What is an inherited IRA?

M1 Team
M1 Team July 30, 2026

An inherited IRA — also called a beneficiary IRA — is a retirement account you open to receive assets from an IRA whose owner has died. It keeps the money’s tax-advantaged status, but the person who inherits it generally cannot treat it exactly like their own. Under current IRS rules, most non-spouse beneficiaries must empty the account within 10 years. 

Who this is for: If someone named you as a beneficiary of a traditional or Roth IRA, this article is for you. The rules changed under the SECURE Act and were finalized by the IRS in 2024, so guidance written a few years ago may be out of date — what follows reflects the rules in effect for 2026. 

What applies to you depends on your relationship to the person who died. Because the details depend on your situation, and a missed RMD carries a penalty, consider confirming your steps with a tax professional. 

The table below compares the main beneficiary categories on three questions: whether you can treat the account as your own, whether you owe annual RMDs, and your final deadline. The sections that follow cover each in detail. 

If you are… Can you treat it as your own? Annual RMDs during the wait? Final deadline 
Surviving spouse Yes (spousal rollover) or stay a beneficiary Follow owner rules if you treat it as your own Your own lifetime (if treated as your own) 
Eligible designated beneficiary (minor child of owner, disabled, chronically ill, ≤10 yrs younger) No Yes — stretched over your life expectancy Over your life expectancy 
Any other (non-spouse) beneficiary No Only if the owner had already started their own RMDs Empty by the end of year 10 

How does an inherited IRA work?

When an IRA owner dies, the account doesn’t simply transfer into your name as if it were always yours. Instead, the assets move into an inherited IRA titled to reflect that it came from the deceased owner — for example, “[Deceased’s name], deceased, for the benefit of [your name].” The IRS beneficiary rules govern what happens next. 

The tax treatment carries over from the original account. Money in an inherited traditional IRA is generally taxed as ordinary income when you withdraw it, while a qualified inherited Roth IRA can generally be withdrawn tax-free. 

In exchange for that continued tax advantage, the account comes with withdrawal deadlines — and, for some beneficiaries, annual required minimum distributions (RMDs) along the way. With a few exceptions for spouses, you generally cannot add new contributions to an inherited IRA.

Spouse vs. non-spouse inherited IRA rules

A major factor is whether you were married to the person who died. The IRS divides beneficiaries into groups with different rules.

If you’re a surviving spouse

A surviving spouse has more options than other beneficiaries, according to the IRS beneficiary guidance. You can generally: 

  • Treat the IRA as your own (a spousal rollover). The account becomes yours, you can add contributions, and your own required-minimum-distribution timeline applies — RMDs begin at age 73 (age 75 if you were born in 1960 or later). This can defer withdrawals the longest, but you generally cannot take penalty-free withdrawals before age 59½. 
  • Remain a beneficiary by keeping it as an inherited IRA. This lets you take withdrawals before age 59½ without the 10% early-withdrawal penalty — useful if you’re younger and may need the money — but the account stays subject to beneficiary distribution rules. 

Which option fits usually depends on your age and whether you expect to need the money before 59½.

If you’re a non-spouse beneficiary

Most non-spouse beneficiaries — adult children, other relatives, friends — are subject to the 10-year rule for IRAs inherited from owners who died after 2019. In short, the entire account must be emptied by the end of the 10th year after the year of death, and you cannot treat it as your own or roll it into your own IRA. 

Whether you also owe annual withdrawals in the meantime depends on one fact about the original owner, covered next.

The exceptions: eligible designated beneficiaries

The SECURE Act created a category called eligible designated beneficiaries (EDBs) who are exempt from the 10-year rule and may instead stretch withdrawals over their life expectancy. Per the IRS rules, EDBs include: 

  • A surviving spouse 
  • A minor child of the account owner (the 10-year clock starts once they reach the age of majority, which the IRS final regulations set at 21) 
  • A beneficiary who is disabled or chronically ill 
  • A beneficiary who is not more than 10 years younger than the deceased owner 

If you don’t fall into one of these groups, the 10-year rule generally applies.

What is the inherited IRA 10-year rule?

The 10-year rule requires most non-spouse beneficiaries to withdraw the entire inherited IRA balance by December 31 of the 10th year after the original owner’s death. For example, if the owner died in 2024, the account must be fully distributed by the end of 2034. 

Whether you also have to take annual withdrawals during those 10 years depends on when the original owner died relative to their required beginning date — the point at which they were required to start their own RMDs: 

  • If the owner died on or after their required beginning date (they had already started RMDs), you generally must take an annual RMD in years 1 through 9 and empty the account by year 10, per the IRS Publication 590-B. 
  • If the owner died before their required beginning date (they had not yet started RMDs), you are not required to take annual withdrawals — you only need to empty the account by the end of year 10. You can take distributions in any amount along the way, or wait. 

A timing note that has tripped up many beneficiaries: the IRS waived the penalty for missed annual RMDs for 2021 through 2024 under Notices 2022-53, 2023-54, and 2024-35 while it finalized these rules. Those waivers have ended, and 2025 was the first year annual RMDs are enforced for beneficiaries who owe them. The waivers did not extend anyone’s 10-year deadline — the clock still runs from the year of death. 

There’s a trade-off worth understanding here. Because traditional inherited-IRA withdrawals are taxed as ordinary income, taking the whole balance in a single year can push that year’s income into a higher tax bracket — often during your own peak earning years. Spreading withdrawals across the 10 years can help some beneficiaries smooth that impact, while waiting can keep more invested for longer; the right balance depends on your tax situation.

How do required minimum distributions (RMDs) work on an inherited IRA?

An RMD is the minimum amount the IRS requires you to withdraw from a tax-deferred account in a given year. For inherited IRAs, whether you owe one — and how it’s calculated — depends on your beneficiary category: 

  • Eligible designated beneficiaries taking life-expectancy distributions calculate each year’s RMD using the IRS Single Life Expectancy table in Publication 590-B, based on the account balance and their life expectancy. 
  • Non-spouse beneficiaries under the 10-year rule owe annual RMDs in years 1–9 only if the original owner had already begun their own RMDs; otherwise, only the year-10 deadline applies. 
  • Surviving spouses who treat the account as their own follow the standard owner RMD rules — beginning at age 73, rising to 75 for those born in 1960 or later, per the IRS RMD FAQs.

How is an inherited Roth IRA different?

An inherited Roth IRA follows the same 10-year deadline for most non-spouse beneficiaries, but with two key differences that generally work in your favor. 

First, because Roth IRA owners are never required to take RMDs during their lifetime, a Roth owner is always treated as having died “before their required beginning date.” That means non-spouse beneficiaries of a Roth IRA are not required to take annual RMDs during the 10 years — they only need to empty the account by the end of year 10. 

Second, qualified withdrawals are generally tax-free, provided the account has met the 5-year holding requirement, per IRS Publication 590-B. The tradeoff: the money must still come out within 10 years, so the account’s tax-free growth ends at that deadline rather than continuing across your lifetime. Some beneficiaries let an inherited Roth grow for most of the 10 years before withdrawing.

What happens if you miss an inherited IRA RMD?

If you were required to take an RMD and didn’t, the IRS applies an excise tax on the amount you should have withdrawn. Under SECURE 2.0, that penalty is 25% of the shortfall, reduced to 10% if you correct the mistake within the IRS correction window and file the appropriate form. In some cases the IRS may waive it entirely for reasonable cause. See the IRS RMD FAQs.

How to open an inherited IRA

Setting up an inherited IRA generally follows a few steps, though the exact process varies by provider:

  1. Confirm you’re the beneficiary.

  2. Gather the death certificate and account details the provider will request.

  3. Open an inherited IRA titled to reflect the deceased owner.

    Most providers that offer IRAs also offer inherited IRAs.

  4. Transfer the assets directly from the original account, trustee-to-trustee.

    This matters because non-spouse beneficiaries generally cannot use a 60-day rollover, a check made out to you personally can be treated as a full taxable distribution, per IRS Publication 590-B — so most beneficiaries move the assets provider-to-provider. 

  5. Set your distribution schedule.

    Based on your beneficiary category, and calendar any annual RMD deadline. 

The M1 bottom line

Inheriting an IRA arrives at a hard moment, and the deadlines are strict — most non-spouse beneficiaries now have a 10-year window, some owe annual RMDs along the way, and missing one carries a penalty. The tradeoffs cut both ways: the account keeps its tax advantage, but that advantage comes with deadlines and, on traditional balances, taxable withdrawals. For many people, a conversation with a tax professional is worth the time. 

On M1, you can open an inherited IRA, set your own target allocation, and let M1 handle the routine work of keeping it invested while you focus on the timeline that applies to you. If you’re also weighing your own retirement accounts, the guides on Roth IRAs and how many IRAs you can have can help.

Frequently asked questions about inherited IRAs

What is the 10-year rule for an inherited IRA?

For IRAs inherited from owners who died after 2019, most non-spouse beneficiaries must withdraw the entire balance by December 31 of the 10th year after the year of death, per the IRS beneficiary rules. Whether you also owe annual withdrawals in years 1–9 depends on whether the original owner had already started their own RMDs.

Do I have to take annual RMDs on an inherited IRA?

It depends. Under the 10-year rule, you generally owe an annual RMD in years 1–9 only if the original owner had already begun RMDs; if they died before starting — or if it’s an inherited Roth IRA — you generally only need to empty the account by year 10, per IRS Publication 590-B. 

What are the inherited IRA rules for a non-spouse beneficiary?

Non-spouse beneficiaries generally cannot treat the IRA as their own or add contributions, and most are subject to the 10-year rule. Eligible designated beneficiaries — a minor child of the owner, a disabled or chronically ill person, or someone not more than 10 years younger than the owner — may instead stretch withdrawals over their life expectancy, per the IRS rules.

What options does a surviving spouse have with an inherited IRA?

A surviving spouse can generally treat the IRA as their own (a spousal rollover) or remain a beneficiary. Treating it as your own defers withdrawals longest but locks the money until age 59½; remaining a beneficiary keeps it accessible without the early-withdrawal penalty but starts distribution rules sooner. See the IRS beneficiary guidance.

Is an inherited Roth IRA taxable?

Qualified withdrawals from an inherited Roth IRA are generally tax-free if the 5-year holding requirement is met, per IRS Publication 590-B. Non-spouse beneficiaries are not required to take annual RMDs, but the account must still be emptied within 10 years.

What happens if I miss an inherited IRA RMD?

A 25% excise tax applies to the amount you should have withdrawn, reduced to 10% if corrected within the IRS window, per the IRS RMD FAQs. Because beneficiary rules depend on individual circumstances, confirming your RMD with a tax professional is generally worthwhile.

Can I combine an inherited IRA with my own IRA?

Generally no. Except for a surviving spouse who elects to treat the account as their own, an inherited IRA must stay a separate account and cannot be rolled into or combined with your own IRAs, per IRS rules. See the guide on how many IRAs you can have.

This material is provided for informational and educational purposes only and is not investment, tax, or legal advice, nor a recommendation regarding any distribution strategy or account type. Inherited IRA and required-minimum-distribution rules depend on your individual circumstances — including your relationship to the original account owner and the date of death — and a missed distribution carries a penalty. Consult a qualified tax professional before acting. M1 charges a platform fee and other fees may apply; see the M1 Fee Schedule for details. All investing involves risk, including the possible loss of principal.

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