Should I take more than the required minimum from an inherited IRA?

For most beneficiaries of a traditional inherited IRA, yes. The required minimum is a floor set by the IRS, not a plan. Taking only the minimum for nine years leaves a large balance that must be withdrawn in year ten, stacking it on top of that year's income and often pushing it through several tax brackets.

Is it better to empty an inherited IRA early or late?

For a traditional IRA, spreading withdrawals across the full ten years usually produces a lower total tax bill than waiting. For an inherited Roth IRA the opposite is generally true, because qualified withdrawals are not taxed and leaving the balance invested for the full ten years preserves tax-free growth.

Can an inherited IRA withdrawal raise my Medicare premiums?

Yes. Medicare Part B and Part D surcharges are based on modified adjusted gross income from two years earlier, so a large withdrawal can raise premiums two years later. This is one reason to spread distributions rather than concentrate them.

Planning

The year-ten tax bomb

The required minimum distribution is the number your custodian sends you every year. For most people it is also the most expensive number to follow.

Why the minimum is not a plan

A required minimum distribution does exactly one thing: it keeps you out of penalty territory. It is a floor written into the tax code, calculated from a life expectancy table that has nothing to do with your income, your bracket, or your plans. Nobody at the IRS or your brokerage is optimising it for you.

Under the ten-year rule the account has to be empty by December 31 of the tenth year after the death. If you have taken only the minimum along the way, whatever is left arrives in that final year as a single distribution — and a traditional inherited IRA is taxed as ordinary income on the way out. It lands on top of your salary, your spouse's salary, and everything else you earned that year.

What the concentration actually costs

Three things happen at once when a large distribution lands in one year, and only the first is obvious.

You climb through brackets

Income tax is marginal, so a large withdrawal fills your remaining low brackets and then spills into higher ones. The same total, split across ten years, may never leave the bracket you were already in. This is the whole game: you are not avoiding tax, you are choosing the rate you pay it at.

Income-linked costs follow two years later

Medicare Part B and Part D surcharges are set from modified adjusted gross income two years prior. A large distribution today can raise premiums in two years, for both spouses, for a full twelve months. Beneficiaries in their sixties are the most exposed to this and the least likely to see it coming.

Phase-outs quietly bite

A spike in income can reduce or eliminate credits and deductions tied to income thresholds, and can increase the share of Social Security benefits that is taxable. None of these appear as a line item labelled "inherited IRA" — they simply show up as a worse return.

The shape of a better plan

The reliable move is to think in terms of a target income level for each year rather than a target withdrawal. Pick the top of the bracket you are willing to pay at, then withdraw enough to reach it — no more.

Some years that number is large and some years it is nearly zero. The years worth watching for:

A gap between jobs, a sabbatical, or a year of unpaid leave. Low earned income means unusually cheap room in the low brackets.
The first years of retirement, before Social Security starts. Often the lowest-income window of an entire adult life, and the single best time to accelerate withdrawals.
A year with large deductible expenses, such as significant medical costs, which can offset a larger distribution.
Years you are already close to a Medicare surcharge threshold. Crossing it by a small amount costs the full step, so it is worth knowing where the line sits before you withdraw.

Doing this well requires knowing your own income, which is why no calculator can hand you the right answer. What a calculator can do is show you the gap between the minimum and an even split, which is usually enough to make the point.

Open the RMD calculator — it shows both schedules side by side for your balance.

Where the advice reverses: inherited Roth IRAs

Everything above assumes a traditional IRA, where withdrawals are taxable. An inherited Roth is the mirror image. There is no annual withdrawal requirement, and qualified withdrawals are not taxed — so there is no bracket to manage and no reason to pull money out early.

With a Roth, the usual strategy is to leave the balance invested for the full ten years and withdraw at the end, capturing a decade of tax-free growth. The one thing you cannot do is forget: the ten-year deadline still applies.

Three mistakes worth avoiding

Assuming the custodian is watching

They calculate the minimum and report the distribution. They are not tracking your tax bracket, they do not know your spouse's income, and they will not warn you that year ten is going to hurt. Several large custodians will not even calculate an inherited IRA minimum automatically the way they do for account owners.

Rolling it into your own IRA

Unless you are the surviving spouse, this is not permitted and doing it can be treated as a full taxable distribution of the entire account. Inherited IRAs must stay titled as inherited, naming the deceased owner.

Waiting for the rules to change again

They already did, twice, and the transition-period penalty relief has ended. Planning around the possibility of another reprieve is not a plan.

Common questions

Can I convert an inherited traditional IRA to a Roth?

Non-spouse beneficiaries cannot. A surviving spouse who treats the account as their own can. This is one of several places where the spousal option set is genuinely different from everyone else's.

What if I need the money now?

Take it. There is no early-withdrawal penalty on an inherited IRA regardless of your age — only ordinary income tax. Tax efficiency is a good goal but it is not worth borrowing at credit card rates to achieve.

Does a qualified charitable distribution work here?

Only from age 70½, and the rules are specific. If you are charitably inclined and old enough, it is worth asking a CPA about, because it can satisfy a required distribution without the income appearing on your return.

I inherited alongside my siblings. Does that change anything?

Splitting the account into separate inherited IRAs, generally by the end of the year after the death, lets each beneficiary use their own life expectancy factor and plan around their own income. Left undivided, the calculation may be driven by the oldest beneficiary. It is a deadline worth knowing about early.

Educational information only. Not tax advice. Bracket planning depends entirely on your own income and filing status, and the rules described here have exceptions this page does not cover. Work the actual numbers with a CPA before making a large withdrawal.