Inherited an IRA?
What You Must Take and When
The rules for inherited IRAs depend on who you are, when the owner died, and whether they had started their own withdrawals. Getting it wrong now costs real money: the IRS has enforced the yearly withdrawal rule since 2025.
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Which rules apply to you
If the owner died before 2020, the older stretch rules generally still apply to you. For deaths after 2019, find your situation below.
What you must do
| If you are | And the owner | You must |
|---|---|---|
| The surviving spouse | Either way | Choose: roll it into your own IRA, or keep it as an inherited IRA |
| Disabled, chronically ill, the owner’s minor child, or not more than 10 years younger | Either way | Take yearly withdrawals over your life expectancy (a minor child switches to the 10-year rule at 21) |
| Anyone else | Had started RMDs | Take a withdrawal every year and empty the account by year 10 |
| Anyone else | Had not started, or it is a Roth IRA | Empty the account by year 10; no yearly minimum |
How much to take each year
When yearly withdrawals are required, the minimum is generally the account balance on December 31 of the prior year divided by a life expectancy factor from the IRS Single Life Table. You look up your age in the year after the owner’s death, then subtract one from that factor each year after. If the owner died before taking their own withdrawal for the year of death, that amount must also be taken.
Many custodians calculate the number for you, but they do not always know whether the owner had started withdrawals, so it is worth checking. Taking more than the minimum is always allowed.
How withdrawals are taxed
- Traditional IRA: every withdrawal is ordinary income on your return. There is no step-up in basis.
- No early withdrawal penalty: the 10% penalty does not apply to inherited IRA withdrawals, whatever your age.
- Roth IRA: withdrawals are generally tax-free if the owner’s Roth account was open at least five years.
- If the estate paid federal estate tax: you may be able to deduct part of that tax against your IRA income. This deduction is often missed.
Because every dollar counts as income in the year you take it, the timing matters. Spreading withdrawals over the years you have, and taking larger ones in lower-income years, usually lowers the total tax.
If you missed a withdrawal
Take the missed amount as soon as you can and file Form 5329 for the year it was missed. The penalty is 25% of the shortfall, reduced to 10% if you correct it within the correction window, and the IRS can waive it entirely for reasonable cause. Your withdrawal for the current year is due on top of the catch-up.
If you inherited from your spouse
A surviving spouse has the most choices. Rolling the account into your own IRA lets you follow your own schedule and name your own beneficiaries. Keeping it as an inherited IRA can make sense if you are under 59½ and need access to the money, because withdrawals as a beneficiary avoid the 10% early withdrawal penalty that would apply after a rollover.
What we need from you
- The inherited IRA statement (including the December 31 balance)
- The original owner’s date of birth and date of death
- Whether the owner had started taking required withdrawals
- Any Form 1099-R you received for the account
- If the estate filed Form 706, the estate tax figures for the IRA
Frequently Asked Questions
Do I have to take money out of my inherited IRA every year?
If the person you inherited from died after 2019 and you are not a surviving spouse or another eligible beneficiary, it depends on whether they had already started their own required minimum distributions. If they had, you must take a minimum amount each year and empty the account by the end of the tenth year after their death. If they had not, or it is a Roth IRA, there is no yearly minimum, but the account must still be empty by the end of year ten.
Is my inherited IRA withdrawal taxable?
Withdrawals from an inherited traditional IRA are ordinary income on your return, because the money was never taxed. There is no step-up in basis. Withdrawals are not subject to the 10% early withdrawal penalty, no matter your age. Inherited Roth IRA withdrawals are generally tax-free. If the estate paid federal estate tax, you may be able to deduct part of that tax against your IRA income.
I missed a required withdrawal from my inherited IRA. What now?
Take the missed amount as soon as possible and file Form 5329 for the year it was missed. The penalty is 25% of the amount you should have taken, reduced to 10% if you correct it promptly, and you can ask the IRS to waive it entirely for reasonable cause, such as genuine confusion about whether the rule applied to you. Your regular withdrawal for the current year is due on top of the catch-up.
Should I spread withdrawals out or take the money all at once?
Every dollar you take from an inherited traditional IRA is added to your income for that year, so a large lump sum can push you into a higher bracket and affect things like Medicare premiums and credits. Spreading withdrawals across the years you have, and timing larger ones for lower-income years, usually lowers the total tax. The right plan depends on your other income and the size of the account.