Inherited IRA 10-year rule for high income: why even yearly draws aren't always the cheapest

Step 1: Put the inherited IRA deadlines on one calendar

Gather the death certificate, your parent's birth date and the custodian's beneficiary letter (the custodian is the firm holding the account). The parent's age at death decides whether yearly minimums apply. If they died on or after their required beginning date, you owe a minimum every year. That date is April 1 after the owner reaches age 73, or age 75 for owners born in 1960 or later.

Then list the dates in calendar order:

Counting year one from the day the letter arrives is the slip people make here. Year one is the calendar year after death, however late the paperwork shows up. The custodian reports each draw to you on Form 1099-R in January, so a missed date also shows up on paper.

If you're in your late 50s, add Medicare at age 65 to the same calendar. The premium surcharge called IRMAA is set by your MAGI from two years before the premium year, so large draws from age 63 can raise your Part B premium. For 2026, CMS lists single-filer totals from $202.90 up to $689.90 a month. Annex Wealth Management puts those ages on the calendar beside the IRA dates.

Gather the paperwork

List the dates in order

Add your own Medicare date

• Death year: parent's own RMD, if untaken, due December 31
• September 30 next year: beneficiaries fixed, last disclaimer day
• December 31 next year: your first annual minimum
• December 31 of year ten: account must be empty

Step 2: Get the account titled as an inherited IRA before any money moves

Get written answers from the custodian on three points. First, how will the account be titled? It should read like 'Jane Doe, deceased, for the benefit of Curtis.' Second, does the custodian calculate the yearly minimum? Third, does it have your parent's birth date on file? Worry if you hear 'we'll move it into your IRA.' A non-spouse can't roll it over, and a check made out to you is taxable that year. For hypothetical Curtis, that puts most of $600,000 on one return at rates up to 37%. No 60-day rollover puts it back; only a costly IRS private letter ruling request might, with no assured outcome.

Step 3: Which years of your 10-year inherited IRA window will your income be lowest?

Your lowest-income years are usually the ones after you cut hours or retire, and those are the years to take the larger draws. Curtis, 57, is a divorced orthopedic surgeon who expects to go part-time at age 62. That is year five of his window, so years five through ten are his low-rate years.

Start with the monthly spending plan, before any tax math. Annex Wealth Management first writes down what part-time pay will cover and how much of the gap the inherited IRA has to fill. Curtis spends about $14,000 each month.

Here is the method you can repeat with your own numbers:

Now Curtis's numbers. In this hypothetical, a custodian letter names him sole beneficiary of his late mother's $600,000 IRA. She was 84 and past her required beginning date, so minimums apply. For illustration, ignore growth and assume a 35% rate while he works full-time and 24% after age 62.

Even draws are $60,000 a year. Four full-time years: $240,000 × 35% = $84,000. Six part-time years: $360,000 × 24% = $86,400. Total tax: $170,400.

Back-loaded, he takes about $20,000 in minimums for four years: $80,000 × 35% = $28,000. The other $520,000 spreads over six years, about $86,667 each year: $520,000 × 24% = $124,800. Total: $152,800, which is $17,600 less. After tax, each part-time year adds about $5,500 a month toward his $14,000. The site's calculator runs the same steps with your balance and rates.

Check side effects before you commit. Draws of $86,667 on top of part-time pay can push him into a higher bracket and, from age 63, into IRMAA tiers. Rerun years five through ten with his real salary. Markets move too: the balance can fall, and he may draw out less than he inherited.

The back-of-the-envelope method

Curtis's numbers

Side effects to check

• Divide the balance by ten
• Write your marginal rate per year
• Multiply each year's draw by its rate
• Add the ten years together
• Compare with a back-loaded schedule

Step 4: Choose even draws or a back-loaded plan, and accept what each gives up

Even draws give up some tax savings in exchange for predictability. No single year carries a big bill, and a later rise in tax rates hurts less. Back-loading saves tax only if your income really drops. It piles the bill into later years and leaves the delayed money exposed to market swings and future tax law.

Curtis should back-load, because part-time work at age 62 lands in year five. A hypothetical colleague who stays full-time until age 67 gains nothing by waiting. Even draws keep that colleague out of any single year near the 37% top rate.

Reena, 38 and four years from Public Service Loan Forgiveness, might take only minimums for a different reason. Inherited IRA draws raise the income behind her income-driven loan payment, so larger draws after forgiveness can cut loan payments as well as tax. Our Physician student loan planning service covers that side.

Decision rule: if your marginal rate will drop by at least one bracket inside the window, take only minimums until that year and spread the rest over the lower years. If no drop is coming, take roughly even draws. Either way, take every required minimum and empty the account by December 31 of year ten.

Change one assumption and the answer moves. If Curtis's part-time rate came in at 32% instead of 24%, even draws would cost $199,200, the back-loaded plan $194,400, and the saving shrinks to $4,800.

This page doesn't cover heirs who are spouses, minor children, disabled or chronically ill. It also leaves out heirs born less than a decade after the owner. Those heirs can use life-expectancy payouts.

What each plan gives up

Who should choose which

What changed in the inherited IRA rules since the SECURE Act, and does an older estate plan still work?

For owners who died after 2019, the SECURE Act replaced the lifetime stretch with the 10-year rule for most heirs who aren't spouses, and the IRS later confirmed that heirs of owners past their required beginning date also owe yearly minimums. The IRS waived penalties for several years while it finished the rules; that waiver has ended.

SECURE 2.0 cut the penalty for a missed minimum to 25% of the shortfall, or 10% if corrected in time. A trust or estate plan written earlier may assume a stretch that no longer exists, so have beneficiary forms and any conduit trust language reread.

Bring the custodian's letter to Annex Wealth Management before the first December deadline

Talk to Annex Wealth Management once the beneficiary letter arrives and before December 31 of the year after death, when the first annual minimum is usually due. Bring the letter, your parent's last year-end IRA statement, your own last tax return and a rough date for cutting back hours. Annex Wealth Management advisors then price the draw schedule against your monthly spending.