The Do’s and Don’ts of Inherited IRAs
When you inherit an IRA, you likely have a lot of questions. Do you need to take RMDs? When? How long do you have before the account must be cleaned out?


There’s been significant buzz recently focused on the expected transfer of approximately $72 trillion (yes, trillion with a T) of personal assets in the United States over coming years from baby boomers to younger generations. While this may seem to negate the need for pre-retirees to plan for their own retirements (spoiler alert — it doesn’t), it does highlight the significant role inherited IRAs play in wealth transfers between generations.
There are two types of inherited IRAs: traditional and Roth. An inherited traditional IRA is a tax-deferred investment account that is used as the vessel to receive assets coming from another tax-deferred investment account (e.g., traditional 401(k)s and traditional IRAs). By comparison, an inherited Roth IRA is an after-tax investment account used to receive assets from a Roth 401(k) or Roth IRA.
To help you decide how to handle being the owner of an inherited IRA, I’ve compiled three common questions I receive from my clients and my current guidance on the matter.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. What are the current distribution rules and tax impacts for inherited traditional and Roth IRAs?
For traditional inherited IRAs:
- If the assets received have come directly from your deceased spouse, you can liquidate the IRA over your lifetime — a tax-minimizing strategy called a “stretch IRA.” You will only be on the hook to take annual required minimum distributions (RMDs), which will be treated as taxable income for you.
- However, in most cases, if the assets were received from anyone else (for example, a deceased parent), then you can no longer do a stretch IRA. Instead, you must liquidate the entire account within the next 10 years. (This unfortunate window was passed into law in 2019 under the SECURE Act, and it applies to inheritances received starting in 2020.) There are a few exceptions to the 10-year rule, including minor children (but not grandchildren) of the IRA owner, and people who are chronically ill or disabled. These folks can all still do a stretch IRA.
For inherited Roth IRAs:
- Basically, the same conditions above apply; however, any distributions taken are not taxed.
2. Is it true that annual RMDs are now required if I inherit a non-spousal IRA?
Technically, yes … but in reality, no — because the IRS waived the annual RMD requirements in 2021, 2022 and 2023 due to the confusion surrounding the issue. Let me explain:
The way the IRS interprets the SECURE Act, if you inherit an IRA from someone other than your spouse who had already begun taking RMDs themselves — and you aren’t among the exceptions listed above, such as someone who is chronically ill or disabled — then, yes, you must take annual distributions in each of the 10 years before the IRA must be fully liquidated. That news came as a surprise to many people who thought you could hold off on distributions until you had to clean the IRA out in year 10.
This uncertainty regarding whether annual RMDs are now required has caused a lot of confusion and let otherwise well-intentioned advisers decide for themselves. In 2023, the tax adviser of one of my longstanding clients declared early in the year that my client was required to take an RMD by the end of the year. After I recommended for months that she hold off doing so, the IRS finally declared that annual RMDs were, in fact, not required in 2023 but left the door open for RMDs to be required in future years.
You might be asking yourself if RMDs are now required in 2024. Thankfully, the IRS in April declared that annual RMDs are not required in 2024 for owners of a non-spousal inherited IRA. The IRS seems committed to offering future guidance on annual RMDs once a year, so we can likely expect another update sometime in 2025.
A reminder, though: Annual RMDs are required for IRAs inherited from a spouse. When those RMDs begin depends on whether the person chooses to be treated as a beneficiary of the inherited IRA or opts to be treated as its owner instead.
3. Can someone else inherit my inherited IRA?
This tends to surprise some people, but you can in fact designate beneficiaries for an IRA that you inherited. Those beneficiaries (either primary or contingent) can take over your inherited IRA upon your passing. This even applies in the case where you have inherited an IRA from a non-spouse and you pass away before the 10-year full liquidation period.
You should be sure to designate at least one beneficiary for each IRA you own — not only for inherited IRAs — especially if your intention is to leave IRA assets to people other than your spouse. Failure to declare at least one IRA beneficiary will likely result in your IRA passing to your spouse (if you’re married at the time of your death) or your estate (if you’re not married).
Designating a beneficiary is relatively straightforward and quick. Be sure to contact your IRA custodian to confirm their process.
Given the complex nature of inherited IRA enforcement, be sure to seek counsel from a trusted professional such as a Certified Financial Planner™ practitioner (aka a CFP® certificant) and/or a Certified Public Accountant (CPA) to help ensure you’re following the rules properly.
Related Content
- Getting an Inheritance? Here Are 4 Things to Consider
- Six of the Worst Assets to Inherit
- Thinking of Getting a Pet? What Costs to Expect
- 10 Things You Should Know About Estate Planning
- Five Strategies to Keep Your Heirs From Blowing Their Inheritance
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Vincent Birardi is based in Halbert Hargrove’s Long Beach headquarters and brings more than 25 years of experience in financial services to his wealth advisory relationships with clients — along with a passion for identifying solutions that will enable them to fulfill their life goals. What he values most about his role is helping to bring clarity and peace of mind to clients and their families. Prior to joining the firm in 2018, Vincent held management roles with PIMCO and Morgan Stanley. He was awarded the ACCREDITED INVESTMENT FIDUCIARY™ designation by the University of Pittsburgh-affiliated Center for Fiduciary Studies and is a CERTIFIED FINANCIAL PLANNER™ professional.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have Millions
Private market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It Helps
Saving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard About
Timing is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
Early conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term Plan
The new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
-
I'm an Insurance Expert: This Is Exactly Why Your Insurance Rates Are Soaring (and What You Can Do)
A dramatic rise in the frequency and cost of severe weather and wildfires means you need to prepare, prepare, prepare — no matter where you live — for higher premiums.
-
Q3 2025 Post-Mortem From an Investment Adviser: Markets Continue to Climb, Gold Shines
The third quarter saw market gains driven by Fed rate cuts and strong earnings, despite high valuations and concerns about speculative trading and job growth. Gold and international stocks could be potential hedges.
-
Moving Abroad? You Might Need a Cross-Border Financial Adviser
If you want to live in another country long term, you could benefit from an expert's guidance. Here's how to find a good qualified adviser to help with residency requirements, documentation, financial laws and tax impacts.