A Couple Who Dies With $900,000 Between Two IRAs, Never Having Converted a Dollar, Leaves Two Kids $450,000 Each and Ten Years to Pay Tax on It, About $45,000 a Year Apiece on Top of Their Own Salaries

If you are not familiar with these scenarios, a traditional IRA postpones taxes until you withdraw the money. The unpaid tax on the rest becomes their children’s problem. This happens when a retired couple takes out only what they need and never converts any of it to a Roth. In one example, $900,000 split between two IRAs passes to two adult children, $450,000 each, under the distribution rules Congress rewrote in the SECURE Act.

Ten-Year Clock Starts at the Second Death

When the first spouse dies, the survivor can usually treat the IRA as their own, so no withdrawals are forced at that point. Federal law treats an account as inherited only when the person receiving it was not the surviving spouse of the owner, under 26 U.S.C. § 408(d)(3)(C)(ii). The children’s time starts when the second parent dies.

Most non-spouse heirs must empty the account. For owners who die in a tax year beginning after December 31, 2019, they must do so by December 31 of the year containing the 10th anniversary of the owner’s death, according to IRS Publication 590-B. The IRS gives an example: if the owner died in 2025, the heir has until December 31, 2035. Healthy adult children don’t qualify for the old lifetime “stretch.”

If each child withdraws equally, $450,000 over ten years equals $45,000 per year. The real figure will likely be higher because whatever remains in the account keeps growing until it’s withdrawn.

What an Extra $45,000 Does to a Median Paycheck

The median full-time worker earned $1,251 a week in the second quarter of 2026, according to the Bureau of Labor Statistics. That works out to about $65,052 a year. National per-capita disposable income was $69,922. So each child effectively earns a second part-time salary, and every dollar is taxable.

The relevant math here uses the 2025 single-filer brackets, the most recent full schedule available. A median earner deducts the $15,750 standard deduction and ends up with $49,302 of taxable income, which already exceeds the $48,475 12% bracket limit, so every inherited dollar is taxed at 22%.

The extra income raises taxable income to $94,302, which is still under that bracket’s $103,350 ceiling. Federal tax on the inheritance comes to $9,900 a year. That adds up to $99,000 per child over the decade. Between the two children, $198,000 of the parents’ savings goes to federal income tax, and that is before any state tax.

Children who earn more lose a bigger share, as the 24% rate applies to single filers starting at $103,351 of taxable income, so higher-paid heirs give up more of each inherited dollar.

Waiting Until Year Ten Costs Far More

Publication 590-B says that if the owner died before their required beginning date, no distribution is required for any year before the 10th year. That flexibility can backfire. Say the median earner leaves the full $450,000 alone and takes it out in the final year. In this instance, the income would run up through the higher brackets and into 35%, for roughly $138,543 in extra federal tax.

That is about $39,543 more than equally spread withdrawals would cost. The rules are also stricter if the parents had already started their own required distributions. In that case, heirs generally can’t skip years.

Why Roth Conversions Can Pay Off

The case for converting comes down to comparing tax rates. In 2025, married couples filing jointly stay in the 12% bracket up to $96,950 of taxable income. Many retirees living on Social Security and modest withdrawals have unused room below that line.

Converting $100,000 at 12% costs $12,000 in tax. Leaving the same amount to a child in the 22% bracket costs $22,000 in tax. Conversions have downsides.

The first downside is that you owe the tax immediately, and paying it reduces savings that would otherwise keep growing, and the extra income can raise Medicare premiums. The period between the last paycheck and the first required distribution is usually when the math works best, which is the whole subject of our free Roth conversion guide. Inherited Roth IRAs still have to be emptied within ten years, but qualified withdrawals are tax-free. That lets heirs decide when to withdraw based on growth instead of their tax bracket.

Steps That Shrink the Bill

• Parents with room in the 12% bracket: Partial conversions each year can use up the space below the bracket ceiling without crossing it.
• Heirs: Spreading withdrawals over all ten years helps. Taking larger amounts in lower-income years, such as during a career break or before a promotion, can lower the rate paid.
• Both: Whether the parents had started required distributions decides whether yearly withdrawals are mandatory.

A $900,000 IRA balance is pre-tax. For a family that never converted, at least $198,000 goes to federal tax even if two median-earning children withdraw on the most efficient even schedule. The bill grows if the heirs earn more, live in a high-tax state, or wait until the deadline, and the parents control how big it gets, but only while they are alive.

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