Inherited IRA Calculator

Calculate your required minimum distributions (RMDs) from an inherited IRA, Roth IRA, or 401(k). This calculator determines your payout schedule based on the SECURE Act rules, your relationship to the original account owner, and the account type. See your annual RMD, the projected account balance over time, and the potential tax impact of your distributions.

This tool is for anyone who has inherited a retirement account and needs to understand their withdrawal obligations. Whether you are subject to the 10-year rule or qualify as an Eligible Designated Beneficiary, this calculator provides clarity. For your own accounts, you may need the standard RMD Calculator or the Roth IRA Calculator. For a complete overview of the rules, see the guide to Required Minimum Distributions Explained.

The results show which distribution rule applies to your specific situation, a year-by-year schedule of required withdrawals, and a projection of the account's value as it's drawn down. You will also see charts illustrating the total after-tax value you can expect to receive and the estimated tax liability on distributions from traditional (pre-tax) accounts.

Start by entering the basic details of your situation in the "Inherited Account Details" section. This includes your current age, the age of the original account owner (decedent) at their time of death, the current balance of the account you inherited, and the year they passed away.

Next, select the account type: a Traditional IRA, a Roth IRA, or an Inherited 401(k). This choice significantly affects whether your distributions will be taxable.

Then, choose your relationship to the decedent from the list of beneficiary types. This is the most important input, as it determines which set of withdrawal rules applies to you under the SECURE Act. The calculator will automatically identify if you are an "Eligible Designated Beneficiary" (EDB) who can stretch distributions or a non-EDB subject to the 10-year rule. If you are a surviving spouse, an option will appear to model treating the IRA as your own, which often has significant benefits.

For more detailed projections, open the "Advanced Options." Here you can adjust the expected annual investment return on the account's assets, your estimated marginal tax rate for distributions, and the long-term inflation rate. These inputs allow you to create a more personalized forecast.

Your Current Age & Decedent's Age at Death

Your current age is the starting point for calculating your life expectancy factor, which is used for the "stretch" RMD method available to Eligible Designated Beneficiaries. The decedent's age at death can be relevant for determining if they had already started taking their own RMDs, which can influence the rules for beneficiaries.

Inherited Account Balance

This is the current market value of the retirement account you inherited. This figure serves as the starting principal for the entire projection. A larger balance will generally result in larger required distributions.

Year of Death

The year the original account owner passed away is critical. The SECURE Act of 2019 dramatically changed the rules for most beneficiaries. This calculator assumes the death occurred in 2020 or later, making the SECURE Act rules applicable.

Account Type

The type of inherited account determines the tax treatment of your distributions.

• Traditional IRA / 401(k): Distributions are typically considered ordinary income and are subject to federal and state income taxes.
• Roth IRA: Qualified distributions are completely tax-free. This makes inheriting a Roth IRA highly advantageous. For a comparison, see Roth IRA vs. Traditional IRA.

Your Relationship to Decedent (Beneficiary Type)

This selection dictates the withdrawal timeline. The SECURE Act created two main categories of individual beneficiaries:

• Eligible Designated Beneficiaries (EDBs): This group can "stretch" distributions over their own life expectancy. It includes surviving spouses, the decedent's minor children (until they reach the age of majority), disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the decedent.
• Non-Eligible Designated Beneficiaries (Non-EDBs): Most non-spouse beneficiaries, such as adult children, fall into this category. They are generally subject to the 10-year rule, requiring the account to be fully distributed by the end of the 10th year after the year of death.

Spouse Specific Option: Treat as Own IRA

A surviving spouse has a unique and powerful option: they can roll over the inherited IRA into their own IRA. This allows the funds to continue growing tax-deferred, and the spouse does not have to take any RMDs until they turn 73. This is often the most advantageous strategy for spouses who do not need the income immediately.

Advanced Options: Return, Tax, and Inflation

These inputs allow for a more customized projection. The expected return should reflect the investment strategy for the inherited account's assets. The tax rate should be your estimated marginal federal income tax rate. Remember that large distributions could push you into a higher tax bracket. For ideas on managing this, see how to reduce taxes on RMDs.

The calculator's primary function is to identify the correct distribution rule based on your beneficiary type and then project the annual withdrawals and account balance accordingly.

1. Rule Determination: Based on your "Relationship to Decedent," the calculator assigns one of the following rules:

   • 10-Year Rule: For non-EDBs. The account must be emptied by the end of the 10th year following the original owner's death. The calculator also models the potential for annual "mini-RMDs" during this period if the decedent had already started taking their own RMDs.
   • Stretch RMD: For EDBs. The calculator finds your life expectancy factor from the IRS Single Life Expectancy Table for the first distribution year. Each subsequent year, this factor is reduced by one.
   • Minor Child Rule: A special case of the stretch rule. The calculator applies the life expectancy method until the child reaches the age of majority (e.g., 21), at which point the 10-year rule begins.
   • 5-Year Rule: For non-designated beneficiaries like an estate or charity. The account must be emptied by the end of the 5th year, with no annual RMDs required.
   • Treat as Own IRA: For spouses. The calculator projects continued growth with no RMDs until you reach age 73, then calculates RMDs based on the Uniform Lifetime Table.

2. Year-by-Year Projection: Once the rule is set, the calculator builds a schedule. For each year, it calculates the required RMD, subtracts it from the balance, and then applies the expected investment return to the remaining funds to find the end-of-year balance.

3. Tax Calculation: For Traditional IRA or 401(k) accounts, the calculator multiplies each RMD by your specified tax rate to estimate the federal tax liability. For Roth IRAs, the tax is zero.

The final output is a comprehensive schedule showing how the inherited account will be distributed over its required lifespan, giving you a clear picture for financial planning.

The calculator uses a year-by-year simulation. The core formulas vary depending on the applicable distribution rule.

Life Expectancy Divisor

For the "Stretch RMD" method, the divisor is found using the IRS Single Life Expectancy Table.

First Year Divisor = IRS Single Life Expectancy Factor for Beneficiary's Age
Subsequent Year Divisor = Previous Year Divisor - 1

Stretch RMD Formula

This formula is used for Eligible Designated Beneficiaries.

Annual RMD = Account Balance at End of Previous Year / Life Expectancy Divisor

10-Year Rule Calculation

Under the 10-year rule, the calculation is more complex. While the account must be fully withdrawn by year 10, recent IRS guidance suggests annual RMDs are also required if the original owner had reached their RMD starting age. The calculator models this by using the Stretch RMD formula for years 1-9 and then requiring a full withdrawal of the remaining balance in year 10.

RMD for Year 1-9 = Account Balance at End of Previous Year / Life Expectancy Divisor
RMD for Year 10 = Remaining Account Balance at End of Year 10

For an inherited Roth IRA under the 10-year rule, the RMD is $0 for years 1-9.

Annual Balance Projection

For every year in the schedule, the account balance is updated.

Ending Balance = (Starting Balance - RMD) * (1 + Expected Annual Return)

Tax Calculation

For non-Roth accounts, the estimated tax on each distribution is calculated.

Estimated Tax = Annual RMD * Marginal Tax Rate

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in late 2019, significantly changed the landscape for beneficiaries of retirement accounts. Before the SECURE Act, most individual beneficiaries could "stretch" distributions from an inherited IRA over their own lifetime, minimizing the annual tax burden and allowing the account to grow for decades.

The SECURE Act eliminated the stretch IRA for most non-spouse beneficiaries and replaced it with the 10-year rule. This rule mandates that the entire account must be fully distributed by the end of the 10th year following the year of the original owner's death.

However, the law created a protected class of beneficiaries called Eligible Designated Beneficiaries (EDBs). These individuals are exempt from the 10-year rule and can still use the life expectancy or "stretch" method. Understanding which category you fall into is the first and most critical step in managing an inherited IRA.

Your distribution options depend entirely on your beneficiary classification.

Eligible Designated Beneficiaries (Can Stretch RMDs)

You are an EDB if, at the time of the account owner's death, you were:

1. The Surviving Spouse: Spouses have the most flexibility, including the option to treat the IRA as their own.
2. A Minor Child of the Account Owner: The child can stretch RMDs until they reach the age of majority (typically 21), at which point the 10-year rule applies to the remaining balance. Note this does not apply to minor grandchildren.
3. A Disabled Individual: Must meet the strict IRS definition of disability.
4. A Chronically Ill Individual: Must be certified by a licensed health care practitioner.
5. An Individual Not More Than 10 Years Younger: This often includes siblings or partners who are close in age to the decedent.

Non-Eligible Designated Beneficiaries (10-Year Rule)

If you are an individual beneficiary who does not fit into one of the five EDB categories, you are subject to the 10-year rule. The most common example is an adult child inheriting an IRA from a parent.

Non-Designated Beneficiaries (5-Year Rule)

If the beneficiary is not a person—such as an estate, a charity, or a non-qualifying trust—it is considered a non-designated beneficiary. These entities are typically subject to a 5-year distribution rule if the owner died before their RMD starting age.

Managing the tax impact is a key part of handling an inherited IRA. A large inheritance can become a significant tax liability if not managed carefully.

• Spread Distributions Under the 10-Year Rule: Instead of waiting until the 10th year to take a massive, tax-heavy lump sum, consider taking partial distributions each year. This can help you stay in a lower tax bracket and manage the tax hit over time. The calculator's "Distribution Strategy Comparison" for 10-year rule beneficiaries models this benefit.

• Time Withdrawals with Your Income: If you are subject to the 10-year rule, you have flexibility. If you anticipate a low-income year (e.g., due to a job change or sabbatical), that could be an ideal time to take a larger distribution from the inherited traditional IRA.

• Spouses: Consider Treating as Your Own: For a surviving spouse who doesn't need the money right away, rolling the inherited IRA into their own is usually the best strategy. It delays RMDs until their own age 73 and allows for maximum continued tax-deferred growth.

• Consult a Professional: Inherited IRA rules are among the most complex in the tax code. The new rules under the SECURE Act are still being clarified by the IRS. A financial advisor or tax professional can provide personalized RMD strategies for your situation.

• Distribution Rule: The banner at the top of the results clearly states which rule applies to you (e.g., 10-Year Rule, Stretch RMD), removing any guesswork.
• Summary Cards: These provide key figures at a glance: your first year's required distribution, the total amount you'll receive over the entire payout period, the estimated total taxes, and the final after-tax value.
• Account Balance Over Time Chart: This visualizes how the inherited account's value is projected to change as you take distributions and the remaining assets continue to grow.
• Annual Distributions Chart: This bar chart shows your required withdrawal for each year. For traditional accounts, it breaks down the pre-tax RMD into the after-tax amount you keep and the portion that goes to federal taxes.
• Distribution Schedule Table: This table provides a detailed, year-by-year breakdown of your age, the account balance, the RMD divisor (if applicable), the RMD amount, and the tax impact.

While you cannot change the rules, you can make smart decisions to get the most value from your inheritance.

1. Avoid a Lump-Sum Payout: Cashing out the entire account at once is almost always a bad idea for a traditional IRA, as it can trigger a massive tax bill in a single year. Use the flexibility you have, whether it's 10 years or a lifetime stretch.
2. Invest Appropriately: The money in the inherited IRA can remain invested. Ensure the asset allocation aligns with your distribution timeline and risk tolerance.
3. Coordinate with Your Own Finances: Use the inherited distributions to fund your own retirement accounts, like a Roth IRA or 401(k), if you have earned income. This effectively moves money from a tax-deferred account with a required payout schedule to one with more favorable tax treatment and no RMDs (in the case of a Roth IRA).
4. Plan for State Taxes: This calculator models federal taxes, but most states also have an income tax that will apply to distributions from traditional accounts. Consider this when planning withdrawals. See the best states to retire for taxes.

1. Missing the First RMD: The deadline for your first RMD can be confusing. Failing to take it on time can result in a steep 25% penalty on the amount you should have withdrawn.
2. Misunderstanding the 10-Year Rule: A common misconception is that no withdrawals are needed until the 10th year. However, if the original owner was already taking RMDs, you may need to take annual RMDs as well.
3. Incorrect Account Titling: You cannot simply combine an inherited IRA with your own (unless you are a spouse). The account must be re-titled to show it is an inherited account, for example: "John Smith (Deceased) IRA FBO (for the benefit of) Jane Smith."
4. Forgetting to Name Beneficiaries on the Inherited IRA: Once you inherit an IRA, you become the owner. It is crucial to name your own successor beneficiary for the account.
5. Ignoring the 60-Day Rollover Rule: If you receive a check from the inherited account, you cannot roll it over into another IRA. Direct trustee-to-trustee transfers are required. The 60-day rollover rule does not apply to non-spouse inherited IRAs.