Inherited IRA from a Parent: Rules, Deadlines, and Tax Planning for Adult Children

The most common inherited IRA scenario is also one of the most expensive: an adult child at peak earnings inherits a large traditional IRA from a parent and suddenly has a compressed 10-year window to deplete it — on top of salary, at their highest marginal rate. This guide covers what you actually owe, when you owe it, and how to plan around it.

Step 1: Confirm your beneficiary category

The SECURE Act created two tiers of beneficiaries with very different rules. Before anything else, you need to know which tier you are in.

Eligible Designated Beneficiaries (EDBs) — a short list who still qualify for the old "stretch IRA" option:¹

• Surviving spouse of the IRA owner
• Minor child of the IRA owner (until age 21, then switches to the 10-year rule)
• Individual who is disabled (per IRC § 72(m)(7))
• Individual who is chronically ill (per IRC § 7702B(c)(2))
• Individual who is not more than 10 years younger than the IRA owner

For most adult children, none of these apply. If your parent died at age 70, 75, or 80, and you are in your 40s, 50s, or early 60s, the age gap almost certainly exceeds 10 years — making you a non-EDB. Children with disabilities or chronic illness are the main exception.

If you are a non-EDB, the SECURE Act 10-year rule applies to you. Skip to Step 2. If you believe you qualify as an EDB, consult a specialist — the stretch IRA option requires careful documentation and custodian setup.

Step 2: Know your 10-year deadline

The inherited IRA must be completely depleted by December 31 of the calendar year that includes the 10th anniversary of the IRA owner's death.¹

This deadline is hard. There is no extension for life events, financial hardship, or probate delays. The IRS excise tax for failing to deplete by year 10 is 25% of the amount that should have been distributed (reduced to 10% if corrected within a 2-year window).²

Step 3: Determine whether you owe annual RMDs during the 10 years

This is the question that trips up most adult children — and where an enormous planning mistake often gets made.

The 2024 IRS final regulations (T.D. 10001) established a split: whether your parent had started Required Minimum Distributions before they died determines whether you must take annual distributions during years 1–9 of your 10-year window.³

• Parent died BEFORE their Required Beginning Date (RBD): No annual RMDs during the 10-year window. The inherited IRA simply needs to be fully depleted by December 31 of year 10. You choose when and how much to take in each of the 10 years.
• Parent died ON OR AFTER their RBD: Annual RMDs are required in years 1 through 9. By December 31 of year 10, any remaining balance must be fully withdrawn. Missing a required annual RMD exposes you to the 25% excise tax.

The RBD is not the year your parent turned a certain age — it is April 1 of the calendar year following the year they reached their required starting age. Required starting age depends on birth year:⁴

If your parent died before their RBD (before the April 1 date in the table above), you have no annual RMD obligation during the 10-year window. If they died after their RBD — even if they had not yet taken their first RMD — the annual RMD requirement applies to you.

How to calculate your annual RMD (if parent was post-RBD)

Your annual RMD for inherited IRA purposes is calculated using the Single Life Expectancy Table (IRS Publication 590-B, Appendix B, Table I) — based on your age in the year following the parent's death, not the parent's age.⁵

Formula for year 1: December 31 balance of inherited IRA ÷ your life expectancy factor from IRS Table I

For subsequent years, the factor decreases by 1.0 each year (you don't look up a new factor — you subtract 1 from the prior year's factor each year).

Example: Inherited $700,000 IRA, parent died post-RBD, you are 53 at the end of the year following death:

• Year 1: $700,000 ÷ your Table I factor at age 53 = your required minimum withdrawal. The remaining balance stays in the inherited IRA and continues to grow.
• Year 2: (prior-year Dec 31 balance) ÷ (year 1 factor minus 1.0)
• Years 3–9: same pattern — factor reduces by 1.0 each year
• Year 10: full remaining balance must be withdrawn

The actual Table I factor for your specific age is in IRS Publication 590-B. A specialist can calculate your precise annual RMD schedule and overlay it with your tax bracket profile to optimize withdrawal timing within the required minimums.

Why inheriting from a parent is particularly expensive for working adults

The demographic reality: parents most commonly die with large IRAs at ages 73–85. Their adult children — the primary beneficiaries — are typically 45–65, often at or near peak income.

This creates the inherited-IRA tax trap that is specific to the parent-child scenario:

• All inherited traditional IRA distributions are ordinary income. Unlike a house or stock account, there is no stepped-up basis. Every dollar withdrawn is taxed at your ordinary income rate — your salary rate, not the lower long-term capital gains rate.
• The distributions stack on top of your other income. A $150,000 salary plus a $50,000 mandatory annual inherited IRA RMD means $200,000+ in ordinary income in that year — pushing more income into higher brackets than either component would in isolation.
• The year-10 lump sum is often catastrophic. A $700,000 inherited IRA growing at 6%/year for 10 years is worth approximately $1.15 million by year 10. If you deferred distributions, taking $1.15 million in a single year while also earning $150,000 in W-2 income would push the majority of the combined income into the 35–37% bracket range. That's a tax bill approaching $400,000–$450,000 on the inherited IRA alone.
• The overlap with Social Security can multiply the effective marginal rate. If you're near retirement or collecting Social Security, inherited IRA distributions raise provisional income and can cause 85% of your Social Security benefits to become taxable. See the Inherited IRA and Social Security guide for the math.
• IRMAA can add a second hit two years later. Large distributions spike MAGI, which triggers Medicare IRMAA surcharges in the second subsequent year. See the Inherited IRA and IRMAA guide.

Planning strategies for adult children inheriting from parents

1. Model the 10-year bracket fill before taking your first discretionary distribution

The first step is a year-by-year projection: what are your expected income sources each year for the next 10 years? Salary, expected retirement dates, pension start dates, Social Security claiming timing, rental income, capital gains. Then overlay the mandatory annual RMDs (if applicable) and identify the years with the most bracket space remaining. Front-load discretionary distributions in those years. The 10-Year Withdrawal Optimizer compares equal, front-loaded, and back-loaded strategies.

2. Identify any low-income years — and use them

Job transitions, sabbaticals, parental leave, early retirement gaps before Social Security and pension income begin — any year with significantly lower ordinary income than typical is a bracket-fill opportunity. An adult child who takes a gap year or reduces hours has a window to withdraw more from the inherited IRA at a lower effective rate than during peak salary years. This requires advance planning: these windows are often short and hard to predict.

3. Coordinate own-IRA Roth conversions with inherited IRA withdrawals

Non-spouse beneficiaries cannot Roth-convert an inherited IRA (IRC § 408(d)(3)(C) bars inherited IRA rollovers). But you can coordinate: take mandatory or discretionary distributions from the inherited IRA and simultaneously convert a matching amount from your own traditional IRA to a Roth IRA — filling the bracket. The net ordinary income in the year is the same (inherited IRA distributions + Roth conversion), but the Roth conversion moves assets from your own taxable-IRA pool into tax-free Roth treatment permanently. Over a 10-year window, this combined strategy can significantly reduce lifetime taxes. See the Roth Conversion Coordinator.

4. Use Qualified Charitable Distributions if you're 70½ or older

If you are age 70½ or older, you can make a Qualified Charitable Distribution (QCD) directly from the inherited traditional IRA to a qualified charity. The 2026 QCD limit is $111,000.⁶ A QCD is excluded from AGI — it does not raise your provisional income for Social Security taxation, does not count toward IRMAA MAGI, and satisfies part of your 10-year depletion obligation (including any annual RMD requirement). For charitably inclined beneficiaries in this age range, QCDs are the most tax-efficient way to fulfill inherited IRA distribution requirements.

5. Don't miss the year-of-death RMD

If your parent had started RMDs and died mid-year without taking their full annual RMD for the year of death, the remaining amount is owed by December 31 of that same year. This obligation passes to you (or is split pro-rata across multiple beneficiaries). Missing it triggers the same 25% excise tax as a missed inherited IRA RMD. See the Year-of-Death RMD guide for the calculation method.

6. Consider whether a disclaimer makes sense before the 9-month deadline

In some cases — particularly if you have substantial wealth of your own and don't need the inheritance, or if the tax cost is especially high — a qualified disclaimer under IRC § 2518 lets you refuse all or part of the inherited IRA within 9 months of the date of death. The disclaimed amount passes to the next contingent beneficiary (often a sibling, or directly to grandchildren, depending on the beneficiary designation). If the next beneficiary is in a lower tax bracket or younger and can use more of the 10-year window advantageously, a disclaimer can save significant taxes across the family. See the Disclaiming an Inherited IRA guide. The 9-month deadline is hard — if you're considering a disclaimer, act quickly.

Your first-year action checklist

1. Do not take a distribution yet. Even well-meaning custodians sometimes initiate distributions that trigger tax consequences before you have a plan. Pause and assess first.
2. Confirm the account is titled correctly. The inherited IRA must be held as an inherited IRA in your name "FBO" (for benefit of) style — for example, "[Parent's Name], deceased, IRA FBO [Your Name]." You cannot roll a parent's IRA into your own IRA. Doing so is a prohibited rollover and the entire amount becomes taxable. See the How to Open an Inherited IRA guide.
3. Determine your parent's Required Beginning Date. Using the birth year table above, establish whether your parent died before or after their RBD. This single fact determines whether you have annual RMD obligations.
4. Check for the year-of-death RMD. Ask the custodian whether your parent had taken their full annual RMD for the year of death. If not, the shortfall is due by December 31 of that year.
5. Identify your 10-year deadline. Using the table above, mark your calendar with the December 31 depletion deadline.
6. Get the December 31 balance. If annual RMDs are required, you'll need the December 31 balance of the inherited IRA (from the prior year) to calculate year-1 RMD. The custodian will provide this, and will also typically calculate the RMD amount — but verify the math.
7. Build a 10-year income projection. List your expected income each year, bracket boundaries, any low-income years, and Social Security/pension timing. Use this to plan the discretionary distributions within or beyond the mandatory RMD floor.

When multiple siblings inherit the same account

If your parent named multiple children as co-beneficiaries on the same IRA, there are two critical deadlines: September 30 of the year following death (beneficiary determination date) and December 31 of the year following death (deadline to establish separate accounts at the custodian). Missing the December 31 separate accounts deadline means all beneficiaries must use the oldest sibling's shorter life expectancy factor for annual RMD calculations — disadvantageous for younger siblings. See the Multiple Beneficiaries guide.

Sources

1. IRC § 401(a)(9)(E) and § 401(a)(9)(H) — Eligible Designated Beneficiary definitions and SECURE Act 10-year rule. The 10-year depletion rule applies to deaths after December 31, 2019 for non-EDB beneficiaries. The 10-year period ends on December 31 of the calendar year containing the 10th anniversary of the employee/IRA owner's death (§ 401(a)(9)(H)(i)). EDB categories under § 401(a)(9)(E)(ii): surviving spouse, minor child, disabled, chronically ill, not-more-than-10-years-younger. Verified via Cornell LII, May 2026.
2. IRS — RMD FAQs and Excise Tax. IRC § 4974 imposes a 25% excise tax on RMD shortfalls; SECURE 2.0 § 302 reduced this to 10% if corrected within the correction window. The 2021–2024 waivers (Notices 2022-53, 2023-54, 2024-35) applied specifically to the annual RMD requirement during the 10-year window for non-EDB beneficiaries of post-RBD decedents; those waivers ended after 2024. Verified May 2026.
3. T.D. 10001 — Final Regulations on Required Minimum Distributions (July 18, 2024). Finalized the split: non-EDB beneficiaries of IRA owners who died after their Required Beginning Date must take annual RMDs in years 1–9 of the 10-year window, calculated using Table I (Single Life Expectancy). Non-EDB beneficiaries of pre-RBD decedents have no annual RMD requirement. Effective for distributions in 2025 and later.
4. IRS — SECURE 2.0 Required Beginning Date. SECURE 2.0 § 107 raised the RMD starting age: those born 1951–1959 start RMDs at age 73; those born 1960 and later start at age 75. Those born before 1951 were subject to earlier rules (age 70½ or 72 under prior law). The RBD is April 1 of the calendar year following the year the owner reaches their applicable starting age. Verified May 2026.
5. IRS Publication 590-B — Distributions from Individual Retirement Arrangements. Appendix B, Table I (Single Life Expectancy) provides the divisor for calculating annual RMDs for inherited IRA beneficiaries. The table was updated per T.D. 9930 (final regulations effective 2022) — beneficiaries who were already using the table prior to 2022 were required to reset to the new table values in 2022 by finding their current age in the new table. For inherited IRAs of post-RBD decedents, the beneficiary uses their own age in the year following the year of death, then reduces the factor by 1.0 each subsequent year.
6. IRS — Qualified Charitable Distributions: 2026 limit $111,000 per taxpayer. QCDs are available to IRA owners (including inherited IRA beneficiaries) age 70½ or older. Distributions must go directly from the IRA to a qualified charity; they are excluded from gross income and do not appear in AGI. The $111,000 annual limit is per taxpayer, not per IRA, and is indexed for inflation per SECURE 2.0 § 307. QCDs satisfy required minimum distribution obligations (including annual RMDs during the 10-year window). Verified May 2026.

SECURE Act rules and RBD ages verified as of May 2026 against IRC § 401(a)(9), IRS Publication 590-B, T.D. 10001, and SECURE 2.0 legislation. RMD starting ages depend on birth year — confirm your parent's applicable age using the table above and IRS guidance before making distribution decisions.