You’re at the kitchen table with three papers in front of you: a death certificate, an IRA statement, and a custodian letter that seems routine until one sentence changes the plan.
Maya thought she had ten years to empty her mother’s IRA. Then her accountant asked the question that matters: had her mother already started taking required minimum distributions?
That one detail can change everything. The 10-year rule may still apply, but for many beneficiaries, it is not the only clock running.
The 10-Year Rule Is the Finish Line, Not Always the Whole Route
For many IRA owners who died after December 31, 2019, the SECURE Act generally replaced the old “stretch IRA” approach with a 10-year distribution window for non-spouse beneficiaries.
That sounds simple: inherit the account, empty it by year ten.
But the IRS final regulations clarified a key point. If the original IRA owner had already reached their required beginning date and was taking required minimum distributions, many beneficiaries subject to the 10-year rule must also continue annual withdrawals during that window.
Maya’s mother was 78. She had already been taking RMDs. That meant Maya, an adult daughter who was not disabled, chronically ill, a minor child, a spouse, or close in age to her mother, fell into the general beneficiary bucket.
Her job was not just to empty the inherited IRA by year ten. She also had to confirm whether annual beneficiary RMDs were due each year along the way.
Think of it like inheriting a rental property with a lease already in place. You own the property, but the existing obligations do not disappear.
The Key Switch: Had RMDs Already Begun?
Start with one question: had the original owner reached their required beginning date?
RMDs generally begin at age 73 for account owners, though the inherited IRA rules depend on owner status, beneficiary status, account type, and timing. For Maya, the answer was clear. Her mother was 78, so the account came with ongoing distribution requirements.
If the original owner had not yet reached the required beginning date, annual withdrawals may not be required during the 10-year window. The beneficiary may still need to empty the account by the end of year ten, but the annual step may not apply in the same way.
If the original owner had already started required annual distributions, the IRS says many 10-year-rule beneficiaries must keep taking annual distributions during that period.
That distinction is where families get caught. They hear “10-year rule” and assume the only deadline is far away. Then December arrives, the custodian’s phone lines jam, and a tax issue becomes a paperwork emergency.
Annual beneficiary RMDs, when required, typically must be taken by December 31 each year.
Penalties, Relief, and Why Custodians May Not Give You the Whole Answer
Missed required minimum distributions may trigger a 25% excise tax. That can be reduced to 10% if corrected within the IRS correction window.
There has been relief for earlier confusion. Professional analysis, including Kitces commentary, has noted IRS relief for missed beneficiary RMDs for 2021 through 2024, with no penalty and no catch-up requirement in many cases.
But relief for past transition years is not a permanent pass. The final regulations generally became relevant for calendar-year RMD determinations beginning in 2025.
Maya called the custodian expecting a clean answer. She received an estimate, several caveats, and a recommendation to speak with a tax professional. That was not evasive. It was honest.
Custodians can administer accounts and may calculate distributions, but your full tax picture includes salary, bonuses, deductions, state taxes, estimated payments, family obligations, and future income expectations.
The IRS also says the account owner is ultimately responsible for taking the correct RMD amount, even when a custodian provides calculations.
If an RMD was missed, ask a qualified tax professional about Form 5329 and whether reasonable-cause relief may apply.
Minimums Are the Floor — Tax Planning Is the Strategy
Maya inherited a $400,000 IRA. Her annual minimum was manageable. The bigger issue was what would remain if she took only the minimum every year and left a large balance for the final year.
That final distribution could stack on top of salary, bonuses, Medicare surcharges, or state taxes, depending on her situation.
A better framework is to run three scenarios:
1. Take only the annual minimums. 2. Take roughly equal withdrawals across the 10-year period. 3. Take heavier withdrawals in lower-income years.
Maya expected two promotion years, which meant higher income. She also considered a possible lower-income sabbatical later. That changed the withdrawal conversation. The question was no longer “How little can I take?” It became “Which years give me the most tax flexibility?”
If income is unusually low this year, taking more than the minimum may reduce pressure later. If income is unusually high, staying closer to the minimum may preserve flexibility. The right answer depends on the full math.
Coordinate withdrawals with paycheck withholding or estimated taxes. A traditional IRA distribution may look like cash in your account, but part of it may already be headed to the IRS or your state tax agency.
Roth inherited accounts need their own review. Roth IRAs do not require lifetime RMDs for the original owner, but beneficiaries still face post-death distribution rules. The account’s tax character matters, but death starts a separate rulebook.
Your Inherited IRA Checklist Before Year-End
Before making a withdrawal, gather five items: the death certificate, prior-year account value, beneficiary designation, account agreement, and any custodian RMD estimate.
Then work through the sequence:
- Classify the beneficiary. - Identify whether the original owner had begun RMDs. - Confirm whether annual beneficiary RMDs apply. - Choose a withdrawal rhythm. - Reserve money for taxes. - Document everything.
If the account is inside an employer plan rather than an IRA, ask whether plan documents affect timing or whether transferring to an inherited IRA could make administration easier.
Maya eventually chose to take more than the minimum in a lower-income year while keeping enough liquidity for estimated taxes and family expenses. Your answer may differ. The point is not to copy her. The point is to stop letting default timing make the decision for you.
Before year-end, send your advisor three numbers: inherited account balance, expected salary, and planned withholding. Then ask one focused question: if I take only the required minimum this year, what distribution might remain in the final year?
That question turns a confusing inherited IRA rule into a cash-flow forecast.
The inheritance was never just money. For Maya, it was memory, responsibility, and a tax code that did not pause for grief.
This content is for educational and informational purposes only and does not constitute financial advice. Always consult with a qualified financial advisor before making investment decisions.
If you inherited an IRA, do not just ask when the account must be empty. Ask what must happen this year.
