Planning
The mechanics are settled. The planning value is almost entirely in the timing, and it is decided in year one.
The stretch treatment that let most non-spouse beneficiaries draw an inherited retirement account down over their own lifetime was replaced for most beneficiaries who inherit after 2019 with a ten-year window. There are exceptions — a surviving spouse, a minor child of the account owner, a disabled or chronically ill beneficiary, and a beneficiary close in age to the deceased.
For everybody else, the account has to be empty by the end of the tenth year.
Whether annual distributions are required during those ten years depends on whether the original owner had already begun taking required distributions. If they had, the beneficiary generally continues taking something each year and empties the account by year ten. If they had not, the ten-year deadline stands alone.
This distinction produced years of confusion and transitional relief while the rules were finalized. It is now settled enough to plan around, and the practical implication is that the first question to answer about any inherited account is where the original owner stood.
Almost nowhere in the mechanics, and almost entirely in the timing.
A beneficiary who takes nothing for nine years and everything in year ten will often pay more tax on that account than they had to — a decade of income compressed into one year, potentially over a bracket threshold, and quite possibly in a year they had no reason to expect it.
A gap year. Between retiring and claiming Social Security, or a year between jobs, income is often unusually low. That is the cheapest year to take a large distribution.
Before other income arrives. A beneficiary whose earnings are still rising may be better served drawing early rather than late.
Against a deduction. A year with a large charitable gift, a business loss, or unusual medical expenses can absorb more of the account than a typical one.
And the interaction most often missed: for a beneficiary near Medicare age, a large distribution raises the income used to set premiums two years later.
Not "when must this be emptied" but "across which years, and why". A beneficiary who understands the window as a planning opportunity rather than a deadline will make better decisions in years two through nine, which is where the money is.
Which account to draw from first →
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