Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Many non-spouse beneficiaries must empty an inherited IRA within ten years, and the withdrawals are taxed as income. A $500,000 balance growing at 5 percent, drained in level yearly amounts over ten years, needs about $64,752 gross a year. At a 24 percent tax rate that is about $15,541 of tax and about $49,212 in hand. A level schedule is not the only choice, and spreading withdrawals across years with lower income can reduce the tax.
Before you rely on it
What to check
Confirm your beneficiary category and whether annual withdrawals are also required in the first nine years, which depends on whether the original owner had begun required distributions.
The common error
Where people go wrong with inherited IRA 10-year distribution calculator
Waiting until year ten to withdraw everything. A single large withdrawal stacks the whole balance into one year's income and can push you into the top bracket.
Sensitivity evidence
How annual return changes the level annual gross withdrawal
| Annual return | Level annual gross withdrawal | Estimated annual tax | Level annual net withdrawal |
|---|---|---|---|
| 3.0% | $58,615 | $14,068 | $44,548 |
| 4.0% | $61,645 | $14,795 | $46,851 |
| 5.0%worked example | $64,752 | $15,541 | $49,212 |
| 6.0% | $67,934 | $16,304 | $51,630 |
| 7.0% | $71,189 | $17,085 | $54,103 |
Every input, tested
Which input moves the level annual gross withdrawal most
| Input | Tested from | To | Level annual gross withdrawal at each end | Swing |
|---|---|---|---|---|
| Distribution window | 7.0 years | 13.0 years | $86,410 to $53,228 | $33,182 (51%) |
| Inherited account balance | $450,000 | $550,000 | $58,277 to $71,228 | $12,950 (20%) |
| Annual return | 4.0% | 6.0% | $61,645 to $67,934 | $6,289 (9.7%) |
| Estimated tax rate | 22.0% | 26.0% | $64,752 to $64,752 | none |
Two variables at once
Level annual gross withdrawal by annual return and inherited account balance
| Annual return \ Inherited account balance | $400,000 | $500,000 | $600,000 |
|---|---|---|---|
| 3.0% | $46,892 | $58,615 | $70,338 |
| 4.0% | $49,316 | $61,645 | $73,975 |
| 5.0% | $51,802 | $64,752 | $77,703 |
| 6.0% | $54,347 | $67,934 | $81,521 |
| 7.0% | $56,951 | $71,189 | $85,427 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Inherited account balance | $500,000 |
| Annual return | 5.0% |
| Distribution window | 10.0 years |
| Estimated tax rate | 24.0% |
| Level annual gross withdrawal | $64,752 |
| Estimated annual tax | $15,541 |
| Level annual net withdrawal | $49,212 |
Where the inputs come from
Inherited account balance is the value at the date you begin the plan or at the previous year-end. Annual return is your growth assumption, the distribution window is ten years for most non-spouse beneficiaries, and the estimated tax rate is your marginal rate on the withdrawals. If the original owner had already started RMDs, annual distributions are also required during the ten years, and a level withdrawal may not satisfy them.
Using the level annual gross withdrawal in a real decision
Even spreading is a starting point, and tailoring to your low-income years can do better.
When the result stops applying
The estimate ignores required annual distributions when they apply, which can force larger early withdrawals. Roth inherited accounts follow the same deadline but with tax-free withdrawals, so timing them differently makes sense. Different beneficiaries, such as spouses and minor children, follow other rules. Rules for inherited accounts have been revised by regulation, so confirm the current ones.
What to compare it with
The inherited IRA RMD calculator handles annual distributions using life expectancy factors, and the Roth bracket fill and taxable Social Security pages show how income affects taxes. Consider the beneficiary's own income and estate plans when deciding the timing. Spreading distributions across your lower-income years is usually worth more than any small difference in investment return.
People also ask
Frequently asked questions
Must I withdraw a set amount each year under the 10-year rule?
It depends. If the owner died before RMDs began, you can take anything as long as the account is empty by the end of year ten. If RMDs had begun, annual withdrawals are required too.
Is it better to spread withdrawals evenly?
Often, to avoid a large taxable spike in the final year, but tailoring withdrawals to years when your income is lower can reduce total tax.
Does the 10-year rule apply to spouses?
No. A surviving spouse has more options, including treating the inherited IRA as their own or rolling it over, so the ten-year deadline usually does not apply to them.