Waiting Until Year Ten to Withdraw an Inherited IRA Can Trigger a Large Tax Bill
A non-eligible beneficiary who inherits a $280,000 traditional IRA at age 59 must generally empty it by the tenth year after the owner's death. If the account grows at 5% annually and is left untouched for nine years, it could reach about $434,000, all taxable as ordinary income when withdrawn. Taking roughly $36,000 per year could keep a median-income heir in a lower bracket, while a single-year $430,000 distribution could push much of the income into the top rates.
A non-eligible designated beneficiary who inherits a traditional IRA at 59 generally has until December 31 of the tenth year after the owner’s death to clear the account. If the owner died before required distributions began, no yearly withdrawals are mandated before that final year.
With $280,000 growing at 5% for nine years, the balance could near $434,000. Because traditional IRA withdrawals count as ordinary income when received, a single year-ten distribution may be compared with the $46,960 median personal income reported for 2024.
Heirs in their late 60s, especially those with modest incomes, could face a much larger federal tax bill if they delay inherited IRA withdrawals until year ten. A single large distribution may push them into higher brackets, reducing the amount they keep. Those with substantial wages, pensions, or business income may see even more taxed at top rates. Spreading withdrawals could help some manage brackets, but the deadline may still create planning pressure for affected families.