How Do RMDs Work When Multiple Beneficiaries Inherit One IRA?

Q: How do RMDs work when multiple beneficiaries inherit one IRA?

The IRA should be split into separate inherited IRAs, one per beneficiary, by December 31 of the year following the owner's death. After the split, each beneficiary follows the distribution rules for their own beneficiary category: eligible designated beneficiaries may use their own life expectancy, while other designated beneficiaries follow the 10-year rule. If the split is not done by the deadline, all beneficiaries use the oldest beneficiary's schedule.

Q: What is the penalty for missing an inherited IRA RMD?

A 25% excise tax on the amount that should have been withdrawn. Under SECURE 2.0, the penalty drops to 10% if the failure is corrected promptly.

Guides · Updated October 2026

Three siblings inherit their father's $300,000 IRA. Nobody splits it. A year passes, then another, and by the time anyone asks how the RMDs work, the answer has quietly gotten worse for two of them. This is the most common way multiple-beneficiary inheritances go wrong, and it is not a complicated tax strategy problem. It is a deadline problem. One date, December 31 of the year after the death, decides whether each beneficiary gets their own withdrawal schedule or everyone gets stuck with the oldest sibling's.

This is paperwork you do while grieving, and the deadline does not care. That is worth saying plainly, because the separate-account rule is genuinely simple and people still miss it, not from ignorance but from the fact that nobody is thinking about trustee-to-trustee transfers in the months after a funeral.

How RMDs work with multiple beneficiaries: the split

The rule is called the separate-account rule, and it does exactly what the name says. When an IRA names more than one beneficiary, each beneficiary's share should be moved into a separate inherited IRA, titled in the decedent's name for the benefit of that beneficiary, by December 31 of the calendar year following the year of death. The move happens by trustee-to-trustee transfer, which preserves the tax-deferred status. It is not a distribution. Nobody owes tax on the split itself.

After the split, each beneficiary follows the rules for their own category. An eligible designated beneficiary, a surviving spouse, a minor child, someone disabled or chronically ill, or someone not more than ten years younger than the decedent, can generally stretch distributions over their own life expectancy. Everyone else, the adult children in the usual case, follows the 10-year rule: the account must be empty by December 31 of the tenth year after death. And each beneficiary's 10-year clock runs independently once the accounts are separated. Your sibling's withdrawals do not affect yours.

The year-of-death RMD is separate from all of this. If the original owner had an RMD obligation for the year they died and had not taken it, that remaining amount must come out by December 31 of the year of death. The IRS clarified in 2024 that any one or more of the beneficiaries can satisfy it collectively. It does not have to be divided evenly, as long as the full required amount leaves the inherited accounts before year-end.

What happens if you miss the split

This is the part that stings. If the beneficiaries do not establish separate accounts by the December 31 deadline, the IRS treats the group as one, and everyone takes distributions on the oldest beneficiary's schedule. The oldest beneficiary has the shortest life expectancy, which means the largest required withdrawals. The younger siblings, who would have had smaller annual RMDs on their own factors, now withdraw faster than they had to, paying tax sooner than they had to.

Worked example: three siblings, $300,000, one missed deadline

Their father died in 2025 at 78, after his required beginning date, so annual RMDs apply during the 10-year period. The siblings are 45, 50, and 55. Each share is $100,000. Using the IRS Single Life Expectancy Table (Table I, current version): age 45 factors to 38.8, age 50 to 34.2, age 55 to 29.6.

Sibling (age)	Own factor	RMD on own schedule	RMD on oldest's schedule
Age 45	38.8	$2,577	$3,378
Age 50	34.2	$2,924	$3,378
Age 55	29.6	$3,378	$3,378
Extra withdrawn by the two younger siblings		$1,255/yr

Each year's RMD is the prior December 31 balance divided by that year's factor, and the factor drops by one each subsequent year. The $1,255 is not a penalty. It is just tax paid years earlier than necessary, which is its own kind of penalty. Verify your own factors in IRS Publication 590-B, Table I; do not copy these for a different age.

The question nobody answers: what if the siblings disagree?

Here is the open thread in this whole area. The separate-account rule assumes the beneficiaries cooperate, and the IRS guidance describes a clean world where everyone signs the transfer paperwork on time. In practice, one sibling wants to cash out immediately, another wants to stretch, and the third has not returned anyone's calls since the reading of the will. The custodian typically needs all beneficiaries to act to split the account, and the December 31 deadline does not pause for family dynamics.

I do not have a clean answer for this, and you should be suspicious of anyone who claims to. The practical advice, such as it is: start the split paperwork as early as possible, in writing, with the custodian, so that a non-responsive beneficiary is a documented problem rather than a surprise in December. An estate attorney earns their fee here in a way a tax article cannot. What I can tell you is the cost of letting the disagreement run past the deadline, which is the table above, and that number has a way of focusing everyone's attention.

The penalty backdrop, for completeness: missing a required distribution carries a 25% excise tax on the amount that should have come out, reduced to 10% if you correct it promptly under SECURE 2.0. That applies to skipped annual RMDs, not to the split itself. The split has no penalty. It just has a deadline, and the consequence for missing it is permanent.

Model each sibling's schedule separately

Enter each beneficiary's age and share to see the annual RMDs and the 10-year empty-by date.

Calculate inherited IRA RMDs

Frequently asked questions

How do RMDs work when multiple beneficiaries inherit one IRA?

Split the IRA into separate inherited IRAs by December 31 of the year following the owner's death. After the split, each beneficiary follows their own category's rules: eligible designated beneficiaries may use their own life expectancy, while other designated beneficiaries follow the 10-year rule. Miss the split and everyone uses the oldest beneficiary's schedule.

What is the deadline to split an inherited IRA among beneficiaries?

December 31 of the calendar year following the year of the account owner's death. The split is done by trustee-to-trustee transfer into separately titled inherited IRAs and does not trigger a taxable distribution.

What happens if beneficiaries do not split the inherited IRA in time?

All beneficiaries are stuck with the least favorable schedule: distributions based on the oldest beneficiary's life expectancy, meaning larger required withdrawals, and earlier tax, for the younger heirs.

Who takes the year-of-death RMD when there are multiple beneficiaries?

If the decedent had an RMD obligation for the year of death and did not take it, the remaining amount must come out by December 31 of that year. The IRS clarified in 2024 that any one or more beneficiaries can satisfy it; it does not need to be split evenly.

What is the penalty for missing an inherited IRA RMD?

A 25% excise tax on the undistributed amount, reduced to 10% if corrected promptly under SECURE 2.0.

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