the tenth year after the year in which the account holder died.
- Distributions may be taken during that period without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable.
- You will not incur the 10% early withdrawal penalty.
- Undistributed assets can continue growing tax-free for up to ten years.
- You may designate your own beneficiary.
Account type:
None. All assets in the Roth IRA are distributed to you.
Money is available:
All at once.
Other considerations:
- Distributions may be taken during that period without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable.
- You will not incur the 10% early withdrawal penalty.
Non-individual options
If the beneficiary is not an individual (such as an estate, charity, or organization):
- If the original IRA owner was required to take RMDs at the time of their death, then RMD distributions are required based on the single life expectancy of the original IRA owner.
- If the original IRA owner had not yet reached the required beginning date for RMDs at the time of their death, then the 5-year rule applies and all assets must be fully distributed by the end of the fifth year after the original IRA owner's year of death.
Note: If the original account holder did not take an RMD in the year of death and they were required to, an RMD must be taken from the account by 12/31 of the year the original account holder died.
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