Inherited Roth IRA — 10-Year Rule Schedule

For a non-spouse beneficiary of a Roth IRA, the SECURE Act 2019 and the 2024 final regulations (TD 10001) set one hard deadline: the account must be fully distributed by December 31 of the tenth year after the original owner's death. This tool builds a year-by-year withdrawal schedule across those ten years, optimizing for the beneficiary's projected income path. The output is a table showing annual distribution, projected income, marginal bracket used, and cumulative tax paid under each candidate strategy.

Because Roth distributions to qualified beneficiaries are tax-free at the federal level (provided the original Roth was open at least five years), the "optimization" isn't about federal tax — it's about state tax arbitrage, IRMAA tier management for Medicare-age beneficiaries, and the opportunity cost of leaving versus taking. This tool handles all three.

Who should use this tool

Anyone who inherited a Roth IRA from a non-spouse (a parent, aunt, uncle, sibling, unrelated) and who is not an Eligible Designated Beneficiary (EDB). EDBs — surviving spouses, minor children of the original owner, disabled/chronically ill beneficiaries, and beneficiaries less than ten years younger — have different rules and should use a different planning approach. The 10-year rule applies to the "plain" non-spouse beneficiary.

The tool also helps beneficiaries decide whether a lump-sum distribution in year one (maximum flexibility, but loses 9 more years of tax-free growth) is worth it compared to a series of smaller distributions (more growth, but more IRMAA or state-tax exposure).

Walking through the inputs

Inherited balance. The Roth balance as of the date of death, plus any growth since.

Your projected ordinary income for each of the next ten years. Enter wages or pension expected in each year. The tool uses these to determine the marginal bracket that each distribution would land in if you weren't inheriting a Roth (for the state-tax and IRMAA calculations, which do use distributed amounts even when federal tax is zero).

State of residence. A small number of states tax inherited Roth distributions as income even though the federal treatment is tax-free. Enter your state rate if applicable.

Your age and Medicare status. IRMAA tiers apply to Medicare-age beneficiaries. A distribution that crosses an IRMAA tier raises your Medicare premiums two years forward.

Assumed growth rate on the inherited Roth. The Roth continues to grow tax-free until distributed. Higher growth favors back-loading distributions (leave the money in the Roth until year ten).

How to read the result

The tool compares three strategies. Lump sum (year 1): take everything now. Equal annual: take one-tenth each year. Back-loaded (year 10): take nothing until required, then pull the full balance in year ten. For each strategy, it shows annual distribution, state tax (if any), IRMAA surcharge (if any), and terminal wealth including the growth on the undistributed balance.

For most beneficiaries with no state tax on inherited Roth and no Medicare IRMAA concern, back-loaded wins because the entire pre-distribution growth remains tax-free. For beneficiaries in a state that taxes distributions or for Medicare-age beneficiaries who would spike into a high IRMAA tier, an equal-annual approach often wins.

Common mistakes this tool prevents

• Assuming the 10-year rule is optional. It isn't. The SECURE Act 10-year deadline has applied to all post-2019 Roth-IRA deaths since enactment; failing to empty the account by December 31 of year ten triggers the §4974 excise tax on the remainder.
• Taking large lump-sum distributions without state-tax check. A handful of states — check your state's treatment of inherited Roths — will tax the full distribution at the state rate. Spreading over ten years reduces the per-year state hit.
• Ignoring the original owner's five-year Roth clock. If the original Roth wasn't open five years at the owner's death, earnings distributed to you are taxable until the clock reaches five years. Most inherited Roths satisfy this test, but newer accounts may not.
• Forgetting to transfer to an Inherited Roth IRA titled correctly. Non-spouse beneficiaries cannot roll the Roth into their own IRA. The inherited account must be titled "[Decedent's name], deceased, for benefit of [your name]" per §408(d)(3)(C).
• Missing the EDB exception. If you qualify as an Eligible Designated Beneficiary, the 10-year rule doesn't apply and you can take life-expectancy distributions instead. This tool assumes you are a non-EDB.

After you pick a schedule

Execute year-one distributions early in the year to give you flexibility to adjust. Re-run the tool each year with updated actuals. If your income profile changes materially — a retirement, a move, a layoff — revisit the plan.

The Inherited Roth 10-Year Rule pillar covers the July 2024 final regulations in detail, including the nuances around the "designated beneficiary" definition and the special rules that apply if the original owner had already started taking RMDs.

Worked example: $500K inherited Roth, back-loading wins

Nadia, 48, inherits a $500,000 Roth IRA from her father when he dies in 2026. She is a Designated Beneficiary subject to the 10-year rule. Her father had the Roth open for 20 years, so all distributions to Nadia are qualified (federal-tax-free). She lives in Texas (no state income tax), earns $120,000 as a W-2 consultant, and is not yet Medicare-eligible.

The tool compares three strategies assuming 5 % real growth on undistributed balances:

Lump sum in 2026: She receives $500,000 tax-free immediately. Federal tax: $0. Sequence of post-distribution returns on the $500,000 in taxable depends on her investment choices and tax drag — modeled at 4 % after-tax real, it grows to approximately $713,000 by end of 2035.

Equal annual: $50,000/year for 10 years. Each distribution is tax-free. The undistributed balance continues to compound at 5 % real inside the Roth wrapper. Distributed dollars go to taxable and grow at 4 % after-tax real. Terminal wealth end of 2035: approximately $774,000.

Back-loaded: $0 for 9 years, then full balance in 2036. The $500,000 compounds inside the tax-free Roth wrapper for 10 years to approximately $814,000. She takes all of it in year 10, tax-free. Terminal wealth end of 2036: $814,000.

Back-loading wins by about $101,000 over lump-sum and $40,000 over equal-annual. The advantage comes entirely from the tax-free compounding premium on undistributed Roth dollars versus taxable dollars. No state tax and no Medicare exposure means there's no offsetting cost to back-loading.

If Nadia lived in a state that taxed inherited Roth distributions at 5 %, the math would shift. Under lump-sum, she'd owe $25,000 of state tax upfront, depressing terminal wealth to ~$678,000. Under equal-annual, state tax would apply to each $50,000 tranche ($2,500/year), depressing terminal wealth to ~$750,000. Under back-loaded, all $500,000-plus gets taxed in year 10, depressing terminal wealth to ~$775,000. In this alternate scenario equal-annual becomes marginally optimal — the state-tax smoothing benefit offsets the tax-free-growth benefit.

The general takeaway: without state tax or IRMAA complications, back-load. With state tax, equal-annual often wins. With IRMAA complications in Medicare-age beneficiaries, equal-annual almost always wins because lump-sum crossings of IRMAA tiers are expensive.