Inherit a Mother’s $200,000 IRA at 60 While Earning $95,000, and $20,000 a Year for Ten Years Stays in the 22% Bracket. Take Nothing for Five Years and the Last Five Come to About $50,000 Each, With Part of Every One Taxed at 24%

Imagine a 60-year-old single filer making $95,000 who inherits a $200,000 traditional IRA from their mother and must decide when to withdraw the money. The answer isn’t so easy, as the timing changes how much of each withdrawal is taxed at 22% versus 24%. It can also affect what the beneficiary pays for Medicare later.

Under the 10-year rule, a beneficiary who is not an eligible designated beneficiary has to empty the account by December 31 of the year containing the 10th anniversary of the owner’s death. An adult child usually falls into that group, while other eligible designated beneficiaries include the owner’s surviving spouse, the owner’s minor child, a disabled individual, a chronically ill individual, or any other individual who is no more than 10 years younger than the IRA owner.

How a $95,000 Salary Fills Most of the 22% Bracket

For 2026, the standard deduction for a single filer is $16,100, and the 24% rate starts on taxable income over $105,700. Take the deduction off the salary, and you get $78,900 of taxable income. That leaves $26,800 of room before the 24% bracket begins.

A $20,000 annual withdrawal fits within that room, and when taxable income rises to $98,900, each withdrawal adds about $4,400 in federal tax at 22%. Ten equal withdrawals cover the starting balance, but any investment growth also has to come out by the deadline, so the real yearly amount would probably be higher.

What Waiting Five Years Does to the Numbers

If you wait to withdraw instead of taking money out in year one, the balance has time to grow. At a given 5% annual return, the account would reach about $255,256 after five years. Split into five withdrawals, that’s about $51,051 each before any further growth, close to the $50,000 a year in this example.

Each withdrawal that size, added to the same salary, pushes taxable income past the 24% threshold. About $26,800 is taxed at 22% and the remaining $23,200 at 24%. That works out to about $11,464 in federal tax per year.

Crossing into the higher bracket costs less than the 24% rate might suggest. Only the income above $105,700 is taxed at the higher rate, so the extra 2 percentage points cost about $464 a year, or $2,320 over five years. A larger balance offsets part of that, but only if returns match the assumption. Weaker returns would reduce the advantage, and losses would erase it.

Whether Waiting Is Allowed Depends on the Mother’s Age at Death

Taking nothing for five years is only allowed in certain cases. If the owner died before their required beginning date, no distribution is required for any year before the 10th year. If the owner died on or after that date, the beneficiary must take annual withdrawals based on the longer of the beneficiary’s life expectancy or the owner’s. For people born on or after January 1, 1951, the required beginning date is tied to age 73.

The mother of a 60-year-old may well be past that age, so many beneficiaries in this situation fall under the annual-distribution rules. The final regulations apply to calendar years beginning on or after January 1, 2025. Fidelity notes that missing a distribution can trigger a penalty of up to 25%. For these beneficiaries, some money must come out every year, and five years without withdrawals is not an option.

Medicare Premiums Can Rise After 65

If the 10-year window starts at 60, its second half overlaps with Medicare eligibility. Medicare’s income-related surcharges are based on modified adjusted gross income, generally from a prior tax year. In 2026, single filers with income up to and including $109,000 pay the standard Part B premium of $202.90 per month.

If the salary continues, a $50,000 withdrawal brings gross income to about $145,000. That lands in the bracket over $137,000 through $171,000, where the total Part B premium is $405.80 per month.

A $20,000 withdrawal brings income to about $115,000, which falls in the first surcharge bracket with a total premium of $284.10 per month. Either schedule can cross the threshold while the paycheck continues, but the larger withdrawals land in a higher bracket.

Factors That Decide Which Schedule Costs Less

Which schedule costs less depends on three things: whether the mother died before her required beginning date, whether the salary continues into the second half of the window, and how the account performs. If making income falls after retirement, more room opens up in the 22% bracket, and larger late withdrawals could cost less than this example shows. Pre-tax retirement contributions would also lower taxable income and change the bracket math.

Under the current figures, equal yearly withdrawals keep every dollar in the 22% bracket. Waiting places about $23,200 a year into the 24% bracket and, after 65, may raise Medicare premiums.

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