You Inherited an IRA. Here Is the 10-Year Rule, and the Mistake That Costs the Most.

Henry Supinski, ChFC® · 5 min read · August 2026

If you inherited an IRA from a parent in the last few years, the old advice about stretching withdrawals over your lifetime no longer applies to you. The account has to be empty by the end of the tenth year after the death. And as of 2025, depending on how old the original owner was, you may owe a withdrawal every single year in between. Here is how the rule works and how to keep it from becoming a tax problem.

Who the 10-Year Rule Applies To

The rule covers most people who inherit an IRA or 401(k) from someone who died in 2020 or later and who are not the owner's spouse. Adult children, grandchildren, siblings, nieces, nephews, and friends all fall into this group. The exceptions, called eligible designated beneficiaries, are surviving spouses, minor children of the owner (until they reach 21), disabled or chronically ill individuals, and anyone not more than ten years younger than the owner. Those groups can still take withdrawals over their own life expectancy. Everyone else has ten years.

The Part That Changed in 2025

For several years after the rule was created, it was unclear whether heirs had to take anything out during years one through nine or could simply empty the account in year ten. The IRS settled it. If the original owner had already reached the age where their own required minimum distributions had begun, the heir must take an annual withdrawal in each of years one through nine and empty the account by the end of year ten. That annual requirement is enforced starting in 2025. If the original owner died before their required distributions began, no annual withdrawal is required, but the account must still be empty by the end of year ten.

The Mistake That Costs the Most

The expensive mistake is not missing a withdrawal. It is waiting. Heirs who leave the account alone and empty it in year ten stack a decade of tax-deferred growth into a single tax year, on top of whatever else they earn that year. A $600,000 inherited IRA emptied all at once, in the peak earning years of a fifty-something child, can push a large share of it into the top brackets and raise Medicare premiums two years later through IRMAA. The same account withdrawn in roughly equal pieces over ten years is taxed at much lower average rates. The rule sets the deadline; the plan sets the sequence.

Spouses Have Better Options

A surviving spouse can treat an inherited IRA as their own, rolling it into their own IRA and following normal rules, or can remain a beneficiary and take withdrawals over their life expectancy. Neither is automatically better. Rolling it over defers withdrawals until the spouse's own required distribution age. Staying a beneficiary can allow penalty-free access before 59 and a half. It is a decision to make with the whole plan in view, not on the phone with the custodian.

Inherited Roth IRAs Follow the Same Clock

The 10-year rule applies to inherited Roth IRAs too. The account must be empty within ten years. The difference is that qualified withdrawals are tax-free, which turns the strategy on its head: with an inherited Roth, waiting until year ten is usually the right move, because every year of tax-free growth is a year you want. Traditional inherited IRAs reward spreading; inherited Roths reward waiting.

A Hypothetical Heir, Two Ways

The numbers are invented; the tax logic is real. A 54-year-old inherits a $500,000 traditional IRA from her 78-year-old father, who had already been taking required distributions. She earns $180,000 a year. Path one: she takes only the minimum each year, then withdraws the roughly $450,000 remaining balance in year ten. That year her income is over $600,000, much of it taxed at the top federal rate, and her Medicare premiums jump two years later. Path two: she withdraws about $50,000 a year for ten years, keeping her income in a steady bracket every year. Same inheritance. The difference in total tax can be well into five figures. Nothing clever, just sequencing.

Pennsylvania Adds Its Own Layer

For Pennsylvania families, the income tax on withdrawals is not the only tax on an inherited IRA. If the original owner was 59 and a half or older at death, the full account was also subject to Pennsylvania inheritance tax at 4.5% for a child, due within nine months of death. That bill is separate from and in addition to the income tax on every withdrawal. We cover the asset-by-asset picture in what your heirs actually pay.

How We Approach It

When a client inherits a retirement account, we build the ten-year withdrawal schedule against their own income projection, year by year, and revisit it annually. The goal is to spread the income across the lowest available brackets, coordinate it with any Roth conversions or large gains in the same years, and stay under the IRMAA lines where possible. This is the same coordination we bring to beneficiary designations on the giving side, which is where a good inheritance starts.

Questions We Hear

Do I have to take money out of an inherited IRA every year?

It depends on how old the original owner was. If they had already begun required minimum distributions, you must take an annual withdrawal in years one through nine and empty the account by year ten. If they died before required distributions began, no annual withdrawal is required, but the account must still be empty within ten years.

Can I wait until year ten to withdraw everything?

If no annual withdrawals are required, yes, but for a traditional IRA it is usually the most expensive choice, because it stacks ten years of growth into one tax year. Spreading withdrawals across the ten years generally produces a lower total tax bill. For an inherited Roth IRA, waiting until year ten is usually the right move because withdrawals are tax-free.

Does the 10-year rule apply to a spouse?

No. A surviving spouse can roll the account into their own IRA or remain a beneficiary and take withdrawals over their life expectancy. Minor children of the owner, disabled or chronically ill heirs, and anyone within ten years of the owner's age also have life-expectancy options.

What if the original owner died before 2020?

The old rules apply. Beneficiaries of owners who died before 2020 can generally continue stretching withdrawals over their own life expectancy. The 10-year rule applies to deaths in 2020 and later.