Inheriting an IRA or 401(k): The 10-Year Rule and What to Do First

Retirement accounts are often the biggest asset a person leaves, and also the one with the most traps for beneficiaries. The rules changed substantially in recent years, and mistakes can be costly. This guide explains the framework in plain language. Because it’s technical, treat it as a map for a conversation with a tax professional, not a substitute for one.

Why are retirement accounts different?

Two reasons. First, the accounts typically pass by beneficiary designation, not through a will; see probate vs. non-probate assets. Second, a traditional IRA or 401(k) holds money that hasn’t yet been taxed. IRS Publication 559 has a section on “income in respect of a decedent,” and tax guidance explains that assets like these don’t get the step-up in basis that most inherited property does, and that withdrawals are generally taxed as income to the person who receives them; see step-up in basis. The Journal of Accountancy explains that, although this income is taxable to the beneficiary when received, the law permits a deduction for estate taxes attributable to it. That only matters when federal estate tax was actually imposed, which is uncommon.

What is the 10-year rule?

For most non-spouse beneficiaries who inherit an IRA from someone who died after 2019, the account must be fully withdrawn by December 31 of the tenth year after the year of the owner’s death. Publication 590-B (2025) organizes the rules according to whether the owner died before or on/after their required beginning date (RBD), the date when the owner was required to start minimum distributions, and according to whether the beneficiary is an “eligible designated beneficiary.”

Do I have to take withdrawals every year?

It depends on when the owner died. Based on the IRS final regulations issued July 19, 2024 (effective for distributions starting in 2025), as summarized by Kitces and others:

• If the owner died before their required beginning date, you generally don’t have to take annual withdrawals, but you must empty the account by the end of year 10. You can take money out whenever you like in the interim
• If the owner died on or after their required beginning date, you must take annual required minimum distributions in years 1 through 9 and withdraw the rest by the end of year 10

The required beginning date is generally April 1 of the year after the owner reaches the age at which minimum distributions begin, which depends on birth year (73 for those born 1951 to 1959 and 75 for those born in 1960 or later, according to one summary). Ask the custodian or your tax professional which applies, and whether the owner had started taking distributions.

Who gets more flexibility?

“Eligible designated beneficiaries” can generally use a slower, life-expectancy-based payout. Tax guidance lists them as:

• The owner’s surviving spouse
• The owner’s minor child (this treatment lasts only until the child reaches the age of majority)
• A disabled individual
• A chronically ill individual
• Someone not more than 10 years younger than the owner, such as a sibling or partner close in age

A surviving spouse typically has additional options, such as treating the IRA as their own; ask a professional which fits your age and plans.

What about Roth IRAs?

Roth IRAs are treated as if the owner died before their required beginning date. A non-spouse beneficiary under the 10-year rule generally has no required annual withdrawals but must empty the account within 10 years, according to a summary of Publication 590-B and IRS guidance. Qualified Roth distributions are generally tax-free, but check the details for your situation.

What about a 401(k) or other employer plan?

The plan’s own rules matter. Some plans pay out faster or restrict options, and a beneficiary may be able to move money to an inherited IRA. Contact the plan administrator promptly; see lost pensions and old retirement accounts if you’re not sure where the account is.

What should I do first?

1. Don’t cash out or move money yet. Taxes, deadlines, and options depend on decisions that are hard to undo
2. Confirm who the beneficiary is. Get the beneficiary designation form from the custodian. If the “beneficiary” is the estate or a trust, different rules can apply, so ask an attorney
3. Contact the custodian with a certified death certificate and ask about the date-of-death balance, the owner’s required beginning date, and what the beneficiary options are. Ask the custodian to retitle the account as an inherited account instead of rolling it into your own, unless you’re the surviving spouse and a professional advises otherwise
4. Note the key dates: the year of death, the December 31 deadline for year 10, and whether you owe a distribution this year
5. Talk to a tax professional before you take your first withdrawal, especially if the account is large, a trust is involved, or the owner was past their required beginning date
6. Mind the tax bracket. Because withdrawals are generally taxed as income, spreading them over the years allowed can sometimes reduce the total tax, but the right pace depends on your situation

What mistakes should I avoid?

• Missing an annual required withdrawal when the owner died after their required beginning date, which can lead to a penalty
• Rolling an inherited IRA into your own IRA when you’re not the surviving spouse
• Assuming a will controls the account when a beneficiary is named
• Taking one big withdrawal in a single year without checking the tax effect
• Waiting until the last year without a plan for the tax bill

For the bigger picture of taxes after a death, see which tax forms an executor may need and do you pay taxes on an inheritance?.

This is general educational information, not tax or legal advice. Inherited retirement account rules are complex, differ by beneficiary type and plan, and change; ages, dates, and penalties here are summaries from tax-education sources. A tax professional can address your situation before you withdraw anything.