Use this calculator to understand the withdrawal rules and potential distribution schedules for an inherited IRA, especially considering the SECURE Act.
Spouse
Minor Child of Deceased
Disabled or Chronically Ill Individual
Individual Not More Than 10 Years Younger Than Deceased
Other Individual (10-Year Rule)
Estate, Trust, or Charity
Understanding Inherited IRAs and the SECURE Act
An inherited IRA is an Individual Retirement Account (IRA) that has been passed down to a beneficiary after the original owner's death. The rules governing these accounts, particularly regarding Required Minimum Distributions (RMDs), underwent significant changes with the passage of the SECURE Act (Setting Every Community Up for Retirement Enhancement Act) in late 2019.
Key Changes from the SECURE Act
Before the SECURE Act, most non-spouse beneficiaries could "stretch" distributions over their own life expectancy, allowing for extended tax-deferred growth. The SECURE Act largely eliminated this "stretch" provision for many beneficiaries, introducing a new 10-year rule.
Types of Beneficiaries and Their Rules:
Spouse Beneficiary:
Spouses generally have the most flexibility. They can typically roll over the inherited IRA into their own IRA, treating it as their own. This allows them to defer distributions until their own RMD age (currently 73) and continue tax-deferred growth. Alternatively, they can remain a beneficiary and take distributions based on their own life expectancy or the deceased's life expectancy, or even elect the 10-year rule. Consulting a financial advisor is crucial for spouses to determine the best option.
Eligible Designated Beneficiaries (EDBs):
Certain beneficiaries are exempt from the 10-year rule and can still "stretch" distributions over their own life expectancy. These include:
The deceased's minor children (until they reach the age of majority, typically 21 or 26 if a student, after which the 10-year rule applies).
Disabled individuals.
Chronically ill individuals.
Individuals not more than 10 years younger than the deceased IRA owner.
For EDBs, RMDs are generally required annually based on their life expectancy, allowing for continued tax-deferred growth over a longer period.
Designated Beneficiaries (Most Other Individuals – 10-Year Rule):
This category includes most adult children, siblings, and other non-spouse individuals who are not EDBs. Under the 10-year rule, the entire inherited IRA balance must be distributed by the end of the 10th calendar year following the original owner's death. There are two main scenarios:
Owner Died BEFORE RMDs Started: If the original owner died before their Required Beginning Date (RBD) for RMDs (typically April 1 of the year following the year they turn 73), no RMDs are required in years 1-9. The entire balance must be withdrawn by the end of year 10.
Owner Died AFTER RMDs Started: If the original owner died on or after their RBD, RMDs *were* generally required in years 1-9 based on the beneficiary's life expectancy, with the remaining balance distributed by the end of year 10. However, the IRS issued Notice 2022-53 and Notice 2023-54, waiving penalties for not taking these RMDs in 2021, 2022, and 2023. The final rules for this scenario are still being clarified, and it's essential to consult a tax professional.
If the beneficiary is an estate, a non-qualifying trust, or a charity, different rules apply:
Owner Died BEFORE RMDs Started: The 5-year rule generally applies, meaning the entire account must be distributed by the end of the fifth year following the owner's death.
Owner Died AFTER RMDs Started: Distributions generally follow the deceased owner's remaining life expectancy. This is a complex area, and professional advice is highly recommended.
How to Use the Calculator:
Enter the initial value of the inherited IRA, the year the original owner passed away, your current age, your relationship to the deceased, whether the original owner had started RMDs, and an assumed annual growth rate. The calculator will then provide an estimated withdrawal schedule and important notes based on your beneficiary type.
Disclaimer: This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice. Inherited IRA rules are complex and can change. Always consult with a qualified financial advisor or tax professional for personalized guidance.
';
// Helper function for currency formatting
function formatCurrency(amount) {
return '$' + amount.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ',');
}
// Helper function for simplified Life Expectancy Factor (IRS Single Life Expectancy Table approximation)
function getLifeExpectancyFactor(age) {
if (age < 10) return 74.2;
if (age < 20) return 64.4;
if (age < 30) return 54.5;
if (age < 40) return 44.7;
if (age < 50) return 35.0;
if (age < 60) return 26.0;
if (age < 70) return 19.5;
if (age < 80) return 13.8;
if (age < 90) return 9.0;
if (age < 100) return 5.3;
return 3.0; // For ages 100+
}
// — Logic based on Beneficiary Type —
switch (beneficiaryType) {
case 'spouse':
outputHtml += 'As a Spouse Beneficiary, you generally have the most flexibility:';
outputHtml += '
';
outputHtml += '
You can roll over the inherited IRA into your own IRA, treating it as your own. This allows you to defer distributions until your own RMD age (currently 73) and continue tax-deferred growth.
';
outputHtml += '
Alternatively, you can remain a beneficiary and take distributions based on your own life expectancy or the deceased\'s life expectancy.
';
outputHtml += '
You could also elect the 10-year rule, though this is less common for spouses.
';
outputHtml += '
';
outputHtml += 'Recommendation: Consult a financial advisor to determine the best option for your specific situation, as each choice has different tax implications and benefits.';
break;
case 'minorChild':
case 'disabledChronicallyIll':
case 'notMoreThan10YearsYounger':
outputHtml += 'As an Eligible Designated Beneficiary, you can generally stretch distributions over your own life expectancy. This allows for a slower withdrawal schedule and continued tax-deferred growth.';
var leFactor = getLifeExpectancyFactor(beneficiaryAge);
var firstYearRMD = initialIRAValue / leFactor;
outputHtml += 'Estimated First Year RMD (Approximate): ' + formatCurrency(firstYearRMD) + ";
outputHtml += 'Note: This is an approximation for the first year\'s RMD. Subsequent RMDs are calculated annually by dividing the prior year-end balance by your remaining life expectancy factor (which decreases each year). For minor children, the 10-year rule applies once they reach the age of majority (typically 21 or 26 if a student).';
outputHtml += 'Recommendation: Consult IRS Publication 590-B and a financial advisor for precise calculations and rules, as life expectancy tables are detailed.';
break;
case 'otherIndividual': // 10-Year Rule
var startYear10YearPeriod = yearOfDeath + 1;
var endYear10YearPeriod = yearOfDeath + 10;
var yearsRemaining = endYear10YearPeriod – currentYear;
outputHtml += 'As an Other Individual Beneficiary, the 10-Year Rule generally applies. This means the entire inherited IRA balance must be distributed by the end of the ' + endYear10YearPeriod + ' (the 10th calendar year following the original owner\'s death).';
if (ownerHadStartedRMDs) {
outputHtml += 'Important Note: Since the original owner had started RMDs, you *were* generally required to take RMDs in years 1-9 based on your life expectancy, with the remaining balance distributed by the end of year 10. However, the IRS has issued Notice 2022-53 and Notice 2023-54, waiving penalties for not taking these RMDs in 2021, 2022, and 2023. The final rules for this scenario are still being clarified. Consult a financial advisor for the latest guidance.';
} else {
outputHtml += 'No RMDs are required in years 1-9. The entire balance must be withdrawn by the end of ' + endYear10YearPeriod + '.';
}
outputHtml += '
Projection Scenarios (10-Year Rule):
';
// Scenario 1: Withdraw everything at the end of year 10
var futureValueIfNoWithdrawals = initialIRAValue * Math.pow(1 + annualGrowthRate, 10);
outputHtml += '
Scenario 1: Withdraw Entire Balance at End of Year 10
';
outputHtml += 'If no withdrawals are made until the end of the 10-year period (' + endYear10YearPeriod + '), the projected balance would be approximately: ' + formatCurrency(futureValueIfNoWithdrawals) + '. This entire amount would need to be withdrawn by the end of ' + endYear10YearPeriod + '.';
// Scenario 2: Level Annual Withdrawals over 10 years
if (annualGrowthRate === 0) {
var levelAnnualWithdrawal = initialIRAValue / 10;
} else {
// Annuity formula for withdrawals from a growing account
// A = P * [ r / (1 – (1 + r)^-n) ]
var levelAnnualWithdrawal = initialIRAValue * (annualGrowthRate / (1 – Math.pow(1 + annualGrowthRate, -10)));
}
outputHtml += '
Scenario 2: Level Annual Withdrawals to Empty Account Over 10 Years
';
outputHtml += 'To empty the account with approximately equal annual withdrawals over the 10-year period, you would withdraw about ' + formatCurrency(levelAnnualWithdrawal) + ' each year.';
outputHtml += 'Projected Withdrawal Schedule (Level Annual Withdrawal):';
outputHtml += '
Year
Account Balance (Start of Year)
Annual Withdrawal
Account Balance (End of Year)
';
var currentBalance = initialIRAValue;
var totalWithdrawn = 0;
for (var i = 1; i <= 10; i++) {
var startOfYearBalance = currentBalance;
var withdrawal = (i === 10) ? Math.max(0, currentBalance * (1 + annualGrowthRate)) : levelAnnualWithdrawal; // Last year takes remaining
if (i === 10 && annualGrowthRate !== 0) { // Adjust last withdrawal to ensure it's emptied
withdrawal = currentBalance * (1 + annualGrowthRate);
} else if (i === 10 && annualGrowthRate === 0) {
withdrawal = currentBalance;
} else {
withdrawal = levelAnnualWithdrawal;
}
// Ensure withdrawal doesn't exceed balance + growth for the year
withdrawal = Math.min(withdrawal, currentBalance * (1 + annualGrowthRate));
var endOfYearBalance = (currentBalance * (1 + annualGrowthRate)) – withdrawal;
totalWithdrawn += withdrawal;
outputHtml += '
';
outputHtml += 'Total Withdrawn Over 10 Years: ' + formatCurrency(totalWithdrawn) + ";
break;
case 'estateTrustCharity':
outputHtml += 'As an Estate, Trust, or Charity Beneficiary (Non-Designated Beneficiary), the rules depend on when the original owner died relative to their RMDs:';
if (ownerHadStartedRMDs) {
outputHtml += 'If the original owner died after their RMDs started, distributions generally follow the deceased owner\'s remaining life expectancy. This is a complex area requiring specific IRS life expectancy tables for the deceased owner.';
outputHtml += 'Recommendation: Consult a financial advisor or tax professional for precise guidance, as this scenario is highly specific.';
} else {
outputHtml += 'If the original owner died before their RMDs started, the 5-Year Rule generally applies. The entire account must be distributed by the end of the fifth year following the owner\'s death.';
var startYear5YearPeriod = yearOfDeath + 1;
var endYear5YearPeriod = yearOfDeath + 5;
// Level Annual Withdrawals over 5 years
if (annualGrowthRate === 0) {
var levelAnnualWithdrawal5Yr = initialIRAValue / 5;
} else {
var levelAnnualWithdrawal5Yr = initialIRAValue * (annualGrowthRate / (1 – Math.pow(1 + annualGrowthRate, -5)));
}
outputHtml += '
Level Annual Withdrawals to Empty Account Over 5 Years
';
outputHtml += 'To empty the account with approximately equal annual withdrawals over the 5-year period, you would withdraw about ' + formatCurrency(levelAnnualWithdrawal5Yr) + ' each year.';
outputHtml += 'Projected Withdrawal Schedule (Level Annual Withdrawal):';
outputHtml += '
Year
Account Balance (Start of Year)
Annual Withdrawal
Account Balance (End of Year)
';
var currentBalance5Yr = initialIRAValue;
var totalWithdrawn5Yr = 0;
for (var i = 1; i <= 5; i++) {
var startOfYearBalance5Yr = currentBalance5Yr;
var withdrawal5Yr = (i === 5) ? Math.max(0, currentBalance5Yr * (1 + annualGrowthRate)) : levelAnnualWithdrawal5Yr;
if (i === 5 && annualGrowthRate !== 0) {
withdrawal5Yr = currentBalance5Yr * (1 + annualGrowthRate);
} else if (i === 5 && annualGrowthRate === 0) {
withdrawal5Yr = currentBalance5Yr;
} else {
withdrawal5Yr = levelAnnualWithdrawal5Yr;
}
withdrawal5Yr = Math.min(withdrawal5Yr, currentBalance5Yr * (1 + annualGrowthRate));
var endOfYearBalance5Yr = (currentBalance5Yr * (1 + annualGrowthRate)) – withdrawal5Yr;
totalWithdrawn5Yr += withdrawal5Yr;
outputHtml += '