Inherited IRA Calculator
Calculate inherited IRA distribution requirements under SECURE Act 2.0. Understand 10-year rule, stretch IRA exceptions, RMD timing, and tax implications for beneficiaries.
Inherited IRA Details
Distribution Rule
10-Year Rule
SECURE Act: Most beneficiaries must distribute within 10 years. No annual RMDs, but all out by year 10.
Distribution Years:10
Annual Distribution:$50000.00
Tax Implications (Traditional IRA)
$125000.00
Estimated Tax Rate:25%
Total Distribution:$500000.00
Traditional IRA distributions taxed as ordinary income. Roth IRA distributions tax-free if account open 5+ years.
Distribution Schedule
| Year | Distribution | Remaining | Tax Estimate |
|---|---|---|---|
| 2025 | $50000.00 | $450000.00 | $12500.00 |
| 2026 | $50000.00 | $400000.00 | $12500.00 |
| 2027 | $50000.00 | $350000.00 | $12500.00 |
| 2028 | $50000.00 | $300000.00 | $12500.00 |
| 2029 | $50000.00 | $250000.00 | $12500.00 |
| 2030 | $50000.00 | $200000.00 | $12500.00 |
| 2031 | $50000.00 | $150000.00 | $12500.00 |
| 2032 | $50000.00 | $100000.00 | $12500.00 |
| 2033 | $50000.00 | $50000.00 | $12500.00 |
| 2034 | $50000.00 | $0.00 | $12500.00 |
Final deadline: December 31, 2034. All funds must be distributed by this date to avoid 25% penalty.
Spouse Beneficiary Options
- Treat as Own IRA: Best if spouse has own IRA. Merge into spouse IRA. RMDs based on spouse age.
- Roll into Own IRA: Transfer to spouse existing IRA. Same effect as treating as own.
- Keep as Inherited: Keep separate. RMDs based on deceased remaining life expectancy OR spouse age.
- Delay RMDs: If deceased died before RBD (age 73), spouse can delay RMDs until deceased would have reached RBD.
- Roth IRA: Spouse can treat inherited Roth as own. No RMDs ever (SECURE Act 2.0).
Eligible Designated Beneficiary (EDB)
- Who Qualifies: Spouse, minor child (under 18), disabled, chronically ill, or person not more than 10 years younger.
- Stretch IRA: EDBs can use life expectancy method. Annual RMDs based on beneficiary age.
- Minor Exception: Minor child gets stretch until age 21. Then 10-year rule applies (all out by age 31).
- Disabled/Chronically Ill: Full stretch IRA based on life expectancy. No 10-year limit.
10-Year Rule (SECURE Act)
- Who Must Use: All non-EDB beneficiaries. Adult children, friends, most non-spouse heirs.
- Deadline: All funds must be distributed by December 31 of the 10th year after death.
- No Annual RMDs: Can take any amount each year (even zero). But all must be out by year 10.
- Penalty: 25% penalty on amounts not distributed by deadline.
Tax Planning Strategies
- Roth Conversion Before Death: Owner converts Traditional to Roth during life. Beneficiary gets tax-free distributions.
- Stretch for EDB: If eligible, use stretch IRA for maximum tax deferral. Annual RMDs spread taxation over decades.
- Flexible 10-Year: Can delay distributions in 10-year rule. Take larger distributions in low-income years.
- Roth Inheritance: Best: inherit Roth IRA. No tax on distributions. Same 10-year rule applies but tax-free.
Inherited IRA Key Rules
- RBD (Required Beginning Date): April 1 after turning age 73 (SECURE Act 2.0). Original owner first RMD deadline.
- Beneficiary RMD Start: December 31 of year AFTER owner death. Or December 31 of year owner would have reached RBD.
- Title Requirements: Inherited IRA must be titled correctly: Jane Smith (deceased) IRA FBO John Smith (beneficiary).
- No Contributions: Cannot make new contributions to inherited IRA. Only distributions allowed.
- Multiple Beneficiaries: If multiple beneficiaries, use oldest beneficiary age for RMD calculations.
- Separate Accounts: Split by September 30 after death. Each beneficiary uses own age for RMDs.