Taxes & Rules

RMDs on Inherited IRAs vs Inherited Annuities: Same Rule, Different Clock

ALBy The AnnuaLife Team10 min read · Updated September 12, 2026

An RMD from an inherited IRA is a required annual withdrawal calculated from the IRS Single Life Table, and most non-spouse beneficiaries must also empty the account within 10 years. An inherited non-qualified annuity has no RMD at all. It follows IRC section 72(s), which sets a 5-year deadline or a life expectancy payout instead.

Two people inherit money on the same afternoon. One gets an IRA, the other gets an annuity their aunt bought with savings from a house sale. Both assume the IRS rules are basically the same. Both are wrong, and in opposite directions.

Think of it as two stopwatches started by two different starting guns. The inherited IRA stopwatch is loud: it demands a specific dollar amount most years, it runs on tables published by the IRS, and it stops hard at ten years. The inherited annuity stopwatch is quieter and shorter: no annual amount at all, but a five-year finish line unless the beneficiary makes an election within the first twelve months.

Getting the two confused is expensive in both directions. Someone who thinks their inherited IRA has no annual requirement can owe an excise tax. Someone who thinks their non-qualified annuity has ten years can lose five of them. Here is which clock is which.

What is an RMD from an inherited IRA?

It is a required minimum distribution: a minimum dollar amount the IRS requires you to withdraw from an inherited IRA in a given year, calculated from the account balance and a life expectancy factor. The inherited version is different from your own RMD, and the differences matter.

Whose life expectancy

Your own, as the beneficiary, taken from the IRS Single Life Table in the year after death. Your own RMDs later in life use the Uniform Lifetime Table instead.

When it starts

Generally the year after the owner’s death, not at your age 73 or 75. Age has nothing to do with an inherited account RMD.

Whether it applies at all

It depends on your beneficiary category and on whether the owner died before or after their required beginning date.

Separate from your own accounts

An inherited IRA cannot be combined with your own IRA, and inherited IRAs from two different people cannot be combined with each other.

Publication 590-B is the IRS’s own explanation of these rules, and it is genuinely readable. If you are holding an inherited IRA and only read one government document, read that one.

How is the annual amount calculated?

You divide the prior year-end balance by a life expectancy factor, and for an inherited account that factor decreases by exactly one every year rather than being looked up fresh.

01Take the December 31 balance from the prior year

That is the numerator. Not today’s balance.

02Find your Single Life Table factor

Use your age in the calendar year after the owner’s death. The current tables sit in IRS Publication 590-B and are summarized in our 2026 RMD table guide.

03Subtract one for each year since

This is the subtract-one method for inherited accounts. If your initial factor was 32.5, the next year is 31.5, then 30.5, and so on.

04Divide

Balance divided by factor equals that year’s required amount.

05Withdraw by December 31

There is no April 1 grace period for beneficiaries the way there is for a first-year owner RMD.

06Check the depletion deadline separately

Taking the annual amount does not satisfy the 10-year rule. Those are two obligations, and the second one is a wall.

Our RMD calculator handles the arithmetic, and the annuity RMD rules guide covers how required distributions work when annuity contracts are involved.

Inherited IRA vs inherited annuity: what is actually different?

The account type decides everything. Here is the comparison side by side.

	Inherited traditional IRA	Inherited non-qualified annuity
Governing rule	SECURE Act of 2019 plus the IRS final regulations of July 19, 2024	IRC section 72(s), unchanged by the SECURE Act
Annual required amount	Yes for eligible designated beneficiaries; also required in years 1 through 9 if the owner died on or after their required beginning date	None. No annual minimum exists
Outer deadline	December 31 of the tenth year after death for most non-spouse beneficiaries	Five years after death by default
Stretch option	Only for eligible designated beneficiaries	Available to any designated beneficiary, but payments generally must begin within one year of death
What is taxable	Generally the entire distribution as ordinary income	Only the gain above the owner’s cost basis. Basis returns tax-free
Penalty for a miss	Excise tax of 25 percent, or 10 percent if corrected in the window, under SECURE 2.0 Act section 302	No RMD to miss, but blowing the one-year election window forfeits the stretch permanently
Spouse’s option	Roll over or assume as their own IRA	Continue the contract as owner under IRC 72(s)(3)

Read the last two rows twice. The inherited IRA punishes you for taking too little. The inherited annuity punishes you for deciding too slowly. Those are different failure modes and they need different calendar reminders.

An inherited IRA fines you for inaction. An inherited annuity just quietly takes your best option away.

The AnnuaLife Team

Does an inherited annuity have RMDs?

A non-qualified annuity has no required minimum distributions, ever, either during the owner’s life or after death. A qualified annuity, meaning one held inside an IRA or an employer plan, absolutely does, because the account it sits in is what triggers the requirement.

Non-qualified annuity, owner alive

No RMDs. This is one of the genuine planning features of after-tax annuity money.

Non-qualified annuity, inherited

Still no RMDs, but a hard 5-year deadline under IRC 72(s) unless life expectancy payments begin within one year of death.

Annuity inside a traditional IRA, inherited

Full inherited IRA rules apply. Annual amounts where required, and the 10-year wall.

Annuity inside a Roth IRA, inherited

The 10-year deadline applies, but because a Roth owner is always treated as dying before their required beginning date, no annual amounts are required and qualified distributions are generally income-tax-free.

That Roth line is the most useful footnote in this whole article for the people it applies to. No annual requirement plus a tax-free withdrawal generally means the balance should stay invested until close to the deadline, which is the reverse of the usual advice.

What happens when the inherited IRA holds an annuity contract?

The IRA’s rules govern, but the annuity’s mechanics change how the required amount is measured, and this is where custodial statements confuse people every year.

Two situations, two answers. If the inherited IRA holds a deferred annuity that has not been annuitized, the required amount is computed from the contract’s fair market value at the prior year end, which under Treasury regulations can include the actuarial value of certain additional benefits such as guaranteed death or income riders. That value can be higher than the cash surrender value shown on your statement, so ask the insurer which number the custodian reported. If the contract has already been annuitized into a stream of payments, that payment stream is what satisfies the requirement for that contract, and there is no balance left to divide.

Three practical consequences follow from that. First, do not assume the surrender value on the statement is the RMD basis. Second, an annuitized inherited contract cannot simply be stopped or reduced to hit a different number, because the payment schedule is the contract. Third, the contract’s surrender charge schedule and the ten-year depletion deadline are set by two different parties and do not automatically align, which is worth checking in year one rather than year eight.

Which dates actually matter?

Four, and they are the entire compliance calendar for an inherited account.

RMD age for savers born 1951 through 1959, under SECURE 2.0 Act section 107

RMD age for savers born in 1960 or later, under the same provision

Dec 31, 2025

First deadline for annual distributions inside the 10-year window, per the IRS final regulations of July 19, 2024

25%

Excise tax on a missed required distribution under SECURE 2.0 Act section 302, reduced to 10% with timely correction

The required beginning date is April 1 of the year after the owner reaches their RMD age. It matters to beneficiaries because it decides whether annual distributions are required during the 10-year window. Death before that date means no annual amounts and a single deadline in year ten. Death on or after it means both.

What mistakes cost beneficiaries the most?

The expensive mistakes are not exotic. They are the same handful, year after year.

Assuming every inherited annuity gets ten years. Non-qualified contracts get five by default. This one costs the most.
Missing the one-year election window. On a non-qualified contract, the life expectancy payout generally has to begin within one year of death.
Combining an inherited IRA with your own. A non-spouse beneficiary cannot roll an inherited IRA into their own IRA, and cannot convert it to a Roth.
Taking the RMD but forgetting the wall. Annual amounts and the ten-year depletion deadline are separate requirements.
Using the wrong table. Beneficiaries use the Single Life Table with the subtract-one method, not the Uniform Lifetime Table.
Using the wrong balance. For an annuity inside an IRA, the reported value may include the actuarial value of riders, not just cash surrender value.
Letting the year-ten balance pile up. Nine quiet years followed by one enormous taxable distribution is the most common self-inflicted tax problem in this whole area.

This is general education rather than tax advice. Inherited account rules turn on dates and beneficiary categories specific to your situation, so confirm the calculation and the deadlines with a qualified tax professional before you rely on them.

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Moving forward

Two stopwatches, two starting guns. The inherited IRA clock is loud and annual, and it fines you for taking too little. The inherited non-qualified annuity clock is quiet and short, and it takes away your best option if you spend the first year thinking about it. Knowing which one is running is the whole job, and it takes one phone call to the custodian or the insurer to find out.

If your inheritance is an annuity inside an IRA, you are running both clocks at once, plus a contract with its own withdrawal terms. That is the case where a generic RMD article stops being enough. AnnuaLife’s Certified Annuity Advisor match can connect you with someone who works these contracts regularly, our annuity tax overview covers how the distributions are taxed, and the RMD calculator will size the annual amount once you know the rules that apply.

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Frequently asked questions

How do I calculate the RMD from an inherited IRA?

Divide the prior December 31 balance by your life expectancy factor from the IRS Single Life Table, using your age in the year after the owner’s death, then subtract one from that factor for each following year. Withdraw the result by December 31. Publication 590-B contains the tables, and inherited accounts cannot be combined with your own for this calculation.

Do I have to take an RMD from an inherited IRA every year?

It depends on when the owner died relative to their required beginning date. Under the IRS final regulations published July 19, 2024, beneficiaries subject to the 10-year rule must also take annual distributions in years one through nine if the owner died on or after that date, with those amounts required beginning no later than December 31, 2025. If the owner died before it, only the year-ten deadline applies.

Does an inherited annuity have required minimum distributions?

A non-qualified annuity, bought with after-tax money, has no RMDs at any point. It follows IRC section 72(s), which requires the contract to be emptied within five years of death unless the beneficiary elects life expectancy payments beginning within one year. An annuity held inside an IRA or an employer plan does carry RMD obligations, because the account triggers them.

What is the difference between the Single Life Table and the Uniform Lifetime Table?

The Single Life Table is used by beneficiaries and produces a shorter factor, meaning larger required withdrawals. The Uniform Lifetime Table is used by account owners taking their own RMDs and produces a longer factor, meaning smaller withdrawals. Beneficiaries also use the subtract-one method rather than looking up a fresh factor each year.

Can I roll an inherited IRA into my own IRA?

Only a surviving spouse can. A non-spouse beneficiary must keep the account titled as an inherited IRA and cannot roll it into their own account or convert it to a Roth. Attempting the rollover generally makes the entire balance taxable in that year, which is one of the more painful mistakes available in this area.

What is the penalty for missing an inherited IRA RMD?

An excise tax of 25 percent of the shortfall under SECURE 2.0 Act section 302, reduced to 10 percent if you correct it within the two-year correction window. Before SECURE 2.0 the penalty was 50 percent. You correct it by taking the missed amount and filing Form 5329, and the IRS can waive the tax for reasonable cause.

What if the inherited IRA is already annuitized?

Then the annuity payment stream itself is what satisfies the required distribution for that contract, and there is no year-end balance to divide by a factor. That also means the schedule is fixed by the contract rather than by you, so confirm with the insurer how the payments interact with any other inherited accounts you hold before you plan around them.