Inherited IRA Rules: How the IRS Sorts Beneficiaries
An inherited retirement account tends to arrive at the worst possible time — somewhere between a funeral and a stack of unopened mail. The two IRS pages that cover it don’t open with instructions. They open with a sorting problem.
The IRS sorts by three things: whether the owner died after 2019, who the beneficiary is, and whether death came before or after the owner’s required beginning date. Later deaths fall under the SECURE Act’s 10-year rule. Within that group, the beneficiary page separates spouses, eligible designated beneficiaries, other designated beneficiaries, and beneficiaries that are not individuals.
Two IRS pages, and what each one covers
The first is the IRS’s required minimum distribution FAQ page. Most of it speaks to living account owners — when withdrawals start, how they’re calculated, how they’re taxed. Near the top, though, it states the rule that applies after an owner dies, and it defines the one term that rule depends on.
That page is unusually candid about its own weight. Its answers, it says, “provide general information and should not be cited as legal authority.”
The second is the Retirement topics – Beneficiary page, built for the situation at hand: what happens to an account after the owner dies. It names the categories, defines the 10-year and 5-year rules, and covers inherited Roth IRAs and employer plans.
That page also states the basics of who counts. A beneficiary is generally any person or entity the account owner chooses to receive the benefits of a retirement account or an IRA after they die, and the owner must designate that beneficiary under procedures established by the plan. Beneficiaries must include any taxable distributions they receive in their gross income.
The date that splits the rules: December 31, 2019
The beneficiary page lists the factors that decide the distribution requirements. Whether the account owner died after 2019 comes first, because the SECURE Act changed the rules for beneficiaries when death occurred after that year.
The other factors are the relationship of the beneficiary to the account owner and certain characteristics — spouse, minor child, disabled or chronically ill individual, entity other than an individual — and whether the original owner died before or after their required beginning date.
For deaths before 2020, the FAQ page describes the older regime. When an owner died before January 1, 2020, before their RMDs were required to begin, the entire amount of the owner’s benefit generally had to be distributed to a beneficiary who is an individual within 5 years of the end of the year following the year of death, or over the life of the beneficiary starting by the end of the year following the year of death.
The beneficiary page defines that 5-year rule plainly: the account must be emptied by the end of the 5th year following the year of the account holder’s death, and 2020 does not count when determining the 5 years. That branch belongs to the pre-2020 deaths. It stays there.
One date-related detail sits apart from all of this. For the year of the account owner’s death, the beneficiary page says the RMD due is the amount the account owner was required to withdraw and did not withdraw before death, if any.
What the FAQ states about the 10-year rule and the required beginning date
Here is the sentence the whole later branch turns on. For defined contribution plan participants or IRA owners who die after December 31, 2019 — with a delayed effective date for certain collectively bargained plans — the SECURE Act requires the entire balance of the participant’s account be distributed within ten years.
The FAQ then states an exception, and it lists who it covers: a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the employee or IRA account owner.
The next line is the one people miss. The new 10-year rule applies regardless of whether the participant dies before, on, or after the required beginning date.
That phrase gets used constantly and defined rarely, so it helps that the FAQ defines it in one sentence: the required beginning date is the date an account owner must take their first RMD. If you want the ordinary-lifetime version of that clock — the age it starts, the April 1 grace, what a miss costs the owner — we covered it separately in RMD deadlines. Everything on this page is the after-death branch.
Eligible designated beneficiaries, in the topics page’s own words
The beneficiary page defines the 10-year rule this way: empty the entire account by the end of the 10th year following the year of the account owner’s (or eligible designated beneficiary’s) death.
For deaths in 2020 and later, that page says the treatment of a beneficiary who is not the spouse of the deceased owner depends on whether they are an “eligible designated beneficiary.” The term is the hinge. The page lists who fits it:
- Spouse or minor child of the deceased account holder
- Disabled or chronically ill individual
- Individual who is not more than 10 years younger than the IRA owner or plan participant
The page then states what such a beneficiary may do. It says an eligible designated beneficiary may take distributions over the longer of their own life expectancy and the employee’s remaining life expectancy. It also says such a beneficiary may follow the 10-year rule if the account owner died before that owner’s required beginning date.
The condition on that second one is attached in the source, and it is not decorative — it names a specific timing of the death, not a general permission.
The page also names a separate row for a designated beneficiary who is not an eligible designated beneficiary, and under that row it gives one instruction: follow the 10-year rule. The topics page sets out separate option lists for a surviving spouse, and this article does not cover them.
When the beneficiary is not an individual
The beneficiary page gives this row one line. If the beneficiary is not an individual, follow the rules described above as if the account owner died before 2020, because the SECURE Act changes only apply to beneficiaries who are individuals.
That is the entire statement, and I’m not going to translate it into anything more specific than the page does. The sentence points backward to a set of rules, not to a single deadline.
Inherited Roth IRAs, employer plans, and the years in between
Roth accounts behave differently while the owner is alive, and the FAQ says so: withdrawals from Roth IRAs and designated Roth accounts are not required until after the death of the account owner. But beneficiaries of Roth IRAs and designated Roth accounts are subject to RMD rules.
The beneficiary page fills in the rest. Inherited Roth IRA accounts are generally subject to the same RMD requirements as inherited traditional IRA accounts, and withdrawals of contributions from an inherited Roth are tax free.
Earnings are the part carrying a condition. Most withdrawals of earnings from an inherited Roth IRA are also tax-free, but withdrawals of earnings may be subject to income tax if the Roth account is less than 5 years old at the time of the withdrawal. Contributions and earnings are not interchangeable in that sentence.
Employer plans work on a different authority altogether. If the distribution is from a qualified retirement plan, such as a 401(k) or profit-sharing plan, the beneficiary page says the plan document establishes the distribution options available to satisfy the RMD rules, and the plan administrator should provide the beneficiaries with their distribution options. The page hands the question to a document these two IRS pages never see.
The beneficiary page also speaks to the years in between, not only the end of them. Beginning the year following the owner’s death, it says, the RMD depends on certain characteristics of the designated beneficiary and the distribution option the beneficiary chooses.
That is the honest shape of what the IRS publishes here — a sorting structure, a set of defined terms, and a point where the answer lives in a plan document instead. A qualified tax professional can apply these categories to a specific account and a specific plan. A page that describes categories cannot.
This article is general information, not professional advice. For decisions about your money or health, consult a qualified professional.