If you inherited an IRA or 401(k), the first question is usually this: do you have to empty the account within 10 years? For most non-spouse beneficiaries, yes. Under the SECURE Act, adult children and other non-spouse beneficiaries generally must fully withdraw an inherited retirement account by the end of the 10th year after the original owner died.

That does not always mean you can wait until year 10. Some beneficiaries must take annual required minimum distributions, often called RMDs, during years 1 through 9, then empty the rest by year 10. The right answer depends on your relationship to the person who died, the type of account, the age of the original owner, and the plan's own rules. This article is general information, not legal or tax advice. A CPA can help you choose the timing that fits your situation.

Start with the beneficiary form

Inherited IRA rules start with one document: the beneficiary designation on file with the IRA custodian or 401(k) plan.

Retirement accounts usually pass outside probate when a living person or trust is named. The will does not control the IRA or 401(k). If the account names a beneficiary, the institution pays that beneficiary directly once it has the claim forms and a death certificate.

If no beneficiary is named, or every named beneficiary died first, the account may pass to the estate instead. That changes the payout rules and can pull the account into probate.

Before you decide anything, gather:

• A certified death certificate. Most custodians require one. Sunset has a guide on how to order death certificates.
• The most recent account statement and the custodian's claim packet.
• The beneficiary designation, if the institution will release it.
• The decedent's date of birth and date of death.
• The account type: traditional IRA, Roth IRA, pre-tax 401(k), Roth 401(k), SEP, or SIMPLE.

It also helps to list the estate's assets and liabilities early. Retirement accounts may sit outside probate, but they still shape the tax deadlines and cash flow for the whole estate settlement.

The SECURE Act 10-year rule inherited IRA beneficiaries need to know

For deaths after 2019, the SECURE Act rewrote the old inherited IRA rules. Beneficiaries used to be able to stretch withdrawals across their own life expectancy. Most non-spouse beneficiaries now use the 10-year rule instead.

The deadline works like this: the account must be fully distributed by December 31 of the 10th year after the year of death. If your parent died in 2026, the inherited IRA generally must be empty by December 31, 2036.

The 10-year rule covers most beneficiaries, including adult children, grandchildren who are not eligible designated beneficiaries, siblings more than 10 years younger than the person who died, friends, and many trusts depending on how they were drafted.

For traditional accounts, every withdrawal is usually taxable income to you. That is why the timing matters so much.

Do you have to take annual RMDs during the 10 years?

Sometimes yes, and this is the easiest of the inherited IRA rules to miss.

The answer turns on whether the original owner had reached the age at which they were required to start taking RMDs, known as the required beginning date.

• If the owner died before their required beginning date, most 10-year beneficiaries have no annual RMDs in years 1 through 9. The account still must be empty at the end of year 10.
• If the owner died on or after their required beginning date, most 10-year beneficiaries must take an annual RMD in years 1 through 9 and still empty the account by the end of year 10.

The IRS issued shifting guidance and penalty relief on this point over several years, which is why so much of the advice online conflicts. By 2026, assume a missed inherited RMD can carry a penalty unless a tax professional tells you otherwise.

If the person who died had not yet taken their own RMD for the year they died, that final distribution may still need to be paid. It is separate from your beneficiary RMDs.

Do not guess. Call the custodian, ask what they show for beneficiary RMDs, and confirm the tax result with a CPA.

Spouse beneficiaries have more choices

A surviving spouse has the widest set of options. If you inherited from your husband or wife, you may be able to roll the account into your own IRA, keep it as an inherited IRA, leave the money in the 401(k) if the plan allows, or take a lump sum.

A spousal rollover treats the account as your own, which can delay RMDs until you reach your own RMD age. But if you are under 59 and a half and may need the money soon, moving it into your own IRA can trigger early withdrawal penalties. Keeping it as an inherited IRA often gives you more access in the meantime.

A surviving spouse is also an eligible designated beneficiary, which can allow life expectancy payouts. Employer plan documents can narrow these choices, so read them before you act.

If you are a spouse, pause before moving anything. A quick transfer can be very hard to undo.

Non-spouse beneficiaries: adult children, siblings, and others

Most non-spouse beneficiaries fall under the 10-year rule, including adult children inheriting a parent's IRA.

Your realistic choices are to open an inherited IRA with the same custodian, move it by direct trustee-to-trustee transfer to an inherited IRA elsewhere, spread withdrawals across the 10 years, or take a lump sum.

A non-spouse beneficiary cannot roll inherited money into their own IRA. The inherited account has to be titled to show both the deceased owner and you as beneficiary. If you accept a check made payable to you personally, that distribution is generally taxable and cannot be put back into an inherited IRA. Ask for transfer instructions in writing before any money moves.

Eligible designated beneficiaries follow different rules

Some beneficiaries are treated differently. The tax code calls them eligible designated beneficiaries, or EDBs:

• A surviving spouse.
• A minor child of the person who died.
• A disabled or chronically ill beneficiary, under IRS definitions.
• Anyone not more than 10 years younger than the person who died.

EDBs can often take distributions over life expectancy instead of on the 10-year clock. A minor child of the decedent gets that treatment only while a minor. Once they reach the age set in the rules, the 10-year clock starts running.

This category gets technical fast, especially for disabled or chronically ill beneficiaries and the trusts created for them. Get tax and legal guidance before choosing a payout method.

Inherited 401k options for beneficiaries

Inherited 401k options for beneficiaries are usually narrower than IRA options, because employer plans set their own procedures on top of the tax law.

A plan may let you leave the account in place for a period, take installments, take a lump sum, or move the balance to an inherited IRA by direct transfer. A surviving spouse may also roll it into their own IRA or qualified plan.

Some plans require payout faster than the tax law would allow, so ask the plan administrator in writing for the beneficiary distribution options and deadlines before the end of the year of death.

Roth 401(k) and Roth IRA inheritances have their own treatment. A 10-year deadline often still applies, but qualified withdrawals can be income-tax-free. Do not assume every Roth distribution is tax-free without having a CPA review the account history.

What if the estate is the beneficiary?

If the estate is named as beneficiary, the rules get less favorable and slower.

An estate is not a designated beneficiary, so the 10-year rule does not apply the same way. The payout period depends on the required beginning date again:

• Death before the required beginning date: the 5-year rule may apply.
• Death on or after it: distributions may be based on the decedent's remaining life expectancy.

The account will also likely pass through probate. The executor has to claim it, report it, cover valid estate expenses, and distribute what remains under the will or state law.

This usually happens when a beneficiary form was never completed, went stale, or named someone who died first. Sunset's guide to POD and TOD designation pitfalls covers how the same paperwork gaps affect other account types.

The cash-out trap

Many beneficiaries are grieving, exhausted, and trying to close accounts quickly. A lump sum feels like one less task, and a custodian may offer it because it is the simplest option to administer. Simple is not the same as cheapest.

Withdrawals from an inherited traditional IRA or pre-tax 401(k) are taxable as ordinary income, stacked on top of your wages and everything else you earn that year. Emptying a large account in one year can mean:

• A higher federal tax bracket.
• Higher state income tax, in states that tax retirement income.
• Reduced eligibility for certain credits and deductions.
• Higher Medicare income-related premiums in a later year.
• Years of lost tax-deferred growth inside the account.

Sometimes a lump sum is still the right call. You may need funds for taxes or debts, the account may be small, or the plan may force the payout. The point is to make that choice with the tax cost visible. Sunset's guide to tax filings after a death covers the returns families need after a loss, and a CPA can model the years before you withdraw.

A checklist before you choose

1. Confirm the beneficiary on file. Do not rely on the will.
2. Confirm the exact account type.
3. Find out whether the original owner had reached RMD age.
4. Ask if a year-of-death RMD is still unpaid.
5. Request the plan's payout options and deadlines in writing.
6. Compare spreading withdrawals against a lump sum.
7. Talk with a CPA before taking any taxable distribution.

If you are also serving as executor, keep beneficiary assets separate from estate assets. Direct beneficiary accounts may sit outside probate, but you still need the records for tax work and family communication. Sunset's guide to what beneficiaries are entitled to know covers information rights.

How Sunset can help with the rest of the estate

An inherited retirement account is one piece of the work. Families still have to find the other accounts, close or transfer them, open an estate account, prepare probate paperwork, and track what has been paid.

Sunset searches 2,300+ financial institutions to find accounts and assets, generates state- and county-specific probate packets, helps families open an FDIC-insured estate account, and refers you to a local probate attorney when you need counsel. Sunset is free for families because bank partners pay, and it has helped more than 10,000 families settle an estate.

Sunset does not replace a CPA on inherited IRA tax choices. It organizes everything around them, so fewer accounts and deadlines slip.

FAQ

What is the 10-year rule for an inherited IRA?

The inherited IRA must be fully emptied by December 31 of the 10th year after the original owner died. Most non-spouse beneficiaries, including adult children, fall under this rule, and some must also take annual RMDs during that period.

Do I have to pay taxes on an inherited IRA?

Withdrawals from an inherited traditional IRA are usually taxable income. Inherited Roth IRA withdrawals can be tax-free if the Roth rules are met, though a 10-year deadline may still apply. Ask a CPA before taking money out.

Can I roll an inherited IRA into my own IRA?

A surviving spouse can. A non-spouse beneficiary generally cannot, and needs an inherited IRA titled for their benefit as beneficiary of the original owner.

What happens if an estate inherits an IRA?

The IRA may become part of probate and follow different payout rules, such as the 5-year rule or the decedent's remaining life expectancy. The executor will likely need a CPA and, in some cases, a probate attorney.

What are my inherited 401k options as a beneficiary?

It depends on the employer plan and your relationship to the person who died. You may be able to leave funds in the plan, take installments, take a lump sum, or transfer to an inherited IRA. Spouses generally have more choices than non-spouse beneficiaries.

Sunset can help you get organized

If you inherited an IRA or 401(k), do not let anyone rush you into cashing it out before you understand the rules. Confirm the beneficiary, ask about RMDs, and talk with a CPA about the tax timing.

For everything else, Sunset can help you find accounts, prepare probate paperwork, open an estate account, and keep things moving. Start with the assets and liabilities, then work through the transfers one at a time.