Navigating Inherited IRAs: Key Rules for Beneficiaries

Inheriting a parent's IRA comes with unique guidelines to avoid tax pitfalls

Mar. 3, 2026 at 2:48pm

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When inheriting an IRA from a parent, beneficiaries must follow specific rules to properly manage the account and minimize tax implications. This includes setting up an inherited IRA, understanding the 10-year withdrawal requirement, and exploring exceptions that may allow for a longer payout period.

Why it matters

Inheriting an IRA can be a complex process, and navigating the rules is crucial to avoid costly mistakes. Understanding the guidelines around inherited IRAs can help beneficiaries make informed decisions to maximize the value of the inherited assets.

The details

Beneficiaries of an inherited IRA from a parent must transfer the funds into a newly established inherited IRA, titled in the deceased owner's name. If there are multiple beneficiaries, the IRA can be split into separate inherited accounts. Under the SECURE Act, most non-spouse beneficiaries must withdraw all the money from an inherited IRA by the end of the 10th year following the original owner's death. Exceptions include a surviving spouse, a minor child, a disabled or chronically ill beneficiary, or someone within 10 years of the original owner's age. Withdrawals from a traditional IRA are taxed as ordinary income, so spreading distributions over the 10-year period can help manage the tax burden.

  • The SECURE Act, signed into law in December 2019, established the 10-year withdrawal rule for most non-spouse beneficiaries of IRAs.
  • The 10-year withdrawal period applies to IRAs where the original owner died in 2020 or later.

The players

SECURE Act

A law signed in December 2019 that changed the rules around inherited IRAs, requiring most non-spouse beneficiaries to withdraw all the money from an inherited IRA by the end of the 10th year following the original owner's death.

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What’s next

To help navigate the decisions around an inherited IRA, beneficiaries should consider working with a financial advisor. A fee-only, fiduciary financial planner can provide guidance on strategies to manage taxes and make the most of the inherited assets.

The takeaway

Inheriting an IRA from a parent requires careful planning to comply with the rules and avoid costly tax mistakes. By understanding the 10-year withdrawal requirement, exceptions, and strategies to minimize taxes, beneficiaries can ensure they make the most of the inherited assets.