How to Open an Inherited IRA: Steps, Deadlines, and Taxes

To open an inherited IRA, first confirm whether you’re the deceased’s surviving spouse or a non-spouse beneficiary, then gather a certified death certificate and the decedent’s account details, complete the custodian’s inherited IRA application with the account titled in the required beneficiary format, and move the assets by direct trustee-to-trustee transfer. The steps are simple. The rules around titling, transfer method, and distribution deadlines are where people lose money, so it’s worth working through each one before you sign anything.

Start With Your Beneficiary Type

Everything else follows from this. A surviving spouse can roll the inherited funds into their own existing IRA, which then behaves like any IRA they opened themselves, including the 10% early withdrawal penalty before age 59½.¹ A spouse can also choose to keep the account as an inherited IRA in their own name, which avoids that early withdrawal penalty at any age and allows life-expectancy distributions.³ The account has to be established fresh as a beneficiary IRA in a specific title format, and the money has to arrive by direct transfer. If you receive a check, the IRS treats it as a taxable distribution that cannot be undone.

A narrow category called eligible designated beneficiaries gets more flexibility than other non-spouse heirs. The IRS recognizes five groups: surviving spouses, minor children of the account owner, disabled individuals, chronically ill individuals, and anyone not more than 10 years younger than the deceased.¹ Disabled and chronically ill status must exist at the time of the owner’s death and cannot be self-certified; a physician’s certification or proof of Social Security disability benefits is typically what custodians accept. A minor child gets life-expectancy treatment until age 21, when the 10-year clock starts.

Documents to Gather Before You Contact the Custodian

Missing paperwork is the most common reason applications stall for weeks. Have all of this on hand before you begin:

A certified copy of the death certificate. Every custodian requires one before releasing assets. Order copies from the county vital records office where the death occurred; fees typically run $15 to $25 per certified copy.
The decedent’s IRA account number at the institution currently holding the funds.
The decedent’s Social Security number, date of birth, and date of death, which custodians use to verify records and calculate distribution obligations.⁴
Your own Social Security number and a government-issued photo ID such as a driver’s license or passport.
The beneficiary designation form on file with the custodian, or trust documents if the IRA passed to a trust. If the estate went through probate, you may also need letters testamentary or a court order confirming your right to the assets.

Confirm that every detail on your application exactly matches the custodian’s records. A Social Security number that doesn’t line up with the file, or a name spelled differently than on the beneficiary form, is the most common reason applications get kicked back.

Titling the Account and Filing the Application

Most brokerages post their inherited IRA application forms online and accept scanned uploads through a secure portal, though some still require mailed originals for the death certificate. You can open the new account at the same institution that held the original IRA or at any other custodian you prefer.

Titling is not cosmetic. A non-spouse beneficiary IRA needs to show the original owner’s name, a notation that they are deceased, and your name as beneficiary. Getting the title wrong at the outset is one of the ways custodians end up treating the transfer as a taxable distribution, so verify the exact wording the custodian uses on the account before you sign.

The application will ask you to confirm your relationship to the deceased, choose your distribution method, and designate a successor beneficiary for the new account. Fill in the successor designation while you’re there. Without one, whatever remains in the account when you die typically passes to your estate, which can accelerate the distribution timeline and force the assets through probate. A successor doesn’t reset the clock; if you were subject to the 10-year rule, your successor must empty the account by the end of your original 10-year deadline, calculated from the original owner’s death.

Moving the Assets

Once the new account is open, request a trustee-to-trustee transfer from the institution that holds the original IRA. The outgoing custodian wires the funds directly to the new one without the money ever touching your bank account. This is the only safe method for non-spouse beneficiaries, because the 60-day rollover window that applies to regular IRA transfers does not apply here. A check made out to you is a taxable event that cannot be reversed.¹

Expect the transfer to take two to four weeks, longer for complex estates or when multiple beneficiaries are involved. During that window, the assets may sit in a money market or cash sweep account until you select investments. Ask both institutions about transfer or account-closing fees up front so you’re not surprised by a deduction from the balance.

If More Than One Person Inherits the Same IRA

Each beneficiary should establish a separate inherited IRA. The deadline is firm: December 31 of the year after the original owner’s death. Miss it, and every beneficiary is forced onto the distribution schedule of the oldest beneficiary, which usually means faster withdrawals and a bigger tax bill for the younger heirs. Any investment gains or losses that accrued after the owner’s death have to be allocated proportionally among the separate accounts, so start the paperwork with the custodian early.

Deadlines That Start the Day You Inherit

Opening the account is the easy part. Two clocks start running immediately, and both belong on your calendar.

The Year-of-Death RMD

If the original owner died after their required beginning date (currently age 73) and hadn’t yet taken their full required minimum distribution for the year, the beneficiary has to complete it. That final distribution has to happen in the calendar year of death, and the beneficiary reports it as income on their own tax return.⁵ This step gets missed constantly in the shuffle of settling an estate.

The 10-Year Rule

Under the SECURE Act, most non-spouse beneficiaries who inherited an IRA after 2019 must withdraw the entire balance by December 31 of the 10th year following the owner’s death.⁶ How you spread the withdrawals depends on whether the original owner had already started taking required minimum distributions. If they died after their required beginning date, you generally must take annual distributions during each year of the 10-year window rather than waiting until year 10 to empty it.⁷ The IRS finalized this rule effective in 2025. If the owner died before reaching the required beginning date, no annual distributions are required during the 10-year period, though you can take them voluntarily.

Eligible designated beneficiaries are exempt from the 10-year rule and can stretch distributions over their own life expectancy.¹

What Missing a Distribution Costs

Falling short on a required distribution triggers an excise tax of 25% of the amount you should have withdrawn. That drops to 10% if you correct the shortfall during a correction window that generally runs through the end of the second tax year after the penalty was imposed.⁸ Before SECURE 2.0 reduced these rates, the penalty was a flat 50%.

A Quick Note on Taxes

Distributions from a traditional inherited IRA are ordinary income in the year you receive them. The custodian reports each one on Form 1099-R using distribution code 4, which identifies the payment as a death benefit.⁹ There’s no capital gains treatment; the distribution stacks on top of your other income. Waiting until year 10 to withdraw a large balance in a single year can push you into a much higher bracket, so plan the pacing before you start taking money out.

Inherited Roth IRAs follow the same 10-year timeline for most non-spouse beneficiaries. Withdrawals of contributions are always tax-free, and withdrawals of earnings are tax-free as long as the original Roth IRA was open for at least five years before the owner’s death.⁷ If the account was less than five years old, earnings may be taxable.

1
Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
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Internal Revenue Service. Retirement Topics – Beneficiary
Everyone else is a non-spouse beneficiary. You cannot treat the inherited IRA as your own, cannot contribute to it, and cannot roll it into an IRA you already have.2Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
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Merrill Edge. Open a Traditional Inherited IRA – What You’ll Need
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Internal Revenue Service. Required Minimum Distributions for IRA Beneficiaries
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Congress.gov. Inherited or Stretch Individual Retirement Accounts and the SECURE Act
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Internal Revenue Service. Retirement Topics – Beneficiary
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Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. Instructions for Forms 1099-R and 5498