Which rule applies to you
Before any arithmetic, establish which of two regimes governs the account. The SECURE Act, effective for deaths after 2019, replaced the old lifetime stretch for most beneficiaries with a ten-year deadline. The stretch survives only for a defined group.
Eligible designated beneficiaries may still use life expectancy. The category covers a surviving spouse, a minor child of the account owner (until majority, after which the ten-year clock starts), a disabled or chronically ill individual, and any individual not more than ten years younger than the deceased owner. A sibling close in age qualifies; an adult child almost never does.
Everyone else who is a designated beneficiary — adult children, grandchildren, friends — falls under the ten-year rule. The account must be empty by 31 December of the tenth year after the year of death.
Within the ten-year rule there is a further split that catches many people out. If the owner died on or after their required beginning date, meaning distributions had already started, the “at least as rapidly” principle requires annual minimums during years one through nine as well as full depletion in year ten. If the owner died before that date, no annual minimum applies and the only obligation is the year-ten deadline. Choose the matching option above; the schedules differ substantially even though both end in the same year.
The subtract-one method, and why the withdrawal rate rises
The life expectancy schedule uses a single lookup and then pure arithmetic. Find your age at the end of the calendar year following the owner's death, read the divisor from Table I of Publication 590-B, and divide the prior 31 December balance by it. That is year one.
For every year after that, you do not look up the table again. You subtract 1.0 from the previous divisor. A beneficiary starting at 31.6 uses 30.6, then 29.6, then 28.6, and so on. This is the subtract-one method, and it is the single most common error in beneficiary distributions — looking the table up each year gives a divisor that falls by roughly 0.9 rather than 1.0, and produces distributions that are too small.
The consequence is that the fraction you must withdraw climbs every year. Starting at 31.6 the first year takes 1 ÷ 31.6 = 3.16% of the balance; ten years later the divisor is 21.6 and the fraction is 4.63%; twenty years later it is 11.6 and 8.62%. Once the divisor drops to 1.0 or below, the remaining balance must come out in full, which is what ends the schedule.
Note what the balance is measured on: the value at 31 December of the preceding year, not the current value. A market fall after year end does not reduce the amount you must take, which is why a required distribution in a bad year can be an uncomfortably large fraction of what the account is then worth.
Worked example: $400,000 inherited at age 55, life expectancy method
Using the calculator's defaults with a 5% assumed return.
- Look up the divisor. At age 55 in the first distribution year, Table I gives 31.6.
- Year one distribution. $400,000 ÷ 31.6 = $12,658.23, which is 3.165% of the balance.
- Grow what is left. $400,000 − $12,658.23 = $387,341.77, and at 5% that becomes $406,708.86 by year end.
- Year two divisor. 31.6 − 1 = 30.6. Not 30.7, and not a fresh lookup at age 56.
- Year two distribution. $406,708.86 ÷ 30.6 = $13,290.49, up 5.0% on year one.
- Grow again. $406,708.86 − $13,290.49 = $393,418.37, growing to $413,089.29 at year end.
- Year three. Divisor 29.6, distribution $413,089.29 ÷ 29.6 = $13,955.72.
The pattern is that the dollar amount rises while the balance is roughly flat, because the divisor is shrinking faster than the account grows. In this example the account keeps growing for the first several years because a 5% return exceeds the 3.165% initial withdrawal rate, and it begins falling once the required fraction overtakes the return — which happens when the divisor drops below 20, at a withdrawal rate above 5%. Starting from 31.6, the divisor is 20.6 in year twelve and 19.6 in year thirteen, so year thirteen is the first in which the required fraction exceeds the return.
Compare the same $400,000 under the ten-year rule with no annual minimum. Take nothing for nine years and the balance compounds to $400,000 × 1.059 = $620,531.29 by the start of year ten, all of it taxable in a single year. The level alternative — withdrawing the same amount at the start of each year so the account empties exactly on schedule — is $400,000 × 0.05 ÷ [(1 − 1.05−10) × 1.05] = $49,335.09 a year. Both satisfy the rule; the tax bills are not remotely comparable.
Reading the schedule as a tax problem
Every dollar out of an inherited traditional IRA is ordinary income to you, stacked on top of your salary. That makes the ten-year rule primarily a bracket-management exercise rather than an investment one, and the default behaviour — do nothing, then take everything in year ten — is close to the worst available answer. A $620,531 distribution in one year will reach brackets that a spread of ten $49,335 withdrawals never touches.
The right pattern usually tracks your own income. Withdraw more in years when your income is low — a sabbatical, a business loss, the year of a job change, the years after you retire — and less in peak earning years. If the ten-year window ends after your own retirement, weighting distributions toward the later years can be genuinely optimal, but that is a calculation rather than an assumption, and it is the opposite of the advice for someone whose income will rise.
Watch the threshold effects as well as the brackets. A large distribution raises adjusted gross income, which can increase the taxable share of Social Security benefits, trigger Medicare income-related premium adjustments two years later, and phase out education or marketplace credits. Price a specific year's distribution with the bracket-stacking calculator, which applies the same mechanic to voluntary income.
An inherited Roth IRA follows the same distribution timetable but the distributions are generally tax-free, which inverts the strategy entirely. There the sensible plan is to leave the money untouched for the full ten years and let it compound tax-free, then take it all at the deadline. Same rule, opposite behaviour, because the tax consequence is the thing that differs.
Starting divisors and first-year distribution on $400,000
| Age | Divisor | Withdrawal rate | First-year amount |
|---|---|---|---|
| 45 | 41.0 | 2.44% | $9,756.10 |
| 50 | 36.2 | 2.76% | $11,049.72 |
| 55 | 31.6 | 3.16% | $12,658.23 |
| 60 | 27.1 | 3.69% | $14,760.15 |
| 65 | 22.9 | 4.37% | $17,467.25 |
| 70 | 18.8 | 5.32% | $21,276.60 |
| 75 | 14.8 | 6.76% | $27,027.03 |
| 80 | 11.2 | 8.93% | $35,714.29 |
The withdrawal rate is 1 ÷ divisor and the amount is $400,000 ÷ divisor. Verify the divisor for your own age against the current Publication 590-B before relying on it; the table was last revised for distributions beginning in 2022.
Mistakes that cost money or trigger the excise tax
- Re-reading the table each year. Only the first divisor is looked up; every later one is the previous figure minus exactly 1.0. Looking it up again produces distributions that are too small and a shortfall subject to excise tax.
- Using the wrong age. The divisor comes from your age at the end of the calendar year after the owner's death, not the year of death and not your age today.
- Rolling an inherited IRA into your own. Only a surviving spouse may treat an inherited IRA as their own. For anyone else, moving the money into a personal IRA is a taxable distribution of the entire balance and cannot be reversed.
- Combining inherited accounts from different decedents. Inherited IRAs may only be aggregated when they came from the same person and are of the same type.
- Missing the year-ten deadline. The deadline is 31 December of the tenth year following the year of death, and the excise tax applies to whatever remains.
- Assuming a trust beneficiary gets the same treatment. Whether a trust can look through to its beneficiaries depends on how it is drafted, and a trust that fails the requirements can face a far shorter distribution period.
Spouses, minors and where this sits among other rules
A surviving spouse has options nobody else does. They may treat the IRA as their own, in which case it stops being an inherited account entirely and follows the ordinary owner rules including the Uniform Lifetime Table used by the standard RMD calculator. They may instead remain a beneficiary, which keeps penalty-free access before 59½ and can be the better route for a younger widow or widower. A spouse who is the sole beneficiary may also delay the start of distributions until the deceased would have reached their required beginning date.
A minor child of the account owner uses the life expectancy method until reaching the age of majority, at which point the ten-year clock begins and the account must be emptied within ten years of that date. Grandchildren and other minors do not qualify — the rule turns on the child of the decedent specifically.
Once you have the schedule, plan the withdrawals alongside the rest of your retirement income rather than in isolation. The withdrawal longevity calculator shows how a stream of distributions interacts with an existing portfolio, and the safe withdrawal rate calculator puts the required percentages in context: an inherited IRA at age 80 requires 8.93% a year, well above any sustainable spending rate, which means the distribution is a tax event rather than a spending instruction. Nothing obliges you to spend it — reinvesting the after-tax proceeds in a taxable account is entirely permitted, and often the right answer.
This is a general explanation, not tax advice. Beneficiary rules interact with trust drafting, community property, plan documents and state law. Confirm your own situation with a tax professional, and check the current Publication 590-B for the divisor and deadlines that apply to your year.