She Inherited Her Mother’s $180,000 IRA at 58 and Was Told She Had 10 Years to Empty It. Nobody Told Her the IRS Also Wants a Withdrawal in Each One of Them
Inheriting an IRA comes with a 10-year deadline most people know about and a year-by-year withdrawal requirement almost nobody sees coming until the IRS penalty notice arrives.
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Inheriting a parent’s IRA feels straightforward until the paperwork arrives. A 58-year-old daughter who inherits her mother’s $180,000 traditional IRA is told she has 10 years to empty the account. What her mother’s estate attorney may not have mentioned: if her mother had already started taking required minimum distributions before she died, the daughter also has to take a withdrawal in each of years one through nine.
Skipping those annual distributions to wait for a lower-tax year at the end is no longer allowed. The IRS finalized that interpretation in 2024, and enforcement began with the 2025 tax year. This rule catches non-spouse beneficiaries off guard more than any other. Under the SECURE Act, a person who dies after December 31, 2019, and whose beneficiaries inherit an IRA has a 10-year maximum for those heirs to withdraw the money, unless they are a spouse or fall under certain other exceptions.
The stretch IRA that once let heirs spread distributions across their own life expectancy is gone for most inheritors. What replaced it was ambiguous for four years, and the IRS waived penalties for missed annual withdrawals from 2020 through 2024 while it sorted out the details.
Two Different 10-Year Rules, Depending on the Decedent’s Age
The final rules split inherited IRAs into two groups based on the original owner’s age at death. If the parent died before reaching their required beginning date for RMDs, currently age 73, the heir can wait until year 10 and take the entire balance in one distribution. If the parent had already started taking RMDs, the heir must continue annual withdrawals based on their own life expectancy and still zero out the account by the end of year 10.
As Suze Orman summarized on her podcast, “you cannot wait till the 10th year for you to withdraw all of that money if that’s how long you wanted to wait. You had to start the year after the owner died to continue to take required minimum distributions based on your life expectancy, and that by the end of the 10th year, the entire account had to be wiped clean.”
For the 58-year-old daughter, that means her first RMD is calculated by dividing the account balance by her single life expectancy factor from the IRS table, roughly 27 years at her age. On a $180,000 balance, that produces a first-year withdrawal near $6,700. She still has to empty whatever remains by the end of year 10, so the annual RMD sets a minimum, and heirs can withdraw more in any year.
Cost of Getting It Wrong
The penalty for missing an inherited-IRA RMD used to be one of the harshest in the tax code at 50% of the amount that should have been withdrawn. SECURE 2.0 lowered it to 25%, with a further reduction to 10% if you correct the shortfall within a two-year window and file Form 5329. On a missed $6,700 distribution, that is still a $1,675 penalty on top of the taxes eventually owed.
How Tax Brackets Shape the Withdrawal Schedule
Every dollar pulled from a traditional inherited IRA is ordinary income in the year it comes out. A daughter still working in her late 50s stacks those withdrawals on top of her salary. Emptying $180,000 over 10 years averages $18,000 a year in added income, which for most middle-income households lands inside the 22% or 24% federal bracket. Waiting and taking a single lump sum in year 10 can push a chunk of the money into the 32% or 35% bracket and, for some filers, trigger higher Medicare premiums through IRMAA surcharges.
The heirs who plan around the rule generally do three things. They confirm whether the parent had reached their required beginning date, because the answer determines whether annual RMDs are mandatory.
They project their own taxable income for each of the 10 years and front-load withdrawals into lower-income years, such as a sabbatical or the gap between retirement and Social Security claiming. And they file Form 5329 immediately if they miss a year, because the 10% reduced penalty is available only when the correction is timely.
Beyond the 10-year deadline, the annual withdrawal requirement is often what determines the total tax owed on an inherited IRA. It is one of nine IRS rules that quietly drain retirement accounts, all charted in a free tax trap map.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
