I Just Inherited an IRA. What Should I Do Next?

You have a few options, but the clock may be ticking, our money columnist says

Sandra Block,

AARP

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Published April 17, 2026

a fine china dining set represents an inherited IRA. in the center, a plate shows a goose laying a golden egg

Inheriting an IRA can provide a financial boost, but the next steps depend on your circumstances.

Pete Ryan

Start by counting yourself lucky. The skyrocketing cost of long-term care has exhausted many older adults’ savings, leaving their families with little or no inheritance.

What should you do with your newly inherited IRA? There’s no one-size-fits-all solution, so let’s take a close look at your options.

One option is to take a lump-sum distribution, which may be a good approach if you have an immediate need for cash, such as paying off large credit card bills or your child’s or grandchild’s college tuition. This option is the most straightforward, but you’ll pay taxes on the entire amount. Depending on the size of the IRA and your other income, this could vault you into a higher tax bracket.

Your other choices depend on how you were related to the IRA owner. If you inherited the account from your spouse, you can roll it into your own IRA. That would allow the money to grow tax-deferred until you need to take required minimum distributions (RMDs) at age 73 (or age 75 if you were born after 1960). The account that you open must be the same kind of IRA; you can’t roll over a traditional IRA to a Roth IRA, for example.

If you’re a non-spouse beneficiary, you can’t roll the funds into your own account. Instead — assuming you don’t want to take a lump-sum distribution — you’ll need to set up an inherited IRA with a financial services provider and transfer the money into that account.

This is where it gets tricky, because Congress rewrote the rules around inherited IRAs in the SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019. Before the law, adult children and other beneficiaries who weren’t married to the original owner could stretch withdrawals from inherited IRAs over their life expectancies — in some cases, for 30 to 40 years. Those so-called “stretch IRAs” were especially attractive to people in their 50s or early 60s who inherited an IRA from a parent and wanted to minimize taxable withdrawals during their highest earning years.

The SECURE Act eliminated stretch IRAs. Now, those beneficiaries are required to deplete inherited IRAs in 10 years.

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There are exceptions, though. If you inherited an IRA before 2020, you can still stretch withdrawals over your lifetime. Minor children and disabled beneficiaries are also exempt from the new rules.

If you inherited a traditional IRA in 2020 or later from anyone other than your spouse, and the original owner died after they were required to take minimum distributions, you’ll need to take RMDs every year based on your life expectancy, beginning in the calendar year following the year of the original account owner’s death.

If you were fortunate enough to inherit a Roth IRA, you’re required to deplete the account in 10 years, but you won’t pay taxes on withdrawals as long as the original account holder owned it for at least five years.

RMDs for an inherited IRA are based on the balance at the end of the previous year and are due by Dec. 31. You can use the IRS Single Life Expectancy Table to figure out how much you need to withdraw. (Alternatively, many IRA providers offer calculators you can use to figure out your RMD.) Failure to withdraw the minimum distribution could subject you to a 25 percent penalty of the amount you should have withdrawn.

As for where to put your IRA withdrawals to get the most out of your inheritance? Consider consulting a financial adviser, such as a certified financial planner (CFP), a credential that requires many hours of experience and passing an exam. To find one in your area, search the directories offered by the National Association of Personal Financial Advisors, Let’s Make a Plan and the Financial Planning Association.

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Sandra Block has covered personal finance for more than two decades. She was a senior editor at Kiplinger Personal Finance and a reporter for USA TODAY. She is the coauthor of The Busy Family’s Guide to Money and Easy Ways to Lower Your Taxes: Simple Strategies Every Taxpayer Should Know.