Inherit a Parent’s $220,000 IRA in November and Their $10,000 RMD for the Year Hasn’t Been Taken, and It Falls to You: Taxed as Your Income, in a Year You Didn’t Plan For
Inheriting a parent's IRA in November sounds like a financial cushion until the IRS hands you a deadline measured in weeks, a tax bill you never saw coming, and a penalty that grows the longer you wait.
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An adult child who inherits a parent’s $220,000 traditional IRA in November may learn that the parent never took the $10,000 required minimum distribution (RMD) due for that year. Under IRS rules, the heir must take that withdrawal. Whatever comes out is taxed as the heir’s ordinary income for the year, on top of their wages, in a year they budgeted with no idea this income was coming. Below is how the rule works, what it costs a typical worker, and which deadlines carry penalties.
Why a Parent’s Unfinished RMD Lands on the Heir
According to IRS Publication 590-B, if the owner “died on or after the required beginning date, the IRA beneficiaries are responsible for figuring and distributing the owner’s required minimum distribution in the year of the death.” The amount is calculated “as if the owner lived for the entire year,” meaning a late-year death still leaves the full amount owed. For owners born on or after January 1, 1951, the required beginning date is tied to age 73.
On taxes, the same publication says beneficiaries “must include in their gross income any taxable distributions they receive.” The parent would have paid tax on this money at their own rate. Once it passes to the child, it gets stacked on the child’s income and taxed at the child’s top bracket.
What $10,000 of Surprise Income Costs a Typical Worker
Median weekly earnings for full-time workers were $1,251 in the second quarter of 2026, according to the Bureau of Labor Statistics. That works out to about $65,052 a year, and the inherited RMD equals roughly eight weeks of extra pay landing in a single December.
Federal brackets are marginal, so only the income inside each layer is taxed at that layer’s rate. Under the IRS’s 2025 schedule for single filers, the 22% rate covers taxable income from $48,476 to $103,350.
A single median earner sits in or near that range, so the full $10,000 would add roughly $2,200 in federal tax. Where the heir falls in the brackets changes the bill, so someone in the 12% bracket would owe about $1,200, and someone in the 24% bracket about $2,400. In most states, state income tax comes on top of that.
Most households have little room for a bill like that. The Bureau of Economic Analysis put the personal saving rate at 4.4% in the second quarter of 2026, down from 5.3% the quarter before. With per-capita disposable income at $69,922, that rate comes to about $3,077 saved per person in a year. A $2,200 tax bill would take most of that.
Skipping the Withdrawal Costs More Than the Tax
If you don’t take the year-of-death RMD, federal law adds a 25% excise tax on the amount that should have come out. On a $10,000 shortfall, that’s $2,500, and you still owe regular income tax once you withdraw the money.
The penalty can be reduced. It drops to 10%, or $1,000, if the heir withdraws and reports the missed amount within a correction window that can run until the last day of the second taxable year after the tax was imposed. The IRS can also waive the penalty entirely if the shortfall came from “reasonable error” and the heir is taking reasonable steps to fix it. A death in November, followed by weeks of paperwork to transfer the account, is the kind of situation that waiver was written for.
Year One Starts a 10-Year Clock
The $10,000 is only the first withdrawal. A non-spouse adult child usually doesn’t qualify as an eligible designated beneficiary, so Publication 590-B requires the account to be drained within 10 years of the owner’s death. Because the parent had already started RMDs, the heir must also take a withdrawal every year in between, based on life-expectancy tables. Splitting $220,000 evenly over a decade comes to about $22,000 a year before any investment growth. A surviving spouse has more options, including treating the IRA as their own. The year-of-death rule is one of several IRS tripwires like this, and we mapped the rest in a free guide to the retirement tax traps that slowly drain inherited accounts.
Moves That Matter Before December 31
- Contact the custodian right away to confirm how much of the parent’s RMD, if any, was already taken, and request the rest before year-end.
- Ask the custodian to withhold federal tax from the distribution, or increase paycheck withholding, so the extra income doesn’t become an April bill or trigger an underpayment penalty.
- Plan the next 10 years against expected income. Larger withdrawals fit better in low-income years, such as a career break or early retirement, than in a single lump sum in year 10.
The year-of-death RMD is a small share of the inheritance, but it arrives on a short deadline with a penalty attached. A late-year inheritance forces a tax decision before the heir has time to plan, and acting before December 31 avoids the penalty and keeps the decade of withdrawals on a schedule the heir picks.
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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.
