Inheriting an IRA can feel overwhelming, especially when you're also dealing with the loss of a loved one. One of the first questions beneficiaries often have is: “What am I supposed to do with this account?”
The answer depends on several factors, including your relationship to the original account owner, the type of IRA, and when the account owner died.
For many non-spouse beneficiaries, the 10-year rule applies, meaning the inherited account generally must be fully distributed by the end of the 10th year following the account owner's death. However, distribution requirements within that period can vary depending on factors such as when the original owner died, whether the owner had reached their required beginning date, and whether the beneficiary qualifies for an exception. IRS.gov
There can also be important tax considerations. Distributions from an inherited traditional IRA are generally taxable as ordinary income, while inherited Roth IRAs are generally treated differently.
That’s why taking the entire account out at once isn't always the best strategy.
Instead, consider how distributions could fit into your broader financial plan and tax situation. Depending on your circumstances, spreading withdrawals over several years may make more sense than taking a large lump sum.
Before you take money from an inherited IRA, consider:
Who was the original account owner?
What type of IRA did you inherit?
What distribution rules apply to you?
How will withdrawals affect your taxes?
How does the inherited account fit into your overall financial plan?
An inherited IRA isn't just an account to distribute—it's a financial planning decision.
Taking time to understand your options can help you make decisions that support both your current financial needs and your long-term goals.
This information is for educational purposes only and is not tax or legal advice. Inherited IRA rules can vary based on individual circumstances. Consider consulting with your financial advisor and tax professional before making distribution decisions.