When someone who inherited an IRA dies, the account does not close and it does not get rolled into anyone’s personal retirement account. It passes to a successor beneficiary — either a person the deceased beneficiary named on the custodian’s paperwork, or, if no one was named, generally the deceased beneficiary’s estate. The successor takes over the account under a compressed distribution timeline, keeps the same tax treatment the original beneficiary had, and in most cases must empty the account within 10 years. That is the short answer to what happens to an inherited IRA when the beneficiary dies; the details below cover how long the successor actually has, what taxes apply, and what to do first.
The 10-Year Deadline for a Successor Beneficiary
How long the successor has depends on the category the deceased beneficiary fell into.
If the deceased beneficiary was a regular designated beneficiary already running out the 10-year clock, the successor does not get a fresh start. The successor steps into whatever time is left. If the beneficiary died in year six, the successor has four years. The deadline stays fixed at December 31 of the tenth year after the original account owner’s death.1Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
If the deceased beneficiary was an eligible designated beneficiary (EDB) — a surviving spouse, a minor child of the account owner, a disabled or chronically ill person, or someone no more than 10 years younger than the original owner — the successor gets a new 10-year window that begins the year after the EDB’s death. The full balance must be withdrawn by December 31 of the tenth year following.1Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans The EDB’s special stretch treatment ends at death, and the statute requires the remainder to be distributed within the following decade.2eCFR. 26 CFR 1.401(a)(9)-5 – Required Minimum Distributions From Defined Contribution Plans
Do You Have to Take Money Out Every Year?
Sometimes yes, sometimes no. The trigger is whether the original account owner had reached their required beginning date — generally April 1 of the year after turning 73 — before they died.
If the original owner died on or after that date, the successor must take a distribution every calendar year of the 10-year window. Final regulations issued by the Treasury Department in 2024, effective for distribution years beginning January 1, 2025, confirm that the annual requirement continues until the account is emptied. A distribution is required even for the calendar year in which the beneficiary died, and if the beneficiary had not already taken that year’s amount, the successor must withdraw it.3Federal Register. Required Minimum Distributions
If the original owner died before the required beginning date, no annual withdrawals are required. The successor can time the money however they want, provided the account is empty by the end of the tenth year.4Internal Revenue Service. Retirement Topics – Beneficiary
Tax Treatment of Withdrawals
Traditional IRA
Every dollar the successor pulls from an inherited traditional IRA is ordinary income in the year received. It stacks on top of the successor’s other earnings and is taxed at their marginal federal rate, which for 2026 ranges from 10% to 37%.5Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The custodian issues Form 1099-R for each distribution.6Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
Because the money has to come out in a short window, a single lump-sum withdrawal can push the successor into a higher bracket. Spreading withdrawals over multiple years usually softens the hit, though a successor also subject to annual required distributions has less room to plan.
Roth IRA
Roth withdrawals are generally tax-free, since the original owner already paid tax on the contributions. The account must have satisfied the five-year aging requirement, measured from January 1 of the tax year of the original owner’s first Roth contribution.7Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements (IRAs) By the time an account has already been inherited once, that clock has usually run. The 10-year deadline still applies, and the custodian still issues Form 1099-R, but the taxable amount is typically zero.
The IRD Deduction if Estate Tax Was Paid
If the deceased beneficiary’s estate was large enough to owe federal estate tax — the 2026 exemption is $15 million per person — the successor may claim a federal income tax deduction on inherited IRA withdrawals.5Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 This is the income in respect of a decedent (IRD) deduction, and it prevents the same dollars from being taxed as estate value and again as ordinary income. The deduction equals the portion of the estate tax attributable to the IRA assets, and the successor claims it in the same year the distribution is included in gross income.8Office of the Law Revision Counsel. 26 U.S. Code 691 – Recipients of Income in Respect of Decedents The calculation is complicated enough that most successors in this situation work with a tax professional.
No Rollover, but Transfers Are Allowed
A successor cannot roll an inherited IRA into a personal IRA. Federal law denies rollover treatment for inherited accounts held by anyone other than the surviving spouse of the original owner, and a successor beneficiary is one step further removed.6Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
What is allowed is a trustee-to-trustee transfer between financial institutions. The receiving account has to be titled in the name of the original deceased IRA owner, for the benefit of the successor as beneficiary. A direct transfer preserves the inherited status and is not treated as a distribution.7Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements (IRAs)
Penalties for Missing a Required Distribution
Missing a required distribution triggers a 25% excise tax on the shortfall, whether the miss was an annual amount or the final drain-the-account deadline.9Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
The rate drops to 10% if the successor fixes it within a correction window. To qualify, the successor must withdraw the missed amount and file a corrected return before the IRS issues a deficiency notice, assesses the tax, or the second tax year after the year the penalty was imposed ends, whichever comes first.9Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
The IRS can also waive the excise tax entirely for a reasonable error being corrected. The successor files Form 5329, writes “RC” and the shortfall amount on the dotted line next to line 54, and attaches a written explanation of the error and the fix.10Internal Revenue Service. Instructions for Form 5329
What if No Successor Was Named
If the deceased beneficiary never designated a successor, the remaining balance generally passes to that beneficiary’s estate. An estate is not an individual for distribution purposes, so the SECURE Act’s 10-year rule does not apply the same way. The account falls back to the pre-2020 framework.4Internal Revenue Service. Retirement Topics – Beneficiary
Under that older framework, the timeline again turns on the original owner’s required beginning date. If the owner died before it, the estate must empty the account within five years of the owner’s death. If the owner died on or after it, the estate can stretch distributions over the longer of its own measuring life or the original owner’s remaining life expectancy. Because estates close and distribute their assets, the practical outcome is often faster liquidation than an individual successor would face.
Naming a successor on the inherited IRA paperwork avoids this default. Most custodians let the primary beneficiary designate a successor at any point while the account is open.
Setting Up the Successor Inherited IRA
The successor’s first move is to contact the custodian holding the inherited IRA and open a successor inherited IRA in their own name as beneficiary. The paperwork typically required:
- A certified copy of the primary beneficiary’s death certificate.
- Government-issued photo ID.
- The successor’s Social Security number or Taxpayer Identification Number for federal reporting.
- The custodian’s successor beneficiary IRA application.
The custodian retitles the account to reflect all three parties: the original owner, the primary beneficiary, and the successor. That chain-of-title naming preserves the inherited status so the correct distribution rules apply. The successor can also name their own beneficiaries on the new account in case they die before the balance is fully withdrawn.
State Inheritance Tax
Federal income tax is not the only tax at issue. A few states impose their own inheritance tax on assets received from a decedent, and inherited IRA distributions can be reached by these taxes. Rates depend on the successor’s relationship to the deceased beneficiary; close relatives usually pay less or qualify for exemptions, while unrelated heirs can face rates up to 16%. Most states impose no inheritance tax, so this only matters in a small number of jurisdictions.