What Happens to Your IRA When You Die? Let’s Make the SECURE Act Easier to Understand

If you have ever tried to read about inherited IRAs and the SECURE Act and thought, I have no idea what any of this means, you are in good company.

This is a tricky area. There are 10-year rules, required distributions, different rules for spouses, exceptions for certain beneficiaries, and another layer of rules if a trust is involved. It can get overwhelming very quickly.

The good news is that you do not need to become an expert in inherited IRA rules to make a good estate plan. That’s one of the reasons your estate planning attorney, financial advisor, and tax professional are important. We can help you understand how the rules apply to your particular family and assets.

My goal here is much simpler. I want to break the basics into manageable pieces so you can understand what happens to your IRA when you die and why it deserves some thought as part of your estate plan.

1. Start Here: What Actually Happens to Your IRA When You Die?

An IRA generally passes to the person or entity you have named as the beneficiary on the account.

That might be your spouse. It might be your children. It could also be a trust.

Once someone inherits your IRA, there are rules governing how and when the money comes out of the account.

There is also an important tax piece to understand. With a traditional IRA, the money generally has not yet been subject to income tax. When your beneficiary takes taxable distributions from the inherited IRA, those distributions generally become taxable income to the beneficiary.

Here’s a simple example.

Suppose Mary has a $500,000 traditional IRA and names her adult daughter, Emily, as the beneficiary.

When Mary dies, Emily doesn’t simply receive a $500,000 check. Instead, Emily inherits an IRA containing $500,000. The inherited IRA rules then determine how long that money can remain in the account and when Emily has to take it out.

And when Emily takes taxable distributions, she generally has to report those distributions as income.

So when we’re planning for Mary’s IRA, we aren’t just thinking about who should get it. We also want to understand what will happen when they do.

2. What Did the SECURE Act Change?

This is where you may have heard people talk about the 10-year rule.

Before the SECURE Act changed the rules for deaths occurring after 2019, many people who inherited an IRA could take required distributions over their own life expectancy. You may have heard this referred to as a “stretch IRA.”

For many beneficiaries, that option is no longer available.

Most adult children and many other non-spouse beneficiaries now generally have to empty the inherited IRA by the end of the tenth year following the original owner’s death.

Let’s go back to Mary and Emily.

Under the old rules, Emily might have been able to take relatively small required distributions from Mary’s IRA over many years.

Under the SECURE Act, Emily will generally have a much shorter window: ten years.

That means Mary’s $500,000 IRA may have to come out of its tax-deferred environment much faster than Mary expected when she originally made her estate plan.

That’s the big change I want you to understand.

3. Does the 10-Year Rule Mean You Can Just Wait Ten Years?

This is one of the places where people understandably get confused. The answer is: sometimes, but not always.

For some beneficiaries, the rule essentially means that the inherited account has to be emptied by the end of year ten.

For others, distributions may also be required along the way during years one through nine.

One important factor is whether the original IRA owner had already reached the point when required minimum distributions had to begin.

Here’s an example.

Let’s say Mary dies before she was required to begin taking distributions from her IRA.

Emily may be able to decide when to take money during that 10-year period, as long as the account is emptied by the deadline.

Now change the facts. Suppose Mary dies after her required distributions had already begun.

Emily may have required distributions during the 10-year period and still have to empty the account by the end of year ten.

This is one of those rules you don’t need to memorize. Just remember that the “10-year rule” does not always mean you can ignore the IRA for nine years and take everything out in year ten.

Your advisors can help you figure out which rules apply when the time comes.

4. Why Does Any of This Matter for Taxes?

This part becomes much easier to understand when we put a person behind the numbers.

Suppose Emily is 52 when she inherits Mary’s IRA.

She’s doing well in her career. She and her spouse are earning good incomes. Maybe they’re paying college tuition for their own children and saving for retirement themselves. These could be some of Emily’s highest earning years.

Now she also has to distribute Mary’s traditional IRA within a 10-year period. Those taxable IRA distributions are generally added to the income Emily is already earning.

And that’s where the tax issue comes in.

If Emily takes significant IRA distributions during years when her income is already high, that additional taxable income could push some of her income into a higher tax bracket.

For example, imagine Emily is already earning a substantial salary and then takes a $75,000 distribution from her inherited IRA. That $75,000 doesn’t exist in a vacuum. It generally gets added to her other taxable income for the year.

The result could be a larger tax bill than Emily, or Mary, anticipated.

That’s very different from the old rules that allowed many beneficiaries to spread inherited IRA distributions over their life expectancy.

There may still be very good reasons for Emily to inherit the IRA. The important point is that when she receives the money can affect how much of it she ultimately keeps after taxes.

That’s why retirement accounts deserve their own conversation when we’re designing an estate plan.

5. What If Your Spouse Inherits Your IRA?

Spouses have more options.

A surviving spouse generally has choices that an adult child does not. Depending on the circumstances, a surviving spouse may be able to roll the IRA into their own IRA, treat it as their own, or keep it as an inherited IRA.

For example:

Let’s change Mary’s family situation.

Instead of being single, Mary is married to John and names John as the primary beneficiary of her IRA. Emily is the contingent beneficiary.

When Mary dies, John may have options available to him as Mary’s spouse that Emily would not have if she inherited the IRA directly.

This is why it’s important not to reduce the SECURE Act to “everyone has ten years.”

Who is inheriting matters.

6. Are There Other Exceptions?

Yes. The law recognizes a special category called eligible designated beneficiaries who may have different distribution rules.

This category can include a surviving spouse, certain minor children of the account owner, disabled or chronically ill beneficiaries, and someone who is not more than ten years younger than the account owner.

Here’s why that can matter.

Imagine Mary has two adult daughters.

Emily is 52 and financially independent.

Her sister, Anna, has a disability and receives means-tested government benefits.

Leaving an IRA to Emily and planning for Anna may require very different approaches, even though they are both Mary’s daughters.

The retirement account rules may apply differently, and Anna’s government benefits and need for long-term protection add another important layer to the decision.

This is a good example of why estate planning is about much more than filling in a beneficiary form.

7. What If You Want to Leave Your IRA to a Trust?

This is probably the part where I most want to say: don’t let the terminology overwhelm you.

There can be excellent reasons to consider having a trust involved.

Maybe your child is young. Maybe you’re concerned about a future divorce or creditors. Maybe your beneficiary has special needs. Or maybe you’re simply uncomfortable with the idea of a large inheritance becoming immediately available with no protection at all.

A trust can help address those concerns.

But retirement accounts have their own tax rules, and trusts have their own tax rules. When we put the two together, we need to be thoughtful about how the trust is drafted.

Consider Emily again.

Suppose Mary loves and trusts Emily, but Emily is going through a difficult divorce.

Mary may not want a large inheritance distributed outright to Emily while that is happening. A trust could potentially provide important protection.

But now we have to consider what happens when money comes out of Mary’s IRA and goes into Emily’s trust.

Depending on how the trust is designed, that income might be distributed to Emily, or the trustee may be able to retain it inside the trust. Keeping assets in the trust may provide greater protection, but retaining taxable income inside a trust can have significant tax consequences because trusts reach the highest federal income-tax bracket much more quickly than individuals do.

In 2026, estates and trusts reach the 37% federal income-tax bracket when taxable income exceeds $16,000.

That doesn’t automatically make a trust the wrong choice. If Emily is in the middle of a divorce, for example, protecting her inheritance may be very important to Mary.

This is where planning becomes less about finding a single “right” answer and more about balancing taxes, protection, flexibility, and the needs of the person who will actually inherit.

8. So What’s the Right Way to Leave Your IRA?

There isn’t one answer that works for every family.

I find it more helpful to start with three questions:

• Who is inheriting your IRA?
• What rules will apply to that person?
• What do you want the inheritance to do for them?

For one family, naming a spouse first and adult children second may make perfect sense. Another family may have a beneficiary who needs additional protection. Another may have a beneficiary with special needs. And another may have a very large retirement account where the income-tax consequences deserve more attention.

Families are different, so the planning should be different too.

And this is exactly why you have advisors.

You don’t need to figure out every SECURE Act rule yourself. Your estate planning attorney can work with your financial and tax advisors to help you understand your options and make decisions that fit your family.

One Thing You Can Do Today

You don’t need to calculate required minimum distributions or study the tax code.

Just find your IRA or retirement account and answer one question:

Who is currently named as my beneficiary?

Then think about this:

If that person inherited this account tomorrow, do I understand what would happen?

If you’re not sure, that’s a good conversation to have.

At Evergreen Legacy Law, my goal is to make conversations like this understandable. Estate planning involves legal rules, tax rules, financial decisions, and family considerations. Sometimes those pieces can feel complicated.

We take them one at a time.

If you’d like help understanding how your retirement accounts fit into your estate plan, you can schedule a complimentary 15-minute discovery call.

This article is for educational and informational purposes only and is not intended as tax, investment, or individualized legal advice. Retirement account rules are complex and can depend on the type of account, the beneficiary, the account owner’s age and circumstances at death, and other factors. Your legal, tax, and financial advisors can help you determine how the rules apply to your particular circumstances.