Inherited IRA RMD Calculator

Before 2020, someone inheriting an IRA could take distributions across their own life expectancy — the "stretch IRA". A forty-year-old inheriting from a parent might spread withdrawals over more than forty years, keeping annual taxable income small and letting the balance compound for decades.

The SECURE Act ended that for most beneficiaries who inherit from 2020 onward. The account must now be emptied by the end of the tenth calendar year after the owner's death. The compounding window shrank from decades to ten years, and the same total income now has to be recognised across a much shorter period — usually during the beneficiary's peak earning years.

A narrow group of eligible designated beneficiaries still qualifies for lifetime treatment: surviving spouses, minor children of the deceased until majority, disabled or chronically ill beneficiaries, and anyone not more than ten years younger than the deceased. Everyone else — most adult children — falls under the ten-year rule.

A widespread misunderstanding is that the ten-year rule means "do nothing for nine years, empty it in year ten". Whether that is permitted depends on a single fact about the original owner.

If the owner died before reaching their required beginning date — broadly, before they were required to start taking RMDs — then only the deadline applies. Nothing need be withdrawn in years one to nine.

If the owner died on or after that date, the beneficiary must take an annual required distribution in years one to nine as well as emptying the account by year ten. This requirement caused years of confusion after the SECURE Act, and the IRS waived penalties for missed distributions across several transition years before final regulations settled the position. Anyone who inherited during that period should confirm which regime applies to them.

The instinct is to delay: leave the money invested as long as possible and take it at the end. For a taxable inherited IRA that instinct is usually expensive.

Distributions from an inherited traditional IRA are ordinary income. Concentrating a whole account into one tax year stacks it on top of that year's salary and can push a large part of it into the top brackets — while spreading it across ten years may keep all of it in the 22% or 24% band. The tax difference frequently exceeds the extra growth earned by delaying.

A larger single-year income spike also has knock-on effects: it can trigger the 3.8% Net Investment Income Tax on other income, push a Medicare enrollee across an IRMAA threshold two years later, and phase out credits and deductions. The general rule is to take enough each year to fill the current bracket without spilling into the next — the same bracket-filling logic that governs Roth conversions.

The exception is a Roth inherited IRA. Distributions are tax-free, so there is no reason to accelerate them: leave the balance to compound and withdraw it all in year ten.