Inherit a Parent’s $220,000 IRA at 58 and Spread It Over Ten Years at 22%. Cash It Out the First Year Like Most Heirs Do, and on a $90,000 Salary About $90,000 of It Lands at 32% and 35%
Inheriting a parent's IRA feels like a windfall until the tax brackets turn it into a lesson about timing. The same $220,000 can cost two very different amounts in federal tax depending on a single decision made in year one.
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Imagine a 58-year-old single filer earning $90,000 who inherits a $220,000 tax-deferred retirement account from a parent. The federal tax bill on that inheritance depends on how and when the money comes out.
You can withdraw the money in equal pieces over ten years or all at once in the first year, and the two choices produce very different tax bills. The figures below use the IRS brackets and standard deduction for tax year 2026, which apply to returns filed in 2027.
How the 10-Year Rule Sets the Withdrawal Clock
For IRA owners who died in a tax year beginning after December 31, 2019, IRS Publication 590-B says all distributions must be made by the end of the 10th year after death, with exceptions for certain qualifying beneficiaries.
That exception generally doesn’t cover adult children, so the account must be emptied by December 31 of the year containing the 10th anniversary of the parent’s death. In the IRS example, an owner who died in 2025 leaves an heir who must finish by December 31, 2035.
The heir decides how to pace the withdrawals inside that window. The IRS notes that beneficiaries can take a lump-sum distribution of the inherited account at any time.
Being 58 does not trigger the early withdrawal penalty here, because the tax code exempts distributions made to a beneficiary (or to the estate of the employee) on or after the death of the employee. That leaves regular income tax as the only federal cost, and its size depends on timing.
Where a $90,000 Earner Starts Before Any Withdrawal
The 2026 standard deduction for single filers is $16,100. Subtracting it from a $90,000 salary leaves $73,900 of taxable income.
The 22% rate applies to income over $50,400, and the 24% rate begins above $105,700. That puts this earner in the lower bracket, with some room before the next rate kicks in.
Spreading Withdrawals Over Ten Years Keeps Them at 22%
Equal withdrawals over ten years total $22,000 per year. Taxable income rises to $95,900, still below the 24% threshold, leaving $9,800 of space. Each year’s withdrawal adds $4,840 in federal tax, for a ten-year total of $48,400.
This version holds the balance flat and keeps 2026 brackets fixed. In practice, investment growth would increase each withdrawal, while annual inflation adjustments usually push the bracket thresholds higher. A raise at work would also use up some of the remaining 22% room.
Cashing Out in Year One Pushes $92,125 Into the 32% and 35% Brackets
Taking the full $220,000 in a single year puts taxable income at $293,900.
For 2026, the 32% rate starts above $201,775, and the 35% rate starts above $256,225.
As a result, the top two rates tax $92,125 of the inheritance.
| Federal Rate | Portion of $220,000 Taxed at That Rate |
|---|---|
| 22% | $31,800 |
| 24% | $96,075 |
| 32% | $54,450 |
| 35% | $37,675 |
Taken together, these portions produce about $60,664 in federal tax on the inheritance, or roughly 27.6% of the account. That is about $12,264 more than the ten-year schedule. The difference comes from bracket structure alone, since each withdrawal method taxes the same $220,000 of income.
Factors That Can Change These Numbers
Whether the parent had started required minimum distributions matters. Publication 590-B states that if the owner died before their required beginning date and the 10-year rule applies, no distribution is required for any year before the 10th year.
Parents who had already begun distributions can leave heirs with a different annual schedule. The IRS suggests that heirs check the IRA plan documents or consult with the IRA custodian or trustee for the details.
Missing the deadline has its own cost. Any amount left after December 31 of the 10th-anniversary year is subject to the excise tax described in the publication. The penalty charge is one of several IRS rules that quietly drain inherited retirement accounts, and we mapped the rest in a free guide to retirement tax traps.
Filing status also changes the result. For married couples filing jointly, the 32% rate doesn’t begin until income exceeds $403,550, so the same lump sum would fall into lower brackets. State income taxes, which this federal comparison leaves out, would add to either scenario.
Looking ahead, the main variables are the annual inflation adjustments to bracket thresholds, changes in the heir’s salary over the decade, and investment returns inside the account. Each one affects how much of a given year’s withdrawal fits under the 24% line. With a ten-year window, the comparison shifts every time one of those factors changes.
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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.
