What are the rules when you inherit an inherited IRA?
Andrew Mclaughlin
Published Feb 15, 2026
Option #1: Open an Inherited IRA: Life expectancy method You transfer the assets into an Inherited IRA held in your name. Required Minimum Distributions (RMDs) are mandatory and distributions must begin no later than 12/31 of the year following the year of death.
What happens when inherited IRA owner dies?
Inherited IRAs: Old Rules If an original beneficiary died prior to depleting the full inherited IRA, the successor beneficiary was able to “step into the shoes” of the original beneficiary. They could continue to take the RMD each year based on the original beneficiary’s remaining life expectancy.
Who is the owner of an inherited IRA?
An inherited IRA is an account that is opened when an individual inherits an IRA or employer-sponsored retirement plan after the original owner dies. The individual inheriting the Individual Retirement Account (IRA) (the beneficiary) may be anyone—a spouse, relative, or unrelated party or entity (estate or trust).
What do you do with an inherited IRA?
Inherited IRA rules: 6 key things to know
- Treat the IRA as if it were your own, naming yourself as the owner.
- Treat the IRA as if it were your own by rolling it over into another account, such as another IRA or a qualified employer plan, including 403(b) plans.
- Treat yourself as the beneficiary of the plan.
Does an inherited IRA have to be distributed in 5 years?
Any individual beneficiary may elect to distribute the inherited IRA assets over the five years following the owner’s death. The distribution must be completed by the end of the year containing the fifth anniversary of the owner’s death.
Can I withdraw all the money from an inherited IRA?
Inherited IRAs continue to grow tax-deferred until withdrawals are made. Taxes on withdrawals are treated the same as the original IRA account. Spouses aside, most beneficiaries must withdraw all funds from their Inherited IRAs within 10 years. They can withdraw assets on any schedule they wish.
How do I calculate my minimum withdrawal from an inherited IRA?
To determine the minimum amount, the IRA balance is divided by the distribution period. Note: The life expectancy payment is the minimum amount that must be withdrawn; a beneficiary may always withdraw an additional amount including a lump-sum distribution.
How does an inherited IRA get taxed?
If you inherit a Roth IRA that was funded for 5 years or more prior to the death of the original owner, distributions can be taken tax-free. On the other hand, when you take money out of an inherited IRA, it will generally be taxed as ordinary income.
