# Inheriting an IRA? 5 Mistakes That Hand Uncle Sam a Bigger Share

> Inherited IRA mistakes cost families millions in taxes by ignoring IRS rules.
- Title: Inheriting an IRA? 5 Mistakes That Hand Uncle Sam a Bigger…
- Summary: Inherited IRA mistakes cost families millions in taxes by ignoring IRS rules. Inherited IRA owners face high taxes if they wait too long to withdraw funds…
- Keywords: ira, taxes, uncle sam, inherited, traditional ira, required minimum distributions, roth conversion, estate planning, tax brackets, federal income tax, Kiplinger
- Source: Kiplinger — https://kiplinger.com/retirement/traditional-ira/inheriting-ira-mistakes
- Published: 2026-11-03T13:00:00+00:00
- Read time: 1 min
- Topics: ira, taxes, uncle sam, inherited, traditional ira, required minimum distributions, roth conversion, estate planning, tax brackets, federal income tax
## The SECURE Act changed IRA rules
Starting January 1, 2020, the SECURE Act ended the stretch IRA allowing heirs to spread withdrawals over lifetimes.
## Lisa's hypothetical inheritance
Lisa inherits $500,000 traditional IRA at age 55 with $200,000 annual income.
## 10-year rule for inherited IRAs
Heirs must empty accounts by December 31 of the 10th year after the original owner's death.
## Annual RMDs depend on original owner's death date
If the owner died before their required beginning date, heirs face no annual minimums for years one through nine.
## Tax consequences of waiting
Withdrawing $984,000 after 10 years triggers $322,000 federal income tax at 33% average rate.
## Tax savings with regular withdrawals
Taking $71,000 annually reduces tax to 23% average rate versus 33% for lump sum withdrawal.
## Roth conversion timing matters
Parents should compare their tax rates with children's expected rates before converting IRAs.
## Inherited Roth benefits
Inherited Roth IRAs allow tax-free withdrawals without annual RMDs for up to 10 years.
## Five-year rule for Roth conversions
Earnings from Roth accounts may be taxable if opened less than five tax years before withdrawal.
## Key fixes for inherited IRAs
Inheritors should confirm RMD rules, project income, and consider Roth conversions for tax savings.
## Key takeaway

Inherited IRA owners face high taxes if they wait too long to withdraw funds under the 10-year rule.