Required Minimum Distributions on an Inherited Retirement Account

Do I have to take a distribution every year from an inherited IRA?

Yes, if the owner died on or after the required beginning date. A distribution is then due for every calendar year after the death until the account is empty, including each year of a ten-year period (Treas. Reg. § 1.401(a)(9)-5(d)(1)). If the owner died before that date and the ten-year rule applies, nothing is required until the tenth year (Treas. Reg. § 54.4974-1(c)(2)). A beneficiary taking life-expectancy payments generally owes one every year in either case.

Those rules come from IRC § 401(a)(9), which reaches IRAs through IRC § 408(a)(6), and from the final regulations published in July 2024 (T.D. 10001). The regulations apply for determining required minimum distributions for calendar years beginning on or after January 1, 2025 (Treas. Reg. § 1.401(a)(9)-1(d); § 1.408-8(j)). Which beneficiaries are on the ten-year rule at all is covered on the ten-year-rule page; this page covers the yearly mechanics.

The required beginning date

The statute has two regimes. If distributions had begun and the owner dies before the whole interest is paid out, the remainder must be distributed “at least as rapidly” as under the method in use at death (§ 401(a)(9)(B)(i)). If the owner dies before distributions have begun, a different rule applies: five years, extended to ten for a designated beneficiary, with a life-expectancy exception (§ 401(a)(9)(B)(ii) and (iii); § 401(a)(9)(H)).

Distributions are generally not treated as having begun until the required beginning date, even if the owner had been taking withdrawals (Treas. Reg. § 1.401(a)(9)-2(a)(3)(ii)). That date is April 1 of the calendar year following the later of the year the owner reaches the applicable age and the year the owner retires (§ 401(a)(9)(C)(i)). The retirement alternative does not apply to IRAs, so an IRA owner’s required beginning date is April 1 of the year after the year the owner reaches the applicable age (§ 401(a)(9)(C)(ii)(II); Treas. Reg. § 1.408-8(b)(1)(i)).

The statute states the applicable age in two clauses. For “an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, the applicable age is 73”; for “an individual who attains age 74 after December 31, 2032, the applicable age is 75” (§ 401(a)(9)(C)(v)). The regulations restate this by date of birth:

• born before July 1, 1949: age 70½;
• born on or after July 1, 1949, but before 1951: age 72;
• born in 1951 through 1958: age 73;
• born in 1960 or later: age 75.

The regulation’s paragraph for people born in 1959 is reserved (§ 1.401(a)(9)-2(b)(2)). The ten-year-rule page describes the proposed treatment of that birth year.

Annual distributions inside the ten years

When the owner died on or after the required beginning date, the regulation requires an annual distribution and adds that the requirement “continues to apply for every distribution calendar year until the employee’s interest is fully distributed” (§ 1.401(a)(9)-5(d)(1)(i)). The same paragraph says that where section 401(a)(9)(H) applies, the distributions must also satisfy the ten-year limit. Both requirements apply together: a distribution each year, and the whole account out by the end of the calendar year that includes the tenth anniversary of the death (§ 1.401(a)(9)-5(e)(2)).

When the owner died before the required beginning date and the ten-year rule applies, “there is no required minimum distribution until the end of the calendar year” that includes the tenth anniversary. The amount due that year is the entire interest (§ 54.4974-1(c)(2)).

The annual requirement was first set out in proposed regulations in 2022. While they were pending, the IRS issued three notices stating that it would not assert the excise tax for a beneficiary’s missed annual distributions of this kind:

• Notice 2022-53: distributions required in 2021 or 2022;
• Notice 2023-54: distributions required in 2023;
• Notice 2024-35: distributions required in 2024.

Each notice defined the distributions it covered. They were those owed to a designated beneficiary not taking life-expectancy payments, where the owner died on or after the required beginning date in one of the years the notice names (2020 or 2021 in the first notice, 2020 through 2022 in the second, 2020 through 2023 in the third), and those owed to the beneficiary of an eligible designated beneficiary who died in those years while taking life-expectancy payments. None of the three notices covers 2025 or a later year.

Inherited Roth IRAs

A Roth IRA owner has no required distributions during life (IRC § 408A(c)(4)). After the owner’s death the rules apply “as though the Roth IRA owner died before his or her required beginning date” (Treas. Reg. § 1.408-8(b)(1)(ii)). A beneficiary of a Roth IRA who is on the ten-year rule therefore has no annual requirement before the tenth year. An eligible designated beneficiary using life expectancy still takes a distribution each year. A similar rule applies to an employer-plan account held entirely in a designated Roth account (Treas. Reg. § 1.401(a)(9)-3(a)(2)). Whether a Roth distribution is taxable is a separate question, addressed on the Roth-conversions page.

The distribution for the year of death

An owner who dies on or after the required beginning date had a distribution due for that calendar year. Death does not cancel it. The regulation says the amount “must be distributed during that year to any beneficiary to the extent it has not already been distributed to the employee” (§ 1.401(a)(9)-5(c)(1)). It is figured as it would have been for the owner. When the owner died before the required beginning date there is no required distribution for the year of death (IRS Publication 590-B).

Two details follow from the regulations:

• Several IRAs with different beneficiaries. If the owner’s IRAs do not all name the same beneficiaries and the year’s total was not taken, each IRA must distribute a proportionate share of the shortfall to a beneficiary of that IRA, in proportion to the prior year-end balances (§ 1.408-8(e)(4)(i)).
• A beneficiary’s own year of death. The same idea applies down the line. A distribution is due for the calendar year in which a beneficiary dies, payable to that person’s beneficiary to the extent not already taken (§ 1.401(a)(9)-5(d)(1)(i)).

A death late in the year can make the deadline impossible to meet. The excise tax is waived automatically, unless the Commissioner determines otherwise, if the person who owed the distribution died in that year without taking it and the beneficiary takes the missing amount no later than the tax filing deadline, including extensions, for the beneficiary’s taxable year that begins with or within that calendar year, or, if later, the last day of the following calendar year (§ 54.4974-1(g)(3)).

How the annual amount is figured

Each year’s required amount is the account balance divided by an applicable denominator (§ 1.401(a)(9)-5(a)(1)). For an IRA the balance is the balance on December 31 of the preceding calendar year (§ 1.408-8(b)(2)). The denominator comes from the Single Life Table in Treas. Reg. § 1.401(a)(9)-9(b). Publication 590-B prints a single life expectancy table as Table I in its Appendix B.

• A beneficiary other than a spouse looks up the table once, using the beneficiary’s age on his or her birthday in the calendar year after the year of death. For each later year the figure is reduced by one (§ 1.401(a)(9)-5(d)(3)(iii)).
• A surviving spouse who is the sole beneficiary looks up the table again each year, using the spouse’s age that year (§ 1.401(a)(9)-5(d)(3)(iv)). If the owner died before the required beginning date, that spouse may delay the first distribution until the end of the calendar year in which the owner would have reached the applicable age (§ 1.401(a)(9)-3(d)); see the spouse-versus-non-spouse page.
• When the owner died on or after the required beginning date, the denominator is the greater of the beneficiary’s remaining life expectancy and the owner’s. The owner’s is read from the table at the owner’s age in the year of death and then reduced by one for each later year (§ 1.401(a)(9)-5(d)(1)(ii) and (d)(3)(ii)).

A hypothetical example. An IRA owner whose 80th birthday fell in 2025 dies that year, after the required beginning date. The sole beneficiary is an adult daughter who turns 50 in 2026 and is not an eligible designated beneficiary. The Single Life Table gives 36.2 for age 50. The owner’s figure is 11.2 for age 80, less one, or 10.2 for 2026. The greater is 36.2. If the account held $362,000 on December 31, 2025, the 2026 distribution is $362,000 ÷ 36.2 = $10,000. For 2027 the denominator is 35.2; if the account held $352,000 on December 31, 2026, the 2027 distribution is $352,000 ÷ 35.2 = $10,000. The denominator keeps falling by one each year, and whatever remains must be distributed by December 31, 2035.

Taking more than the minimum in one year earns no credit toward a later year (§ 1.401(a)(9)-5(a)(6)). A beneficiary who holds several IRAs inherited from the same person may total the required amounts and take the total from any of them, but may not combine them with the beneficiary’s own IRAs or with IRAs inherited from someone else (§ 1.408-8(e)(2)).

The excise tax and its waivers

If less than the required amount is distributed, the payee owes an excise tax equal to 25 percent of the shortfall (IRC § 4974(a)). The rate is 10 percent if, during the correction window, the payee takes the missing amount from the same plan and files a return reflecting the tax (§ 4974(e)(1)). The correction window ends on the earliest of the date a notice of deficiency for the tax is mailed, the date the tax is assessed, and the last day of the second taxable year that begins after the end of the taxable year in which the tax is imposed (§ 4974(e)(2)). In the hypothetical above, taking nothing for 2026 would produce a tax of $2,500 at 25 percent, or $1,000 at 10 percent if corrected within the window.

The IRS may waive the tax if the shortfall was due to reasonable error and reasonable steps are being taken to remedy it (§ 4974(d); Treas. Reg. § 54.4974-1(g)(1)). The request is made on Form 5329 with an attached statement of explanation (Instructions for Form 5329). The regulations also provide two automatic waivers: the year-of-death waiver described above, and one for an eligible designated beneficiary of an owner who died before the required beginning date who misses a life-expectancy payment and elects the ten-year rule by the end of the ninth calendar year following the year of death, subject to the stated conditions (§ 54.4974-1(g)(2)).

Once the final deadline has passed, the required distribution for that year and every later year is the entire remaining balance (§ 54.4974-1(e)).

Estates and other non-individuals

Only an individual can be a designated beneficiary. If the account passes to the owner’s estate, or to a trust that does not meet the see-through requirements, the owner is treated as having no designated beneficiary, and the ten-year rule does not apply (§ 401(a)(9)(H)(i); Treas. Reg. § 1.401(a)(9)-4(b)).

• Owner died before the required beginning date. The five-year rule applies: the entire interest must be distributed by the end of the calendar year that includes the fifth anniversary of the death, with nothing required before then (§ 1.401(a)(9)-3(c)(2) and (c)(5)(i)(A); § 54.4974-1(c)(2)).
• Owner died on or after the required beginning date. Annual distributions continue over the owner’s remaining life expectancy, read from the Single Life Table at the owner’s age in the year of death and reduced by one each year (§ 1.401(a)(9)-5(d)(1)(iii) and (d)(3)(ii)).

When a trust does meet the see-through requirements, its beneficiaries are treated as the account’s beneficiaries; see naming a trust as IRA beneficiary. The categories that keep life-expectancy treatment are defined on the eligible-designated-beneficiaries page.

Sources