Inherited IRA Calculator
The SECURE Act replaced the stretch IRA with a 10-year rule for most non-spouse beneficiaries. The 2024 IRS final regulations added annual RMD requirements in years 1-9 if the original owner had already started distributions. Calculate what you owe and plan the optimal withdrawal pace.
How this calculator works and the math behind itWhat changed with the SECURE Act
Before 2020, non-spouse beneficiaries could stretch required distributions over their own life expectancy -- sometimes 40-50 years for a younger beneficiary. A $500,000 inherited IRA could produce modest taxable income for decades. The SECURE Act killed that. Now you have 10 years, full stop.
The confusion is around annual RMDs within those 10 years. The IRS spent years clarifying this. Their 2024 final regulations (TD 10001, effective January 1, 2025) confirmed: if the original owner died after their required beginning date, beneficiaries subject to the 10-year rule must also take annual life-expectancy-based distributions in years 1-9, with the rest in year 10. If the owner died before starting RMDs, you can take distributions on any schedule -- you just need the account empty by December 31 of year 10.
The IRS waived penalties for missed annual RMDs in 2021-2024 while the regulations were being finalized. That waiver is over. Starting in 2025, the 25% excise tax (reduced from 50% by SECURE 2.0) applies to any required amount not taken.
Tax planning matters here. Inheriting a $400,000 IRA and taking equal distributions over 10 years adds $40,000/year to your taxable income -- manageable for most people. Waiting until year 10 and taking $500,000 (with growth) in a single year could push you into the 37% bracket and trigger IRMAA surcharges on Medicare premiums. The optimal pace depends on your income in each year of the 10-year window.
Frequently asked questions
What is the 10-year rule for inherited IRAs?
Non-spouse beneficiaries who inherited after December 31, 2019 must empty the account by December 31 of the 10th year following death. The SECURE Act eliminated the old stretch IRA rules. Eligible designated beneficiaries (surviving spouses, minor children, disabled individuals, those within 10 years of the deceased's age) are exempt.
Do I need to take annual RMDs in years 1-9?
Only if the original owner had already started required minimum distributions (died on or after their required beginning date). The 2024 IRS final regulations require annual life-expectancy-based distributions in years 1-9, with the remainder in year 10. If the owner died before their RBD, no annual distributions are required -- take money at any pace, just empty by year 10.
What happens if I miss a required distribution?
25% excise tax on the amount that should have been taken. If corrected in the same tax year or by the tax return due date, the penalty drops to 10%. IRS Form 5329 is used to report and calculate the excise tax.
Can I do a Roth conversion on an inherited IRA?
No. Roth conversions are not available for inherited IRAs held by non-spouse beneficiaries. Only a surviving spouse who treats the inherited IRA as their own can convert. If you inherit a Roth IRA, distributions are generally tax-free but still subject to the 10-year rule.
How do I minimize taxes on an inherited IRA?
Take distributions in years where your income is lowest. Retired beneficiaries with low income in early years can take more then. Spread distributions to avoid bracket creep. If you have significant deductions or losses in a particular year, take a larger distribution that year. Avoid the "back-loaded" approach of waiting until year 10 -- that single-year hit is usually the worst outcome.