So You’ve Inherited an Inherited IRA

By James I. Moore, CFP®

This article is an updated version of the one published July 13, 2021.

When an IRA owner dies, the account ownership will pass to whoever the owner named as the beneficiary. And unless that beneficiary was the original IRA owner’s spouse, the IRA will become an inherited IRA.

If the inherited IRA owner dies, the account ownership will again pass to whoever is named as beneficiary, and the account will become what we will call an “inherited inherited IRA.” The person who inherits an already inherited IRA is called a successor beneficiary.

SECURE Act Changes

The required minimum distribution (RMD) rules were drastically changed with the passing of the SECURE Act in 2019. Some of the most significant changes in that regard were the elimination of the “stretch” provision for many non-spouse beneficiaries as well as the creation of the 10-year rule for non-eligible beneficiaries.

The IRS then made the rules even more complicated with their final regulations issued in 2024. The RMD rules for successor beneficiaries now vary greatly depending on multiple factors. Below, we have tried to cover multiple inherited IRA scenarios, but be aware that there are other situations (including trusts as beneficiaries) that have their own set of rules.

Scenarios 1-2: Pre-SECURE Act

These scenarios apply when the original owner died before 1/1/2020, the effective date of the SECURE Act.

Scenario 1: Both the original owner and the original beneficiary died before 1/1/2020, the effective date of the SECURE Act. In this scenario, the successor beneficiary is grandfathered into the pre-SECURE Act rules. The successor beneficiary is required to continue taking annual RMDs based on the same calculation that the original beneficiary was using. The 10-year rule does not apply.

Scenario 1 example: John Smith died in January of 2010 and left his IRA to his son Max Smith. Max took annual RMDs—based on his own life expectancy factor the IRS provides—starting in 2011 until his death in 2018.

Max’s daughter Annie Smith is then the successor beneficiary, and she continues to take annual RMDs based on Max’s existing factor and schedule of distributions (not her own).

Scenario 2: The original owner died before 1/1/2020; then the original beneficiary died on or after 1/1/2020. In this scenario, the successor beneficiary is required to continue taking annual RMDs based on the same calculation that the original beneficiary was using. In addition, the 10-year rule will start to apply as well. So, the successor beneficiary must take annual RMDs and must withdraw the entire balance of the retirement account within 10 years after inheriting the account.

Scenario 2 example: John Smith died in January of 2010 and left his IRA to his son Max Smith. Max took annual RMDs based on his own life expectancy starting in 2011 until his death in 2022.

Max’s daughter Annie Smith then continues to take annual RMDs based on Max’s existing factor and schedule of distributions (not her own). In addition, Annie’s inherited inherited IRA must be fully distributed by 12/31/2032.

Scenarios 3-6: Post-SECURE Act

The remaining scenarios apply when both the original owner and the original beneficiary died on or after 1/1/2020. For these scenarios, an important distinction must be made between “eligible designated beneficiary” and “non-eligible designated beneficiary.”

Original beneficiaries are considered eligible if they fit into one of the categories below:

Spouse of the decedent
Minor child of the decedent
Not more than 10 years younger than the decedent
Disabled or chronically ill individual

All other original beneficiaries are classified as non-eligible.

Scenario 3: The original beneficiary was an “eligible designated beneficiary” and was already taking annual RMDs. In this scenario, the successor beneficiary is required to continue taking annual RMDs based on the same calculation that the original beneficiary was already using. In addition, the 10-year rule will start to apply as well. So, the successor beneficiary must take annual RMDs and must withdraw the entire balance of the retirement account within 10 years after inheriting the account.

Scenario 3 example: John Smith died in January of 2021 and left his IRA to his brother Steve Smith, who was three years younger. Steve took annual RMDs based on his own life expectancy starting in 2022 until his death in 2024.

Steve’s son Michael Smith then continues to take annual RMDs based on Steve’s existing factor and schedule of distributions (not his own). In addition, Michael’s inherited inherited IRA must be fully distributed by 12/31/2034.

Scenario 4: The original beneficiary was an “eligible designated beneficiary” and had elected the 10-year rule instead of electing to “stretch” by taking annual RMDs. In this scenario, the successor beneficiary does not have to take an annual RMD. Instead, the 10-year rule still applies—but it’s not a new 10 years. Instead, the successor beneficiary must continue with the current 10-year time frame already in place for the previous beneficiary. For example, if the previous beneficiary inherited the account six years prior (and therefore is six years into the 10-year time frame), the successor beneficiary “steps into” that time frame and must withdraw the remaining balance within four years.

Scenario 4 example: John Smith died in January of 2021 and left his IRA to his brother Steve Smith, who was three years younger. Steve did not take any annual distributions until his death in 2024.

Steve’s son Michael Smith does not have to take annual RMDs but must fully distribute his inherited inherited IRA by 12/31/2031.

Scenario 5: The original beneficiary was a “non-eligible designated beneficiary,” and the original owner had died before his or her required beginning date (the date the original owner would have been required to start RMDs). The original beneficiary would have been subject to the 10-year rule but not subject to annual RMDs. In this scenario, the successor beneficiary does not have to take an annual RMD. Instead, as with Scenario 4, the successor beneficiary must continue with the current 10-year time frame already in place for the previous beneficiary.

Scenario 5 example: John Smith died in January of 2021 at the age of 65 and left his IRA to his son Max Smith. Max did not take any annual distributions until his death in 2024.

Max’s daughter Annie Smith does not have to take annual RMDs but must fully distribute her inherited inherited IRA by 12/31/2031.

Scenario 6: The original beneficiary was a “non-eligible designated beneficiary,” and the original owner had died after his or her required beginning date (the date the original owner would have been required to start RMDs). The original beneficiary would have been subject to the 10-year rule and subject to annual RMDs. In this scenario, the successor beneficiary is required to continue taking annual RMDs based on the same calculation that the original beneficiary was already using. In addition, the 10-year rule still applies—but it’s not a new 10 years. Instead, the successor beneficiary must continue on with the current 10-year time frame already in place for the previous beneficiary. For example, if the previous beneficiary inherited the account six years prior (and therefore is six years into the 10-year time frame), the successor beneficiary “steps into” that time frame and must withdraw the remaining balance within four years.

Scenario 6 example: John Smith died in January of 2021 at the age of 77 and left his IRA to his son Max Smith. Max took annual RMDs based on his own life expectancy starting in 2022 until his death in 2024.

Other Considerations

In the scenarios where the successor beneficiary is subject to an annual RMD, it is necessary to calculate the applicable RMD factor each year. This requires knowing the date of death of the original owner as well as the date of birth of the original beneficiary.

The scenarios above apply to both traditional IRAs and Roth IRAs. But it’s important to note that Roth IRAs are not subject to RMDs during the original owner’s life. When the original owner of a Roth IRA dies, they are always considered to have died before their required beginning date. This means that if a successor beneficiary inherits both a traditional Inherited IRA and a Roth Inherited IRA, it is possible that the RMD rules will be different for each account.

Planning Opportunities

The SECURE Act limited the opportunity for beneficiaries to “stretch” the retirement account distributions out over their lifetime, but there are still planning opportunities available.

There are situations where it might make sense to withdraw more than just the annual RMD in order to take advantage of years when taxable income will be lower. If subject to the 10-year rule, intentionally accelerating some distributions can help avoid the situation where a large distribution is forced in the final year, causing a spike in income and a jump into a higher tax bracket.

If you have questions about how the new RMD rules apply to your own unique situation, we are happy to help. Please feel free to schedule a complimentary phone call or meeting with one of our fee-only financial advisors.

James I. Moore, CFP®September 1, 2025