If you inherit an IRA from someone who themselves inherited it, you are a successor beneficiary, and successor beneficiary rules for inherited IRAs are stricter than what the person before you faced. In almost every case, you must empty the account within a 10-year window. What varies is when that window starts, whether you owe annual withdrawals along the way, and how much time is actually left on the clock when you step in.
What Being a Successor Beneficiary Means
You become a successor beneficiary the moment the primary beneficiary of an inherited IRA dies with money still in the account. The primary beneficiary was named by the original owner. You were named by the primary beneficiary on the inherited IRA’s own beneficiary form. This works the same way for Traditional and Roth inherited IRAs.
You do not inherit the primary beneficiary’s rights. If they were stretching distributions over their life expectancy, that stretch does not transfer to you. If they had years left on a 10-year window, you take whatever is left, not a fresh 10.
You also cannot roll this money into your own IRA. The account must stay an inherited IRA, retitled to show the chain of ownership, and no new contributions can be added to it.
How the 10-Year Deadline Is Calculated
The rule sounds simple: everything out by December 31 of the 10th year after the triggering event. The triggering event is the part that trips people up, and it depends on whether the primary beneficiary was an eligible designated beneficiary (EDB).
If the Primary Beneficiary Was an Eligible Designated Beneficiary
Eligible designated beneficiaries include a surviving spouse, a minor child of the original owner, a disabled or chronically ill individual, and anyone not more than 10 years younger than the original owner. If the person you inherited from fell into one of those categories, your 10-year clock starts the year they died.1Federal Register. Required Minimum Distributions So if an EDB died in 2026, you have until December 31, 2036 to empty the account.
If the Primary Beneficiary Was Not an EDB
This is where successors most often get surprised. If the primary beneficiary was a regular designated beneficiary rather than an EDB, you do not get a fresh 10-year window. The deadline is still measured from the original owner’s death, and you inherit whatever time is left.2Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements
An example. The original owner dies in 2021, and their adult child (not an EDB) inherits. The adult child dies in 2027, six years into their 10-year window. The account still has to be emptied by December 31, 2031. You get four years, not 10. Had the primary beneficiary died in 2030, you would have one.
Annual Withdrawals During the Window
Emptying the account by the deadline is one requirement. Whether you must also take annual withdrawals along the way is a separate question, and it turns on when the original IRA owner died relative to their required beginning date. That date is currently April 1 of the year after the owner turned 73, rising to 75 starting in 2033.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
If the original owner died on or after their required beginning date, you must take an annual distribution each year during the 10-year window, on top of emptying the account by year 10. The IRS finalized this rule in July 2024.1Federal Register. Required Minimum Distributions
If the original owner died before their required beginning date, annual withdrawals are not required. You can take money on whatever schedule you like, as long as the balance hits zero by that final December 31.2Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements
When annual distributions are required, you cannot calculate them using your own life expectancy. The IRS prohibits it. Instead, you continue the deceased beneficiary’s remaining life expectancy factor, reduced by one each year.2Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements That factor is often smaller than the one they were using, which produces a larger required withdrawal as the years count down.
Inherited Roth IRAs
A Roth changes the picture. Because the original Roth owner was never subject to required minimum distributions in life, the annual-distribution requirement tied to dying after the required beginning date does not apply. You can let an inherited Roth sit and grow tax-free for the full 10-year window and take everything out in year 10.4Internal Revenue Service. Retirement Topics – Beneficiary
Contribution withdrawals from an inherited Roth are always tax-free. Earnings are tax-free too, provided the Roth’s five-year aging clock has been satisfied. That clock starts with the tax year the original owner made their first Roth contribution. If the account was opened more than five years before the original owner died, earnings you withdraw are fully tax-free. If it was newer, earnings taken before the five-year mark can be taxed as income. No early withdrawal penalty applies to distributions from an inherited account regardless of your age.
Retitling and Moving the Account
Titling is not clerical detail. It determines whether the account keeps its tax-advantaged status or generates an immediate taxable event. The inherited IRA must be retitled to show the full chain, along these lines: “[Original Owner Name], deceased, FBO [Primary Beneficiary Name], deceased, FBO [Successor Beneficiary Name].” Expect the custodian to ask for certified death certificates for both the original owner and the primary beneficiary.
Any transfer to a different custodian has to be a direct trustee-to-trustee transfer into an inherited IRA titled in your name as successor.5Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions A rollover is not an option. If you take the money and deposit it in your own IRA, the IRS treats that as a taxable distribution and, on top of it, an excess contribution. Fill out new beneficiary designation forms at the receiving institution while you are at it, naming your own heirs in case you die before the account is emptied.
How Distributions Are Taxed
Traditional inherited IRA distributions are ordinary income in the year you receive them. No capital gains rate, no special treatment.4Internal Revenue Service. Retirement Topics – Beneficiary
The custodian issues a Form 1099-R for each year you take a distribution, in your name and tax ID, with Code 4 in Box 7 to signal a death distribution.6Internal Revenue Service. Instructions for Forms 1099-R and 5498
The practical problem: pulling a large Traditional balance in a single year can push you into a much higher bracket. Spreading distributions across the window, where the rules permit it, usually keeps the annual tax hit lower. Qualified Roth distributions come out tax-free, which is why Roth accounts are the friendlier inheritance to receive.
Penalties for a Missed Distribution
Missing a required distribution triggers a 25% excise tax, but only on the shortfall, not the whole account. If you were supposed to withdraw $15,000 and took nothing, the penalty is $3,750, not 25% of the account balance.7Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Plans
The penalty drops to 10% if you fix the mistake inside the correction window by withdrawing the missed amount and filing an amended or corrected return.7Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Plans The same penalty structure hits any balance left in the account past the final December 31 deadline: whatever is still there counts as a shortfall.
If you missed a distribution for a legitimate reason, you can request a waiver by filing Form 5329 with a written explanation attached.8Internal Revenue Service. Instructions for Form 5329 The IRS has historically been reasonable with honest mistakes, particularly when the corrective withdrawal has already been taken by the time you file.
Managing the Tax Hit Across the Window
How you spread distributions matters, especially with Traditional balances above roughly $200,000, where a lump-sum liquidation in year 10 can jump you from the 22% bracket into the 32% or 35% bracket. Roughly equal annual withdrawals often produce a smaller total tax bill than waiting.
If you are 70½ or older, you can use a qualified charitable distribution to send money straight from the inherited IRA to an eligible charity. Up to $111,000 per year can be excluded from gross income through a QCD in 2026.9Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted The QCD satisfies any required annual distribution and produces no taxable income.
Disclaiming the Inheritance
If you do not want the account, you can disclaim it and let the assets pass to whoever is next under the beneficiary designation or the estate. To avoid gift tax problems, the disclaimer must be qualified: in writing, delivered to the IRA custodian within nine months of the death that triggered your inheritance, and made before you have accepted any benefit from the account (no distributions, no changing investments).10Office of the Law Revision Counsel. 26 USC 2518 – Disclaimers You cannot direct where the assets go; they pass under the existing designation or state law. The nine-month deadline cannot be extended, so if disclaiming is on the table, act early.