An inherited IRA beneficiary chooses a payout option by matching their relationship to the original owner to the IRS rule for that group, then timing withdrawals to manage taxes. A surviving spouse has the most flexibility, while most non-spouse beneficiaries must empty the account within ten years. An inherited IRA is an account that holds retirement assets left to a beneficiary after the owner dies. The choice turns on spouse status, eligible-beneficiary status, and when the owner died.
Table of Contents
- What choices does a surviving spouse have?
- How does the 10-year rule work for most non-spouses?
- Who can still use lifetime payouts?
- How do taxes and transfers affect timing?
What choices does a surviving spouse have?
A surviving spouse who inherits a traditional IRA can roll the assets into their own IRA or treat the account as their own. According to the IRS in IRS Publication 590-B (2025), this delays distributions until the spouse reaches their own required beginning age.
A spouse can instead keep the account as an inherited IRA. That path allows distributions over the spouse's own life expectancy or election of the 10-year rule. It also avoids the 10 percent early-distribution tax.
How does the 10-year rule work for most non-spouses?
Most non-spouse designated beneficiaries of an owner who died after December 31, 2019 must fully distribute the account by December 31 of the tenth anniversary year. Fidelity explains this deadline in Fidelity's SECURE Act guide.
The rule can also require yearly withdrawals during the ten-year window. If the owner died on or after the required beginning date, the beneficiary must take annual required distributions in years one through nine.
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Who can still use lifetime payouts?
Five eligible designated beneficiaries may stretch payouts over life expectancy. The groups are narrow, so check whether you fit one before assuming annual payments are enough.
This stretch option spreads taxable income across more years. Once a minor child reaches adulthood under the rule, the remaining payout period changes.
- surviving spouse
- minor child of the owner under age 21
- disabled person
- chronically ill person
- person not more than ten years younger than the owner
How do taxes and transfers affect timing?
Any beneficiary can generally take a lump sum at any time. Schwab notes in Schwab's inherited IRA guide that a traditional IRA lump sum counts as taxable income in that year and can push the recipient into a higher bracket.
A non-spouse beneficiary cannot roll an inherited IRA into their own IRA. Assets must move into a properly titled inherited IRA to preserve tax-deferred timing. Because taxable distributions must be included in gross income, spreading withdrawals across years is a key practical lever for managing taxes.
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