You inherited an IRA. Here is what to sort out first.

Confirm four things before you move or withdraw anything: whether it is a traditional or a Roth IRA, how the account is titled, when the original owner died and whether they had reached their required beginning date, and which beneficiary category you fall into. Then speak with the account custodian and a qualified tax professional. A non-spouse generally cannot roll an inherited IRA into their own, and a cash withdrawal cannot be undone. This is general education, not advice.

For most non-spouse beneficiaries of an owner who died after December 31, 2019, the account generally must be fully distributed by the end of the 10th year after the year of death. It replaced the older lifetime stretch for most heirs. Some beneficiaries are exempt, and pre-2020 deaths may follow the older rules. Confirm how it applies to you on IRS.gov.

It depends on when the original owner died. Under regulations finalized in 2024, if the owner had already reached their required beginning date, most non-spouse beneficiaries must take an annual required distribution in years 1 through 9 and empty the account by year 10. If the owner died before that date, the timing within the 10 years is generally flexible. This requirement is enforced from the 2025 distribution year - verify the current rule on IRS.gov.

Possibly, and this is a common situation. The IRS waived the penalty for missed annual distributions inside the 10-year window for 2021 through 2024 while the rules were being finalized, which led many beneficiaries to conclude the annual requirement was not real. No waiver applies for 2025 or later. If the original owner had already reached their required beginning date, annual distributions are now required. Confirm where you stand on IRS.gov or with a tax professional rather than assuming the reprieve continued.

Eligible designated beneficiaries are generally exempt: a surviving spouse, a minor child of the owner, a disabled person, a chronically ill person, and a person not more than 10 years younger than the owner. Several can still spread distributions over life expectancy. The minor-child exception applies only to the owner's own child and ends at the age of majority. See IRS.gov for the current definitions.

A surviving spouse has options no one else has, including paths that avoid the 10-year rule entirely. In general you can treat the IRA as your own, often by rolling it into your own IRA, or keep it as an inherited IRA, which can preserve penalty-free access before age 59 and a half. Each path has trade-offs around timing and access. This is education, not a recommendation - see IRS.gov.

A Roth IRA has no required distributions during the owner's lifetime, but an inherited Roth is still subject to the beneficiary distribution rules, so a non-spouse is generally subject to the 10-year rule. Qualified distributions remain tax-free if the 5-year aging requirement is met. No lifetime distributions for the owner does not mean no deadline for the heir. See IRS.gov.

No. Inherited IRAs generally do not receive a step-up in cost basis, so pre-tax retirement money stays fully taxable to the heir when distributed. The step-up that resets cost basis to the date-of-death value applies to taxable assets such as stocks and real estate, not to retirement accounts. See the IRS or a tax professional.

Distributions from a traditional inherited IRA are generally taxed as ordinary income, but there is no 10 percent early-withdrawal penalty regardless of your age. If you miss a required distribution, an excise tax applies - 25 percent under current law, reduced to 10 percent if corrected within a set window. Because these figures change, confirm the current rules on IRS.gov. This is not tax advice.