Retirement Accounts (IRA, 401k) After a Death

IRAs, 401(k)s, and other retirement accounts are typically among the most valuable assets in an estate — and they have their own set of rules that are completely different from other assets. The key features: they pass directly to named beneficiaries (bypassing probate), and withdrawals from inherited retirement accounts are taxed as ordinary income. This guide explains what beneficiaries need to know.

Inherited retirement account rules are complex and have changed significantly under the SECURE Act (2019) and SECURE 2.0 (2022). Consult a tax advisor or financial planner for guidance specific to your situation.

How Retirement Accounts Transfer at Death

Retirement accounts with a named beneficiary transfer directly to the beneficiary outside of probate. The beneficiary simply contacts the plan administrator or IRA custodian, provides a death certificate, and completes a beneficiary claim form. No court involvement required.

If no beneficiary is named (or all named beneficiaries have predeceased), the account passes to the estate and goes through probate — losing the income tax deferral benefits and the ability to stretch distributions.

Critical lesson: Always keep beneficiary designations current.

Surviving Spouse: The Most Flexible Options

A surviving spouse has more options for inherited retirement accounts than any other beneficiary:

Spousal rollover

The surviving spouse can roll over the inherited IRA or 401(k) into their own IRA. The account then follows the spouse's own RMD (required minimum distribution) schedule, which begins at age 73 (under current law). This is generally the best option for spouses who don't need the money immediately and want maximum deferral.

Inherited IRA (treat as your own)

Alternatively, the surviving spouse can treat the inherited IRA as their own without a formal rollover. Same effect.

Inherited IRA with more favorable RMD rules for spouses

If the spouse needs to take distributions before they turn 59½, treating it as an inherited IRA (rather than rolling it over) allows penalty-free distributions. Once past 59½, rolling it over is typically more beneficial.

Non-Spouse Beneficiaries: The 10-Year Rule

Under the SECURE Act (2019), most non-spouse beneficiaries who inherit a retirement account must withdraw all funds within 10 years of the account holder's death. The specific rules:

• All inherited retirement account funds must be distributed by the end of the 10th year after the year of death
• There are no required annual withdrawals within that 10-year window — the beneficiary can take distributions on any schedule they choose, as long as the account is empty by year 10
• All distributions are taxed as ordinary income in the year received

Eligible Designated Beneficiaries (EDBs) — exceptions to the 10-year rule

Certain beneficiaries can still stretch distributions over their lifetime (longer than 10 years):

• Surviving spouse
• Minor children of the deceased (until they reach the age of majority, then the 10-year rule kicks in)
• Disabled or chronically ill individuals
• Individuals not more than 10 years younger than the deceased

Roth IRA Inheritance

Inherited Roth IRAs follow the same 10-year rule for most beneficiaries — but with a key difference: distributions from an inherited Roth IRA are generally tax-free (if the original account met the 5-year holding requirement). The beneficiary can let the account grow tax-free for the entire 10-year period and withdraw it all at the end — potentially tax-free.

Stretch Strategy Within the 10-Year Rule

Because distributions are taxed as ordinary income, withdrawing a large sum in a single year can push you into a higher tax bracket. A tax advisor can help you plan distributions across the 10-year window to minimize the total tax burden — taking less in high-income years and more in lower-income years.

401(k) Plans: Additional Considerations

401(k) and 403(b) plans have their own beneficiary claim process through the plan administrator (your employer's HR or benefits department, or the plan's third-party administrator). Non-spouse beneficiaries generally must roll the 401(k) into an "inherited IRA" at a financial institution of their choice, rather than keeping it in the 401(k). This gives more investment flexibility. Surviving spouses have the option to roll the 401(k) into their own IRA.

What to Do Now: Finding Retirement Accounts

To find all retirement accounts:

• Check tax returns for IRA contributions and 401(k) contributions (Form 5498 shows IRA contributions)
• Review pay stubs from employers for 401(k) contributions
• Check email and mail for account statements from brokerage firms
• Contact former employers' HR departments to find old 401(k) accounts

For the complete property and assets guide, see our property and assets guide. For the tax implications of inherited assets, see our taxes after a death guide.