Question:
❓A parent leaves you their traditional IRA worth $200,000. What do most non-spouse beneficiaries need to know?
A) You can leave it untouched and let it grow tax-free for as long as you want.
B) You generally have to withdraw the full amount within 10 years, and every withdrawal is taxed as income.
C) You’ll pay a one-time inheritance tax when you receive it, but no taxes after that.
D) You can roll it directly into your own IRA and treat it as yours.
Answer:
✅ B) You generally have to withdraw the full amount within 10 years, and every withdrawal is taxed as income.
Here’s why:
Most non-spouse beneficiaries who inherit a traditional IRA are required to withdraw the full balance within 10 years, and every withdrawal is taxed as ordinary income.
This is known as the 10-year rule, established by the SECURE Act in 2019. There’s no required schedule within those 10 years—you could take it all in year one or wait until year 10—but on a $200,000 inherited IRA, the tax bill can be significant depending on when and how much you withdraw.
Timing those withdrawals strategically can be the difference between paying 22% and paying 32% or more.
Why the others are not correct:
A) This was possible under the old “stretch IRA” rules, which let non-spouse beneficiaries spread withdrawals over their own lifetime. The SECURE Act eliminated that option for most non-spouse beneficiaries. The 10-year clock starts the year after the original owner passes, and the inherited IRA must be fully emptied by the end of that 10th year.
C) Inherited IRAs aren’t subject to a one-time inheritance tax. The money is taxed as ordinary income when you withdraw it, and depending on how much you pull out in a given year, it can push you into a higher tax bracket.
D) Rolling an inherited IRA into your own IRA is an option for spouses, but non-spouse beneficiaries can’t do this. The account must stay as an inherited IRA with its own rules and timeline.
Takeaway:
Inheriting an IRA isn’t the same as inheriting cash. The 10-year withdrawal rule and income taxes on every dollar can significantly reduce what you actually keep—and most people don’t find that out until the bill shows up.
Inside The World Changers Network, we walk through how inherited accounts work, how to plan withdrawals so you keep more of what’s passed down, and how to avoid the tax surprises that catch most families off guard.
→ Learn with us inside the TWC Network.
