• Questionnaire
  • Save

An inherited IRA is a great step to secure your future, even if you haven't given much thought to retirement planning yet. And with an inherited IRA RMD calculator, you'll easily be able to figure out how best to use the funds.

Do those terms and acronyms sound complex? Don't worry! On this page, we'll break down everything you need to know about your inherited retirement account, and how to use our calculator to make retirement plans. If you find it useful, please share it with your friends.


What will this calculator tell me?

If you inherit a traditional IRA, you might be wondering how to take your Required Minimum Distributions.

Using an inherited IRA RMD calculator can help you see what you are required to withdraw, so you can accurately plan your future.

When you inherit an IRA from a non-spouse, you have quite a few choices for what to do with it. You want to make the best decision regarding your finances, and an RMD calculator can help.

After you can see what the RMD is going to be, you can tell if that will be the best choice or if it makes more sense, in the long run, to pull out larger amounts. And by using this tool, you'll be in a better position to discuss your options with a trusted tax advisor.

How does an inherited IRA work?

An inherited IRA is sometimes called a beneficiary IRA. These accounts get opened when you inherit an IRA or a different employer-sponsored retirement plan after the ira owner passes away.

These types of IRAs usually get opened for beneficiaries other than the spouse of the deceased. Since spouses can transfer assets they inherit straight into their own retirement accounts, the rules for spousal beneficiaries tend to be different.

If you have an inherited IRA, you're required to take required minimum distributions or RMDs. The age of the original account holder affects the timing of the RMDs. The amount of each distribution is determined by the value of the account, as well as by your life expectancy.

When you just take out the RMD value each year, you'll keep the account growing in value. This can even allow you to take your inherited IRA and pass it along to your heirs in the future.

When can I withdraw money from an inherited IRA?

When you inherit a retirement account, you have a few choices for how you withdraw the money.

Full Withdrawal

First, you can choose to take all the funds out of the account by the time you reach the fifth year after the original account holder passed away.

If you decide to do this, you don't have to get the funds in the form of installments.

Instead, you have to take out all the funds by some time prior to five years after the death of the account owner, in any amounts and at any times you choose.


However, instead of pulling out all the money in five years, you might instead choose to take the RMD annual withdrawals for the course of your life expectancy.

This allows most of the account to grow tax-deferred, while you just take the minimum distributions. This is sometimes called a "stretch IRA."

If you're mean years younger than the account holder was, and you choose the RMD option, you can let the growth of the rest of the account turn into a nest egg you can use later on.

You'll also be able to take out more than the RMD in certain years if you choose to.

Other distribution options?

You can also choose to take out RMDs for the life expectancy of the IRA's oldest beneficiary. This option only applies when the original account holder named multiple beneficiaries for the account.

If by December 31 on the year after the account holder's death, separate accounts haven't been established for each beneficiary, you can choose this distribution option.

Cashing Out

Finally, you can decide to cash out the entire account right away when you inherit it. Then, you can use the funds in any way you choose.

This option can look tempting, but it's not always the best choice for tax reasons - more on that in the next section.

You'll need to make sure you don't spend all the funds in the year you cash them out since you'll need to think ahead for your tax bill.

Can't Decide?

If you don't make a choice as to what to do with your inherited IRA, you'll be forced to choose the first option - cash it all out in five years.

Make your choice by December 31 of the year after the account holder's death so you don't get locked in.

Is an inherited IRA taxable to the beneficiary?

Yes. Every time you withdraw funds, they become part of your taxable income. This applies both to the RMDs and to the larger amounts.

The larger the amount you pull out of your account, the more you'll owe in taxes. That's why it's crucial to be careful not to spend all of a lump sum - make sure you set aside what you'll need when taxes come due before you start spending.

Can I contribute to an inherited IRA?

When you're the beneficiary of an inherited IRA, you can't make extra contributions of your own. However, you can keep the funds tax-deferred in the account to let them grow, and you can also start taking out the money right away.

Can I roll an inherited IRA into my own?

If the inherited IRA came from someone who wasn't your spouse, you can't roll the funds into an IRA of your own. You'll have to choose from the options listed above when you decide what to do with the money.

Tell your friends about us!