When my aunt passed away last year and left me as the beneficiary of her IRA, I found myself facing a stack of financial paperwork and terms I barely understood. Required Minimum Distribution? Life expectancy tables? The 10-year rule? It felt overwhelming, to say the least. If you’ve recently inherited an IRA and are trying to figure out the RMD calculation maze, I know exactly how you feel.
Calculating Required Minimum Distributions (RMDs) for an inherited IRA isn’t just confusing—it’s also constantly changing due to new legislation. Making a mistake can cost you significantly in penalties, yet getting it right can help preserve your inheritance and minimize your tax burden.
In this comprehensive guide, I’ll walk you through everything you need to know about calculating RMDs for inherited IRAs, based both on my personal experience and extensive research. I’ll cover the dramatic changes brought by recent legislation, break down the different rules based on your beneficiary status, and provide clear, step-by-step calculation examples to help you avoid costly mistakes.
Understanding Inherited IRAs: The Basics
Before diving into RMD calculations, let’s clarify what exactly happens when you inherit an IRA.
An inherited IRA (sometimes called a beneficiary IRA) is an account you receive when you’re named as the beneficiary of someone else’s Individual Retirement Account after they pass away. As the beneficiary, you can’t treat this account exactly like your own IRA—special rules apply, particularly around when and how much money you need to withdraw.
These required withdrawals are called Required Minimum Distributions (RMDs), and they’re calculated differently for inherited IRAs than for your own retirement accounts. The exact calculation depends on several factors, including:
- Your relationship to the original account owner
- When the original owner passed away
- The type of IRA (Traditional or Roth)
- The age of the original owner when they passed away
- Your own age and life expectancy
Getting these calculations right is crucial because the penalty for missing an RMD or withdrawing too little is substantial—25% of the amount you should have taken but didn’t (reduced from 50% thanks to recent legislation).
The SECURE Act Changed Everything: Pre-2020 vs. Post-2020 Rules
If you’re confused about inherited IRA rules, you have a good reason to be. The landscape changed dramatically when the SECURE Act took effect on January 1, 2020.
Pre-SECURE Act Rules (Beneficiaries of owners who died before January 1, 2020)
Before the SECURE Act, most beneficiaries could “stretch” distributions from an inherited IRA over their own life expectancy. This was incredibly advantageous from a tax perspective, as it:
- Minimized annual taxable distributions
- Allowed for extended tax-deferred growth (Traditional IRAs) or tax-free growth (Roth IRAs)
- Provided flexibility in distribution planning
Under these older rules, you would calculate your annual RMD by:
- Finding your life expectancy factor using the IRS Single Life Expectancy Table
- Dividing the previous year-end account balance by this life expectancy factor
- In subsequent years, you would subtract 1 from your original life expectancy factor (rather than looking up a new factor each year)
Post-SECURE Act Rules (Beneficiaries of owners who died on or after January 1, 2020)
The SECURE Act fundamentally changed the RMD landscape for most non-spouse beneficiaries by introducing what’s commonly called the “10-year rule.”
Under this rule, most non-spouse beneficiaries must withdraw the entire inherited IRA balance by December 31 of the tenth year following the year of the original owner’s death. No specific annual distributions are required during this period—you could technically wait and take the entire amount in year 10 if you wanted to (though this could have significant tax implications).
However—and this is where many people get confused—certain “eligible designated beneficiaries” can still use the old life expectancy method. These include:
- Surviving spouses
- Minor children of the account owner (but only until they reach majority, then the 10-year rule kicks in)
- Disabled individuals (as defined by IRS regulations)
- Chronically ill individuals
- Individuals not more than 10 years younger than the deceased owner
A financial planner I consulted explained it this way: “The SECURE Act basically created a two-tier system. Either you’re an eligible designated beneficiary who can still use the stretch provision, or you’re subject to the 10-year rule. Knowing which category you fall into is the first step in determining your RMD calculation method.”
Identifying Your Beneficiary Category: The Critical First Step
Before you can calculate your RMDs, you must determine which category of beneficiary you fall into, as this dictates which calculation method applies to you.
Category 1: Spouse Beneficiaries
As a surviving spouse, you have the most options, including:
- Treat the IRA as your own by designating yourself as the account owner or rolling it into your own IRA. If you choose this option, regular RMD rules apply based on your own age.
- Remain a beneficiary but calculate distributions based on your own single life expectancy, recalculated each year.
- If the original owner died before their required beginning date and you remain a beneficiary, you can delay distributions until the year the original owner would have turned 73 (or 75, depending on their birth year under SECURE 2.0).
My neighbor Helen chose to treat her deceased husband’s IRA as her own since she was only 62 when he passed away. This allowed her to avoid taking RMDs until she turned 73, letting the account continue growing tax-deferred for over a decade.
Category 2: Eligible Designated Beneficiaries (Non-Spouse)
If you qualify as an eligible designated beneficiary under the exceptions I mentioned earlier (disabled, chronically ill, not more than 10 years younger than the deceased, or a minor child of the deceased), you can still use the life expectancy method.
For these beneficiaries, RMDs are calculated by:
- Determining your life expectancy factor from the IRS Single Life Expectancy Table in the year following the owner’s death
- Dividing the previous year-end account balance by this factor
- In subsequent years, subtracting 1 from the previous year’s factor (except for spouse beneficiaries, who recalculate each year)
Note that for minor children, once they reach the age of majority (18 in most states), the 10-year rule kicks in, and they must empty the account by the end of the 10th year after reaching majority.
Category 3: Non-Eligible Designated Beneficiaries (Subject to 10-Year Rule)
This category includes most adult children, grandchildren, and other individuals named as beneficiaries who don’t qualify as “eligible.”
If the original owner died on or after January 1, 2020, and you fall into this category, you must empty the account by December 31 of the 10th year following the year of death. There are no annual RMD requirements during the 10-year period for beneficiaries of Roth IRAs or Traditional IRAs if the owner died before their required beginning date.
However—and this is a crucial point many miss—if the original owner died after their required beginning date (generally age 73 for most people in 2025), you must take annual RMDs during the 10-year period based on your own life expectancy AND empty the account by the end of the 10th year.
This clarification came from IRS regulations issued in 2022, which surprised many beneficiaries and advisors who had initially interpreted the SECURE Act differently.
Category 4: Non-Person Beneficiaries (Estates, Charities, Some Trusts)
If the beneficiary is not an individual (such as an estate or charity) or is a trust that doesn’t qualify as a “see-through” trust, different rules apply:
- If the original owner died before their required beginning date, the 5-year rule applies (empty the account by December 31 of the 5th year following the year of death)
- If the original owner died on or after their required beginning date, distributions are based on the original owner’s life expectancy in the year of death, reduced by 1 for each subsequent year
My cousin’s husband named his estate as the beneficiary of his IRA without realizing the tax implications. Their adult children, who inherited through the estate, lost the opportunity to stretch distributions and had to empty the account within 5 years, creating a much larger tax burden than necessary.
Step-by-Step RMD Calculation Methods for Different Scenarios
Now that you understand the categories, let’s walk through the specific calculations for each scenario.
Calculation Method 1: Life Expectancy Method (Spouses and Eligible Designated Beneficiaries)
For spouses who remain beneficiaries and other eligible designated beneficiaries:
- Determine the applicable life expectancy factor:
- For a spouse beneficiary: Use the IRS Single Life Expectancy Table (Table I in IRS Publication 590-B), finding the factor that corresponds to your age in the year after the owner’s death. In subsequent years, you’ll recalculate using your current age.
- For non-spouse eligible designated beneficiaries: Use the same table, but in subsequent years, you’ll subtract 1 from the previous year’s factor rather than recalculating.
- Calculate the RMD: RMD = Previous Year-End Account Balance ÷ Life Expectancy Factor
Example Calculation: Let’s say Maria inherited an IRA from her husband John, who passed away in 2024. She decides to remain a beneficiary rather than treating it as her own. The year-end balance of the IRA in 2024 was $400,000. Maria will be 72 in 2025 (the year after John’s death).
Looking up age 72 in the Single Life Expectancy Table, Maria finds her life expectancy factor is 17.2.
Her 2025 RMD calculation: $400,000 ÷ 17.2 = $23,255.81
In 2026, she’ll recalculate based on her new age (73), not by subtracting 1 from 17.2. This is a benefit only spouse beneficiaries receive.
Calculation Method 2: The 10-Year Rule with Annual RMDs
For non-eligible designated beneficiaries who inherited from someone who died on or after their required beginning date:
- Determine your life expectancy factor using the Single Life Expectancy Table for the year after the owner’s death
- Calculate annual RMDs by dividing the previous year-end balance by your life expectancy factor (reduced by 1 each subsequent year)
- Ensure the account is emptied by December 31 of the 10th year following the year of death
Example Calculation: Alex inherited an IRA from his aunt, who died in 2023 at age 75 (after her required beginning date). The IRA balance was $300,000 at the end of 2023. Alex is 45 in 2024.
Looking up age 45 in the Single Life Expectancy Table, Alex finds his life expectancy factor is 40.7.
His 2024 RMD calculation: $300,000 ÷ 40.7 = $7,371.01
For 2025, assuming a year-end 2024 balance of $310,000 after growth but accounting for his RMD, his life expectancy factor would be 39.7 (40.7 – 1).
His 2025 RMD calculation: $310,000 ÷ 39.7 = $7,808.56
Alex must continue taking annual RMDs AND ensure the entire account is empty by December 31, 2033 (10 years after the year of his aunt’s death).
Calculation Method 3: The 10-Year Rule Without Annual RMDs
For non-eligible designated beneficiaries who inherited from someone who died before their required beginning date, or for any beneficiary of a Roth IRA:
There are no annual RMD requirements, but the entire account must be emptied by December 31 of the 10th year following the year of death.
Example: Lisa inherited a Traditional IRA from her uncle who died in 2022 at age 69 (before his required beginning date). She has no annual RMD requirements but must withdraw the entire balance by December 31, 2032.
Lisa can choose to:
- Take no distributions for several years and then withdraw larger amounts later
- Take roughly equal distributions over the 10 years
- Time her distributions to align with years when she expects to be in a lower tax bracket
- Withdraw everything in the final year (though this could push her into a much higher tax bracket)
Calculation Method 4: Non-Person Beneficiaries
For estates, charities, or non-qualifying trusts:
- If the original owner died before their required beginning date: The 5-year rule applies—the entire account must be distributed by December 31 of the 5th year following the year of death. No annual RMDs are required.
- If the original owner died on or after their required beginning date: RMDs are based on the deceased owner’s life expectancy in the year of death, reduced by 1 for each subsequent year.
Example Calculation: A charity inherits an IRA from a donor who died in 2024 at age 80. Looking at the Single Life Expectancy Table, the life expectancy factor for an 80-year-old is 11.2.
The 2025 RMD calculation: Previous year-end balance ÷ 11.2
For 2026, the factor would be reduced to 10.2 (11.2 – 1), and so on.
Special Considerations for Different Types of Inherited IRAs
The type of IRA you inherit—Traditional or Roth—also impacts the RMD calculations and tax implications.
Inherited Traditional IRAs
With inherited Traditional IRAs:
- Distributions are generally taxed as ordinary income to the beneficiary
- RMDs are required to ensure the government eventually collects taxes on previously untaxed contributions and growth
- Missing an RMD results in a 25% penalty on the amount not taken
My brother inherited a Traditional IRA and failed to take his first RMD, not realizing it was required. The 25% penalty was a painful lesson on the importance of understanding these rules.
Inherited Roth IRAs
For inherited Roth IRAs:
- Qualified distributions are generally tax-free to the beneficiary
- While the original Roth IRA owner isn’t subject to lifetime RMDs, beneficiaries generally are subject to distribution rules
- For deaths after 2019, most non-spouse beneficiaries must empty the account within 10 years, though no specific annual distributions are required during this period
The silver lining with an inherited Roth IRA is that even though you may need to withdraw the funds within a specific timeframe, those withdrawals are typically tax-free.
Common RMD Calculation Mistakes and How to Avoid Them
Through my own experience and conversations with financial advisors, I’ve identified these common mistakes people make when calculating RMDs for inherited IRAs:
Mistake #1: Misidentifying Your Beneficiary Category
Many beneficiaries don’t correctly identify which category they fall into, leading to incorrect calculations. Take the time to clearly determine if you’re a spouse, eligible designated beneficiary, non-eligible designated beneficiary, or non-person beneficiary.
Mistake #2: Confusing Pre-SECURE Act and Post-SECURE Act Rules
The rules changed significantly in 2020. Make sure you’re following the correct set of rules based on when the original owner died.
Mistake #3: Missing the First RMD
The first RMD for an inherited IRA is typically due by December 31 of the year following the year of the original owner’s death. Missing this deadline can result in penalties.
Mistake #4: Using the Wrong Life Expectancy Table
The IRS updated its life expectancy tables in 2022. Make sure you’re using the current tables found in IRS Publication 590-B.
Mistake #5: Forgetting That the 10-Year Rule May Include Annual RMDs
Many beneficiaries subject to the 10-year rule don’t realize they may also need to take annual RMDs during that period if the original owner died on or after their required beginning date.
My financial advisor told me about a client who thought the 10-year rule meant she could wait until year 10 to take any distributions. She was shocked to learn she needed annual RMDs as well, and had to take corrective actions to avoid penalties.
Strategies to Optimize RMDs and Minimize Tax Impact
While you can’t avoid RMDs for inherited IRAs, you can employ strategies to optimize the tax impact:
Strategy #1: Timing Distributions Within the 10-Year Window
If you’re subject to the 10-year rule without annual RMDs, consider:
- Taking larger distributions in years when you’re in a lower tax bracket
- Avoiding distributions that could push you into a higher bracket
- Coordinating with other income sources to minimize overall tax burden
Strategy #2: Roth Conversions for Inherited Traditional IRAs
In some cases, converting an inherited Traditional IRA to an inherited Roth IRA might make sense, especially if:
- You expect to be in a higher tax bracket in the future
- You want to leave tax-free assets to your own beneficiaries
- You have funds outside the inherited IRA to pay the conversion taxes
However, this strategy requires careful analysis and possibly consultation with a tax professional.
Strategy #3: Charitable Giving Strategies
If you’re charitably inclined, consider using Qualified Charitable Distributions (QCDs) from inherited IRAs once you reach age 70½. This allows you to satisfy RMD requirements while excluding the distribution from your taxable income.
Strategy #4: Taking Advantage of the “As Designated” Rule for Trusts
If you inherit through a properly structured “see-through” trust, the RMDs may be calculated based on the oldest beneficiary’s life expectancy. However, in some cases, separate accounting provisions can allow RMDs to be calculated separately for each beneficiary.
Recent Updates: SECURE 2.0 Act and Its Impact
The SECURE 2.0 Act, passed in late 2022, introduced several changes relevant to inherited IRA RMDs:
- Reduced penalty for missed RMDs: The penalty decreased from 50% to 25% of the missed amount, and can be further reduced to 10% if corrected in a timely manner.
- Increased RMD age for original owners: The age at which RMDs must begin for original account owners increased from 72 to 73 starting in 2023, and will increase to 75 beginning in 2033. This impacts the “required beginning date” calculations for inherited IRAs.
- Eliminated RMDs for Roth accounts in employer plans: Starting in 2024, Roth accounts in employer plans (like Roth 401(k)s) will be exempt from RMDs during the original owner’s lifetime, similar to Roth IRAs.
A tax specialist I consulted emphasized: “These changes continue to evolve the retirement landscape. The reduced penalty is especially welcome news for beneficiaries who might make honest mistakes in these complex calculations.”
Special Situations and Edge Cases
Multiple Beneficiaries of the Same IRA
When an IRA has multiple beneficiaries, the general rule is that the RMDs are calculated based on the oldest beneficiary’s life expectancy. However, if the inherited IRA is split into separate accounts for each beneficiary by December 31 of the year following the year of death, each beneficiary can use their own life expectancy for calculations.
Disclaimer Provisions
In some cases, a primary beneficiary may “disclaim” their inheritance, allowing it to pass to contingent beneficiaries. This must be done within 9 months of the original owner’s death and before accepting any benefits from the IRA. This strategy can sometimes be used to optimize distribution requirements.
Inherited IRAs from Multiple Sources
If you inherit IRAs from different individuals, each inherited IRA maintains its own separate RMD calculation. You cannot combine them for RMD purposes.
My colleague inherited IRAs from both parents who died in different years. She needs to track and calculate separate RMDs for each account based on different sets of rules.
Step-by-Step Guide to Calculating Your Inherited IRA RMD
Let me walk you through the process I used to calculate my own inherited IRA RMD:
Step 1: Gather Essential Information
- Date of death of the original owner
- Age of the original owner at death
- Your relationship to the deceased
- Year-end account balance of the inherited IRA
- Type of IRA (Traditional or Roth)
- Whether the original owner had started taking RMDs
Step 2: Determine Your Beneficiary Category
Based on your relationship to the deceased and when they died, identify which category you fall into.
Step 3: Identify the Applicable Distribution Rules
Based on your category, determine if you’re subject to:
- Life expectancy method
- 10-year rule with annual RMDs
- 10-year rule without annual RMDs
- 5-year rule
Step 4: Find the Correct Life Expectancy Factor
If using the life expectancy method, look up the appropriate factor in the IRS Single Life Expectancy Table.
Step 5: Calculate Your RMD
Divide the previous year-end account balance by your life expectancy factor.
Step 6: Document Your Calculation
Keep records of how you calculated your RMD, including:
- The table you used
- The life expectancy factor
- The account balance used
- The distribution amount
Step 7: Schedule the Distribution
Ensure you take your RMD by December 31 of the current year (except for the first RMD, which can be delayed until April 1 of the year following the year after the original owner’s death).
When to Seek Professional Help
While this guide covers the major aspects of calculating RMDs for inherited IRAs, certain situations warrant professional assistance:
- Complex beneficiary arrangements involving trusts
- Significant inherited assets that could trigger substantial tax consequences
- Uncertainty about which beneficiary category applies to you
- Need for comprehensive retirement and tax planning
- Missed RMDs requiring correction
When I inherited my aunt’s IRA, I ultimately decided to consult with a financial advisor for one session just to verify my calculations and ensure I wasn’t missing anything. The fee was well worth the peace of mind.
Conclusion: Navigating the Inherited IRA RMD Maze
Calculating RMDs for an inherited IRA can feel overwhelming, especially with the significant rule changes in recent years. However, breaking it down into manageable steps makes the process much more approachable:
- First, determine when the original owner died (before or after January 1, 2020)
- Identify your beneficiary category based on your relationship to the deceased
- Apply the appropriate calculation method for your situation
- Track and document your calculations carefully
- Consider tax-optimizing strategies for your distributions
Remember that mistakes with RMDs can be costly, but the IRS has shown leniency in cases of reasonable error, especially with the reduced penalties under SECURE 2.0. When in doubt, consider consulting with a financial advisor or tax professional who specializes in retirement distributions.
Having gone through this process myself, I can tell you that while the learning curve is steep, understanding how to properly calculate RMDs for your inherited IRA puts you in control of your inheritance and helps you maximize its value while respecting both the letter of the law and the legacy of the person who left it to you.
The best tribute we can pay to those who thought enough of us to name us as beneficiaries is to handle their hard-earned retirement savings with the same care and attention they did during their lifetime.
Note: The information in this article is accurate as of July 2025. Tax laws and regulations change frequently, so always verify current rules or consult with a tax professional before making financial decisions about inherited IRAs.