The short answer
Under current rules, most non-spouse beneficiaries who inherit an IRA must withdraw all of the money within 10 years, rather than stretching withdrawals over their lifetime as was allowed before. Because withdrawals from a traditional inherited IRA are taxable, compressing them into 10 years can push the heir into higher tax brackets during those years. Spouses and certain other beneficiaries have different, more flexible options. Planning the timing of withdrawals across the 10 years can reduce the tax hit. This is educational information, not tax advice.
So most non-spouse heirs must empty an inherited IRA within 10 years, which can concentrate taxable income and raise their brackets.
How the rule works
The 10-year rule generally requires the inherited account to be fully distributed by the end of the tenth year after the original owner's death. For some inherited accounts, annual withdrawals may also be required during those years, depending on the situation. Because traditional IRA withdrawals are taxable, the heir's income in each of those years matters. Roth inherited IRAs follow the 10-year timeline too but the withdrawals are generally tax-free. Our guide to estate planning basics covers passing assets to heirs.
The core requirement is full distribution within 10 years, with the tax impact depending on whether the account is traditional or Roth.
How to manage the tax impact
An heir can often reduce taxes by spreading withdrawals across the 10 years to smooth income, taking more in lower-income years and less in higher ones, rather than waiting and withdrawing a large lump sum at the end. Coordinating with the heir's own income and tax situation is key. Because the rules have exceptions and have changed, confirm current requirements with a tax professional. Our retirement income guide covers the broader planning.
The takeaway: most non-spouse heirs must empty an inherited IRA within 10 years, so spread taxable withdrawals across those years to manage brackets, with professional guidance.
Frequently Asked Questions
What is the inherited IRA 10-year rule?
Most non-spouse beneficiaries must withdraw all of an inherited IRA within 10 years of the original owner's death, rather than stretching withdrawals over their lifetime as was previously allowed.
How does the 10-year rule affect taxes?
Because traditional inherited IRA withdrawals are taxable, compressing them into 10 years can push the heir into higher brackets. Spreading withdrawals across the years helps manage the impact.
Do spouses have to follow the 10-year rule?
No. Spouses and certain other beneficiaries have different, more flexible options. Confirm the current rules for your situation with a tax professional.
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