Yes, a minor can inherit an IRA, but the account cannot sit in the child’s name alone and the money has to come out on a schedule the IRS sets. Because a child cannot legally open or manage a brokerage account, an adult has to hold the inherited IRA on their behalf through a custodial arrangement or a trust. And the payout window depends on one key fact: whether the child is the deceased owner’s own son or daughter, or someone else’s, such as a grandchild, niece, or nephew.
Who Actually Manages the Account
The IRA owner names beneficiaries on a form kept by the account custodian (Fidelity, Schwab, Vanguard, and the like). That form controls who receives the money and overrides anything the will says.1Internal Revenue Service. Retirement Topics – Beneficiary
If a child is named directly with no other arrangement, the custodian will freeze the assets until a court appoints a guardian or conservator. That takes months, costs legal fees, and creates ongoing court oversight. Two structures avoid the courtroom.
Custodial Accounts (UTMA or UGMA)
The simplest option is naming a custodian under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act on the beneficiary designation form itself. An adult custodian makes investment decisions and requests distributions on the child’s behalf. Most IRA custodians have standard paperwork for this.
The trade-off is that the custodial relationship ends automatically when the child reaches the termination age set by state law. That age runs from 18 to 25, with 21 the most common; a few states let the donor specify a later age when the account is created. At that point, the young adult gets unrestricted access to whatever is left.
Trust as Beneficiary
Naming a trust as the IRA beneficiary lets the original owner spell out terms: distributions only for education and health, a fixed percentage each year, or no full control until age 30 or 35. For the trust to preserve the more favorable distribution timeline, it has to qualify as a see-through trust under the IRS rules, which includes providing a copy of the trust document to the IRA custodian by October 31 of the year after the owner’s death.2Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) A trust that misses those requirements can be treated as having no designated beneficiary, which shortens the payout window sharply.
How Long the Money Can Stay in the Account
The SECURE Act of 2019 forced most non-spouse beneficiaries to empty an inherited IRA within 10 years. It kept an exception for a category called eligible designated beneficiaries, which includes the deceased owner’s own minor child.1Internal Revenue Service. Retirement Topics – Beneficiary That single distinction is where families see the biggest difference in outcomes.
If the Child Is the Owner’s Son or Daughter
For IRS purposes, “minor child” means under age 21, regardless of the age of majority in your state. While the child is under 21, required minimum distributions are calculated using the IRS Single Life Expectancy Table in Appendix B of Publication 590-B. The custodian divides the prior year-end balance by the child’s life expectancy factor, which decreases by one each year.2Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)
Because children have long life expectancies, those annual distributions are small. A 10-year-old beneficiary has a life expectancy factor around 73, so the first year’s RMD is roughly 1.4% of the account balance. Most of the money keeps growing.
When the child turns 21, the life expectancy method ends and the 10-year rule begins. The entire remaining balance has to be distributed by December 31 of the year containing the 10th anniversary of the child’s 21st birthday.2Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) In practice, the child has until roughly age 31 to drain the account.
There is one wrinkle. If the original IRA owner died after they had already started taking their own RMDs (after their required beginning date), annual distributions have to continue during the 10-year window; the beneficiary cannot simply wait and take one lump sum at the end. The IRS confirmed this in proposed regulations anticipated to take effect for 2025 and later years.3Internal Revenue Service. Notice 2024-35, Certain Required Minimum Distributions for 2024 If the owner died before their required beginning date, only the year-10 deadline matters.
If the Child Is Not the Owner’s Son or Daughter
Grandchildren, nieces, nephews, and any other minor beneficiary who is not the deceased owner’s own child fall under the straight 10-year rule from the start.1Internal Revenue Service. Retirement Topics – Beneficiary There is no life expectancy stretch and no age-based delay. The entire account has to be distributed within 10 years of the owner’s death.
The same rule about the owner’s required beginning date applies here too. If the owner had already started their own RMDs, the child’s custodian has to take an annual distribution each year during the 10-year window rather than waiting until year 10.
Taxes on the Distributions
Every dollar pulled from a traditional inherited IRA is ordinary income to the beneficiary. For a minor, that income runs into the kiddie tax, which exists to stop families from parking investment income in a child’s low bracket.
For 2026, a child’s unearned income above $2,700 is taxed at the parent’s marginal rate.4Internal Revenue Service. Rev. Proc. 2025-32 The kiddie tax reaches children under 18, 18-year-olds who don’t provide more than half their own support, and full-time students under 24.5Internal Revenue Service. 2025 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income If the parent is in the 32% or 37% bracket, even modest distributions can produce a real tax bill.
A dependent child with unearned income above $1,350 in 2026 has to file a federal return.4Internal Revenue Service. Rev. Proc. 2025-32 If the child’s only income is interest and dividends under $13,500, the parent may elect to report it on their own return instead of filing separately for the child.6Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax) That simplifies paperwork; it does not change what is owed.
Roth inherited IRAs work differently. Distributions of contributions and earnings are generally tax-free as long as the original Roth account was open at least five years before the owner died.1Internal Revenue Service. Retirement Topics – Beneficiary The distribution timeline is the same, but the withdrawals don’t create a tax bill. If the five-year clock hasn’t been met, earnings may be taxable while withdrawals of the original contributions remain tax-free.
What Happens If a Distribution Is Missed
The IRS imposes an excise tax equal to 25% of any required amount that wasn’t withdrawn.7Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans If the shortfall is corrected within a two-year window and an amended return is filed, the penalty drops to 10%.8Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
The penalty applies regardless of the beneficiary’s age. A 12-year-old isn’t tracking IRS deadlines, so the adult managing the account has to. Most IRA custodians will calculate the RMD automatically, but requesting the distribution and reporting it on a tax return is on the custodian, trustee, or parent handling the account.
When the Child Becomes an Adult
Two things shift around the same age, on different schedules, and mixing them up causes trouble.
Account control shifts first, if the inherited IRA is held under UTMA or UGMA. The custodian has to turn over the account when the beneficiary hits the state’s termination age, which is 18 in some states, 21 in most, and up to 25 in states that allow an extension. At that point the young adult can withdraw whatever they want.
The distribution rule shifts separately. For IRS purposes the child stays a “minor” until age 21, and that’s when the 10-year clock starts. A beneficiary in a state where UTMA ends at 18 will control the account for three years before the 10-year rule begins. A beneficiary in a state that stretches UTMA to 25 may already be several years into the 10-year window before gaining full control.
A trust follows its own terms, which is the appeal of using one. A well-drafted trust can hold assets past age 21 and release distributions on a schedule that matches the 10-year payout window. Once the beneficiary is an adult and in charge of the account, remaining deadlines are their responsibility, and the 25% penalty for a missed distribution lands on them directly.