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 itImportant: Inherited IRA distributions carry real penalty risk. Missing a required annual distribution in years 1-9 triggers a 25% excise tax on the shortfall, or 10% if you correct it within the correction window (IRC 4974(a), (e)). Determining whether the original owner died before or after their required beginning date requires reviewing plan records. The IRS relief for 2021-2024 is over. Starting in 2025, annual distributions are required when the owner died on or after the required beginning date. This calculator produces estimates for planning purposes. Before making any withdrawal decisions from an inherited IRA, consult a qualified tax advisor who can verify your specific RBD determination and life expectancy divisors. Terms of use.
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What changed with the SECURE Act
Before 2020, non-spouse beneficiaries could stretch required distributions over their own life expectancy, sometimes 40 to 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 (T.D. 10001, applying to distribution years starting January 1, 2025) confirmed this: 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 their required beginning date, you can take distributions on any schedule as long as the account is empty by December 31 of year 10.
The IRS said it wouldn't assert the excise tax for missed annual RMDs in 2021-2024 while the regulations were being finalized (Notice 2024-35 and earlier notices). That relief is over. Starting in 2025, the 25% excise tax applies to any required amount not taken, cut to 10% if you fix it within the correction window.
Tax planning matters here. Inheriting a $400,000 IRA and taking equal distributions over 10 years adds $40,000/year to your taxable income each year. Waiting until year 10 and taking $500,000 (with growth) in a single year taxes most of it at your top marginal rates and can 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 year containing the 10th anniversary of the death. The SECURE Act eliminated the old stretch IRA rules for them. Eligible designated beneficiaries (surviving spouses, minor children, disabled or chronically ill individuals, and those not more than 10 years younger than the owner) can still use life expectancy payments.
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 final regulations require annual life-expectancy distributions in years 1-9 (Treas. Reg. 1.401(a)(9)-5(d)(1)), with the remainder in year 10. If the owner died before their RBD, no annual distributions are required. Take money at any pace and empty the account by year 10.
What happens if I miss a required distribution?
A 25% excise tax on the amount that should have been taken. It drops to 10% if you take the missed amount and file a return reporting the tax within the correction window, which ends at the earliest of the IRS mailing a deficiency notice, the IRS assessing the tax, or the last day of the second tax year after the year the tax was imposed (IRC 4974(e)). You report it on Form 5329 and can ask for a waiver if the shortfall was reasonable error.
Can I do a Roth conversion on an inherited IRA?
Not as a non-spouse beneficiary of an inherited traditional IRA. Pub. 590-A says you can't treat it as your own or roll any amount into or out of it. A surviving spouse who treats the IRA as their own can convert it. If you inherit a Roth IRA, the 10-year rule still applies to it.
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.