Guide · Money and accounts
401(k) and IRA after death
How spousal and non-spousal beneficiaries inherit retirement accounts, the ten-year rule, and how to avoid a taxable mistake.
A surviving spouse can roll an inherited IRA or 401(k) into their own retirement account and defer required distributions. Most non-spouse beneficiaries must drain the account within ten years under the SECURE Act. Cashing out triggers ordinary income tax, often the costliest mistake families make.
Step by step
Identify the beneficiary
The beneficiary form on file with the plan controls, not the will. Call the plan administrator to confirm who is named.
Spousal options
A spouse can roll the inherited IRA into their own IRA and defer required minimum distributions until age 73, the most flexible path.
Non-spouse beneficiary
Under the SECURE Act, most non-spouse beneficiaries must drain the account within ten years of the death. Annual withdrawals are not required, but the balance must be zero by year ten.
Open an inherited IRA
Open an inherited IRA at a brokerage and have the plan administrator transfer the funds directly. Never take a check made out to you, which is taxed as a full distribution.
Plan the withdrawal schedule
Withdrawals are taxed as ordinary income. Spreading them over the ten years often beats taking a lump sum that pushes you into a higher bracket.
Common questions
What if no beneficiary is named?
The account passes to the estate, enters probate, and must usually be distributed within five years. Tax outcomes are usually worse than with a named beneficiary.
Does the ten-year rule apply to everyone?
Spouses, minor children, disabled or chronically ill heirs, and beneficiaries within ten years of the deceased's age are exempt and can use life expectancy distributions.