How Does the 10-Year Rule Work for Inherited IRAs?
Key Points
The 10-year rule determines when you must withdraw all your inherited IRA funds.
It applies to most beneficiaries, though there are a handful of exceptions.
If the money comes from a traditional IRA, you will owe taxes on your withdrawals.
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You just inherited an IRA from a deceased loved one. While you're likely still mourning the loss, you may also be relieved to have the extra cash to spend how you like. So it can be a bit of a shock when you learn you don't have complete control over the funds.
If the money comes from a traditional IRA, you'll owe taxes on the withdrawals. You'll also likely have to follow the 10-year rule to avoid IRS penalties. Here's how that works.
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The 10-year rule says that you must withdraw all money from an inherited IRA by the end of the 10th year following the year that the original owner died. So if you inherit an IRA from someone who died in 2026, you'll have to take all the money out by Dec. 31, 2037, to avoid trouble with the government.
There are no rules about how much you have to withdraw each year. But if you're trying to minimize your tax liability, it's usually best to spread the money out over that time period.
A few groups don't have to follow the 10-year rule if they don't want to. This includes:
- The surviving spouse of the original owner
- Any minor children of the original owner
- Individuals who are disabled or chronically ill
- Anyone not more than 10 years younger than the original owner
Surviving spouses may roll the inherited IRA into an IRA of their own. This could let them delay withdrawals until their retirement. And all four groups can take required minimum distributions (RMDs) based on their life expectancy.
However, for minor children, this is only possible until they turn 18. At that point, they have to switch to the 10-year rule as well.
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