Inherited IRA RMD Calculator

What Are Required Distributions on an Inherited IRA?

When you inherit a traditional IRA or 401(k), the rules for distributing the funds depend on your relationship to the deceased account owner and when they passed away. Enter the inherited account balance and your age in the calculator above to estimate the annual distribution requirement. The SECURE Act of 2019 fundamentally changed inherited IRA rules, eliminating the stretch IRA for most non-spouse beneficiaries and replacing it with a 10-year distribution deadline that affects tax planning for millions of inheritors.

The 10-Year Rule for Most Non-Spouse Beneficiaries

For IRAs inherited from owners who died after December 31, 2019: most non-spouse beneficiaries must fully distribute the inherited account within 10 years of the owner death. There are no annual minimum distributions during the 10-year period (though IRS guidance has gone back and forth on this for deceased owners already taking RMDs). The entire balance must be emptied by December 31 of the 10th year. A $400,000 inherited IRA: if taken as a lump sum in year 10, the entire $400,000 is taxable income in one year. Strategic distribution over the 10 years ($40,000/year) keeps annual taxable income lower and avoids bracket jumps.

Eligible Designated Beneficiaries: Exceptions to the 10-Year Rule

Five categories of beneficiaries can still use the life expectancy (stretch) method: surviving spouses, minor children of the deceased (until they reach the age of majority, then the 10-year clock starts), disabled individuals (as defined by IRS), chronically ill individuals, and beneficiaries not more than 10 years younger than the deceased. Each exception serves a specific demographic that Congress determined should not be forced into accelerated taxation. Surviving spouses have the most flexibility: they can treat the inherited IRA as their own, roll it into their existing IRA, or remain as beneficiary and use the life expectancy method.

Spouse Inherited IRA: Special Advantages

A surviving spouse has three options. Option 1: treat as own IRA - the inherited funds merge with the spouse own IRA, subject to normal RMD rules at the spouse own RMD age. Best when the surviving spouse is under 73 and wants to delay distributions. Option 2: remain as beneficiary - take distributions based on the deceased single life expectancy or the spouse own life expectancy (whichever is more favorable). Useful if the surviving spouse is under 59.5 and needs penalty-free access. Option 3: roll into own IRA - similar to option 1, combining accounts. The spousal rollover is the most powerful inheritance tool because it effectively resets the RMD clock to the surviving spouse own age and timeline.

Tax-Smart Distribution Strategy Over 10 Years

The 10-year rule provides flexibility in timing distributions within the window. A $500,000 inherited IRA for a beneficiary currently in the 22% bracket: taking $50,000/year stays within the 22% bracket - $11,000/year in tax ($110,000 total over 10 years). Taking $500,000 in year 10: pushes into the 35-37% bracket, costing approximately $155,000-$175,000 in tax. The strategic approach: distribute enough each year to fill your current bracket without jumping to the next. In years with lower other income (job transition, sabbatical, parental leave), take larger inherited IRA distributions to fill the bracket space. In high-income years, take the minimum (or nothing if no annual requirement).

Inherited Roth IRA Rules

Inherited Roth IRAs follow the same 10-year distribution timeline for non-spouse beneficiaries, but with a crucial difference: distributions are tax-free (assuming the original owner held the Roth for at least 5 years). Since there is no tax cost to distribution, the optimal strategy is to leave the money in the inherited Roth as long as possible - the full 10 years - allowing maximum tax-free growth. A $300,000 inherited Roth growing at 7% for 10 years reaches approximately $590,000, all distributed tax-free. There is no strategic advantage to early distribution of an inherited Roth; the longer it grows tax-free, the more the beneficiary receives.

Inherited 401(k) vs Inherited IRA

Inherited 401(k) accounts follow the same 10-year rule as inherited IRAs but offer fewer distribution options. Some employer plans require faster distribution (within 5 years or as a lump sum). Rolling an inherited 401(k) into an inherited IRA (not your own IRA) preserves the 10-year timeline and provides more investment choices. Important: a non-spouse beneficiary cannot roll an inherited retirement account into their own IRA - it must be titled as an inherited IRA ("Jane Doe as beneficiary of John Doe IRA"). Violating this rule triggers immediate full taxation of the entire account balance.

Multiple Beneficiaries and Account Splitting

When multiple beneficiaries inherit a single IRA, the account can be split into separate inherited IRAs by December 31 of the year following the owner death. Each beneficiary then manages their own inherited IRA independently. This is critical because without splitting, the oldest beneficiary life expectancy applies to everyone (for eligible designated beneficiaries using the stretch). Splitting allows each person to use their own factors and distribution strategy. Example: a mother leaves a $600,000 IRA equally to three adult children. Splitting into three $200,000 inherited IRAs allows each child to distribute according to their individual tax situation rather than being forced into a one-size-fits-all timeline.

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