What is the 5-year rule for an inherited IRA?

The 5-year rule requires the entire inherited IRA balance to be withdrawn by December 31 of the fifth year after the owner's death. The SECURE Act largely replaced it with the 10-year rule for deaths after 2019, but it still applies when the beneficiary is not an individual, such as an estate or charity, and the owner died before their required beginning date, and for pre-2020 deaths.

What is the 10-year rule for an inherited IRA?

For deaths after December 31, 2019, most non-spouse beneficiaries who are not eligible designated beneficiaries must empty the inherited IRA by December 31 of the tenth year after the owner's death. If the owner died on or after their required beginning date, annual RMDs are also required in years 1 through 9.

When does the 5-year rule still apply instead of the 10-year rule?

The 5-year rule still applies when the beneficiary is not an individual, for example an estate, a charity, or a non-qualifying trust, and the original owner of a traditional IRA died before their required beginning date. It also governs pre-2020 deaths, where beneficiaries could choose between the 5-year deferral and the life expectancy method.

Does the 5-year rule apply to an inherited Roth IRA?

A non-individual beneficiary inheriting a Roth IRA is generally subject to the 5-year rule, since Roth IRAs have no required beginning date during the owner's life. Separately, inherited Roth distributions are tax-free only if the original owner's 5-year holding period was satisfied, a different 5-year rule that uses the original owner's start date, not the date of inheritance.

What happens if you miss the 5-year or 10-year deadline?

Any amount remaining after the deadline is subject to a 25% excise tax on the amount that should have been withdrawn, reported on Form 5329. The IRS can reduce it to 10% if the failure is corrected promptly. Annual RMDs missed in years 1 through 9 face the same excise tax.

Spouse Inherited IRA Options: Roll It Over or Keep It Inherited

Guides · Updated October 2026

Losing a spouse is the worst moment to be handed a tax decision, and the IRA rules do not wait. A surviving spouse who inherits an IRA gets a choice that no other beneficiary gets. You can roll the account into your own IRA, or you can keep it as an inherited IRA in your spouse's name with you as beneficiary. Both are legal. They behave very differently, and the wrong pick can cost real money.

The rollover path is the simpler one to live with. Once the money is in your own IRA, the account follows your rules: your required beginning date, your life expectancy table, your beneficiaries. No 10-year deadline applies. Distributions before age 59 and a half face the 10 percent early withdrawal penalty, just like any IRA distribution. RMDs do not start until you reach your own RMD age, which is 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later. If you are already past 59 and a half and do not need the money soon, this is usually the right call. It simplifies everything into one account with one set of rules.

The inherited IRA path is the flexible one. The account stays in your deceased spouse's name, with you as beneficiary. Distributions carry no 10 percent early withdrawal penalty at any age. That single difference is the whole reason the option exists. RMDs, when they apply, start in the year your spouse would have reached RMD age. And because a surviving spouse is an eligible designated beneficiary, the 10-year rule that forces most beneficiaries to empty the account does not apply. You can take life-expectancy distributions instead. The trade-off is paperwork and attention: the account stays separate, and the rules stay different from your own IRA.

Spouse inherited IRA options: the example that decides it

Take a 52-year-old widow who inherits a $400,000 traditional IRA and, three years later, needs $40,000 from it for medical bills. If she rolled the account into her own IRA, that $40,000 withdrawal is ordinary income plus a 10 percent early withdrawal penalty, another $4,000 gone. If she kept the account as an inherited IRA, the same $40,000 is ordinary income with no penalty. Same widow, same money, same need, $4,000 difference decided by a form she signed years earlier.

Now flip the facts. Take a 67-year-old widower who inherits a $400,000 IRA, does not need the money, and wants the smallest possible RMDs for as long as possible. Rolling it into his own IRA gives him RMDs from the Uniform Lifetime Table, which produces smaller annual withdrawals than the single-life table used for inherited IRAs. The rollover wins here, and it is not close. Age and cash need point in opposite directions, which is why there is no universal answer.

There are two mechanics to get right either way. First, move the money by direct trustee-to-trustee transfer, never by check. A check starts a 60-day rollover clock, and missing that window can make the entire amount taxable in the year of the check. Second, if your spouse had already started RMDs, any RMD due for the year of death still has to come out before you do anything else. That distribution cannot be rolled over.

I will not tell you which option to pick, because the honest answer depends on facts I do not have: your age, your income, whether you might need the money before 59 and a half, and what your own retirement picture looks like. What I will say is this. If you are under 59 and a half and there is any chance you will need the money, keep it inherited. You can roll it over later, when the penalty no longer applies. If you are past 59 and a half and the money is for retirement, roll it over and simplify your life. And if the account is large enough that a wrong move costs five figures, pay for an hour of a CPA's time before you sign anything. Grief is a bad moment to make an irreversible tax election alone.

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Frequently asked questions

What are the options for a spouse who inherits an IRA?

Two main options: roll the account into your own IRA, or keep it as an inherited IRA in the deceased spouse's name with you as beneficiary. Spouses also have a third, less common path: treat the account as your own by election. The rollover and inherited paths cover most situations.

Does the 10-year rule apply to a surviving spouse?

No. A surviving spouse is an eligible designated beneficiary, so the 10-year rule does not apply. A spouse who keeps the account as an inherited IRA can take life-expectancy distributions instead of emptying it within 10 years.

Is there a 10% penalty on withdrawals from an inherited IRA for a spouse?

Not if the account is kept as an inherited IRA: distributions carry no 10 percent early withdrawal penalty at any age. If the spouse rolls the account into their own IRA, the penalty applies to distributions before age 59 and a half.

When do RMDs start on an inherited IRA kept by a spouse?

RMDs start in the year the deceased spouse would have reached their required beginning date, which is 73 for those born 1951 to 1959 and 75 for those born 1960 or later. If the deceased spouse had already started RMDs, distributions continue on that schedule.

Can a spouse roll an inherited IRA into their own IRA later?

Yes. A surviving spouse can keep the account as an inherited IRA and roll it over later, for example after turning 59 and a half when the early withdrawal penalty no longer matters. The rollover should be done by direct trustee-to-trustee transfer.

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