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IRS Rules: Heirs Face Penalties on IRA Withdrawals

11/2/2025

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Summary

Story summary

Non-spouse heirs must understand IRS rules, including the 10-year rule and the 2025 RMD rules, because failing to withdraw the correct amount could trigger a 25% penalty, reduced to 10% if corrected within two years.
Inheriting a pretax IRA means withdrawals are taxed as regular income, which requires tax planning.
Heirs should avoid taking only RMDs for nine years and a lump-sum final-year withdrawal, as that could raise taxes.

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Story summary

Non-spouse heirs must understand IRS rules, including the 10-year rule and the 2025 RMD rules, because failing to withdraw the correct amount could trigger a 25% penalty, reduced to 10% if corrected within two years.
Inheriting a pretax IRA means withdrawals are taxed as regular income, which requires tax planning.
Heirs should avoid taking only RMDs for nine years and a lump-sum final-year withdrawal, as that could raise taxes.