Inherited IRA Under the 10-Year Rule: Spread the Withdrawals or Take a Lump Sum? (2026)

Inherited IRA under the 10-year rule: spread the withdrawals or take a lump sum?

Key numbers — $300,000 IRA, $80,000 other income, 5% growth inside the account, beneficiary 50

Single filer, 2026 standard deduction of $16,100, federal only, 2026 law held constant for all ten years; the account grows at an illustrative 5% while inside the IRA. “Tax on the IRA dollars” is each year's federal tax with the withdrawal minus the tax without it ($8,770 a year on the $80,000 alone). Green is the lowest tax, red the highest.

Which rule applies to your inherited IRA, and this year's required amount →

The free Inherited IRA RMD calculator walks the decision tree this study assumes — who the beneficiary is, when the owner died, whether annual distributions apply inside the 10-year window — and produces the year-by-year required schedule from the IRS Single Life Table.

The rule this study applies

A designated beneficiary who is not an eligible designated beneficiary — an adult child, a grandchild, a sibling more than ten years younger, a friend — of an owner who died in 2020 or later must empty the inherited IRA by December 31 of the year containing the tenth anniversary of the death (SECURE Act of 2019; 26 CFR 1.401(a)(9)-5(e)). Whether anything is required before that deadline depends on the owner. Under the final regulations at T.D. 10001 (July 18, 2024), if the owner died on or after their required beginning date, an annual required minimum distribution applies in each of years 1 through 9, sized by the IRS Single Life Table divisor at the beneficiary's age in the year after death and reduced by one each year (taking the greater of the beneficiary's and the decedent's remaining life expectancy); if the owner died before that date, nothing is required until year 10. This is the rule the site's Inherited IRA RMD calculator applies, and this study uses the same code path for the divisor.

The main grid models the first, more demanding case: an owner who died at 80, past the required beginning date, and a beneficiary aged 50 in year 1, whose Single Life divisor starts at 36.2 and falls by one a year. The year-1 RMD on $300,000 is therefore $8,287 — small, which is why the annual floor only shapes the back-loaded strategy; the generator proves it never binds on the spread strategies. The pre-RBD case, where nothing at all is required until year 10, is carried as its own row (“all in year 10”), and it is the worst row in every case.

Six ways to empty the account

• Lump sum in year 1. The whole balance comes out at once, before any growth.
• 1/N of the remaining balance. One-tenth in year 1, one-ninth of what is left in year 2, and so on. With growth inside the account each withdrawal is 5% larger than the last ($30,000 rising to $46,540 on the $300,000 account).
• Level draw. The same dollar amount every year, sized so the tenth withdrawal empties the account after growth — $37,001 a year on $300,000 at 5%.
• Fill the current bracket. Each year, withdraw exactly the room left in the bracket the beneficiary's other income already sits in; whatever is left comes out in year 10. With $80,000 of other income taxable income starts at $63,900 in the 22% bracket, which ends at $105,700, so the withdrawal is $41,800 a year; with $160,000 it starts at $143,900 in the 24% bracket and the room is $57,875.
• Back-loaded. Only the annual RMD in years 1 through 9, then the remainder in year 10.
• All in year 10. The pre-RBD case: nothing required, nothing taken, until the deadline.

The full grid at 5% growth

Every row is a single filer aged 50 in year 1 taking the standard deduction, with the other income held flat for ten years. “Total withdrawn” exceeds the inheritance by the growth credited while the money was still inside the account; the tax column is the federal tax on those dollars over the ten years; the two after-tax columns are what the beneficiary keeps, in nominal dollars and discounted to year 1 at 3%.

Green: the lowest federal tax in the case; red: the highest. Lowest tax by case: $300,000 IRA, $80,000 other income → Fill the bracket ($78,876); $300,000 IRA, $160,000 other income → Fill the bracket ($80,754); $600,000 IRA, $80,000 other income → Level draw ($169,246); $600,000 IRA, $160,000 other income → Level draw ($190,508). Highest after-tax present value at 3% by case: $300,000 IRA, $80,000 other income → 1/N of the remaining balance ($255,423); $300,000 IRA, $160,000 other income → 1/N of the remaining balance ($248,990); $600,000 IRA, $80,000 other income → 1/N of the remaining balance ($505,325); $600,000 IRA, $160,000 other income → Fill the bracket ($488,764).

Year by year — $300,000 IRA, $80,000 other income

The schedules behind the first case, with the bracket rate the last dollar of each withdrawal was taxed at. The lump sum's single withdrawal climbs four brackets; the level draw never leaves the 22% bracket; the bracket-filling draw lands exactly on the 22% bracket's top in each full year and empties the account in year 9; the two back-loaded rows put $349,692 and $465,398 into year 10.

Withdrawal at the start of the year, then the remaining balance grows 5%. “@22%” is the bracket the final dollar of that withdrawal fell in, from the shared tax module.

What the numbers say, in plain words

A lump sum is taxed on the way up the schedule

The federal schedule is progressive, so the cost of a withdrawal depends on where it lands, not just how big it is. $80,000 of wages leaves a single filer with $63,900 of taxable income, part-way into the 22% bracket. Adding $300,000 in one year fills the rest of that bracket, all of the 24% bracket, all of the 32% bracket and $107,675 of the 35% bracket. The average rate on those dollars is 29.1%. Spread the same dollars so that each year's withdrawal stays under the top of the 22% bracket and the rate on every one of them is 22% — that difference, $8,488 on $300,000, is the entire case for spreading, before growth is counted. At $600,000 against $160,000 the lump sum runs from the 24% bracket into the 37% bracket and costs $204,066, an average of 34.0%, against $190,508 for the level draw, whose top dollars reach the 32% bracket.

Which spread schedule wins depends on how much room the bracket has

The level draw and the bracket-filling draw both keep every withdrawal inside the bracket the beneficiary already occupies, as long as the account is small enough for that to be possible. On $300,000 against $80,000 it is: $41,800 a year covers the account, growth included, by year 9, so filling the bracket pays the least tax of any schedule ($78,876, every dollar at 22%), and the level draw pays $81,403 at the same 22% only because it withdraws $11,487 more — the extra growth earned by leaving money inside the account longer. That extra growth is also why the level draw ends with more after tax, $288,610 against $279,650 nominal and $253,576 against $250,592 in present value: once the rate on the last dollar is pinned, keeping money inside the account is worth the extra tax on the extra growth. On $600,000 against $80,000 the room runs out. Nine years of $41,800 withdraw only $376,200; $446,841 is left for year 10 and is taxed up into the 35% bracket, so the bracket-then-remainder schedule pays $221,523, more than the lump sum's $192,830. There the level draw of $74,003 a year, which reaches into the 24% bracket every year but never beyond it, is the cheapest schedule at $169,246. A schedule that fills the 22% bracket and then spreads the rest evenly across the 24% bracket would do a little better still; it sits between those two rows and is not modelled here. The 1/N schedule, whose withdrawals grow with the account, edges the level draw on present value at 3% in all four cases because it defers the most, at the cost of touching the next bracket in its later years.

When back-loading loses

Waiting is the mirror image of the lump sum with a bigger number. Nothing until year 10 turns $300,000 into $465,398 of income in a single year, taxed from the 22% bracket up into the 35% bracket, for $145,254 — 48.4% of the inheritance, and the highest tax of any schedule in every case in the grid. The nine years of extra growth soften it but do not rescue it: the after-tax present value, $245,364, is above the lump sum's $212,636 only because of that growth, and below every other spread schedule's (the level draw's is $253,576). Taking the annual RMDs first (the post-RBD case) barely moves the answer at 50, because the divisor of 36.2 makes them small: $124,860 of tax, with $349,692 still landing in year 10. Back-loading only makes sense when the beneficiary expects a much lower bracket later in the window — a retirement inside the ten years, say — and this study holds income flat, so that case is outside it.

The IRMAA trap runs both ways

A beneficiary already on Medicare, or about to be, has a second schedule to watch. Each year's MAGI — and every dollar withdrawn from an inherited traditional IRA is in it — sets the Part B and Part D income-related surcharge two years later, in tiers that are cliffs rather than ramps. A lump sum crosses those cliffs once; a spread can cross the first one every year. The sub-case below shows the same four cases for a beneficiary who is 64 in year 1: the withdrawal years 1 through 10 are the lookback years for premium years 3 through 12, all on Medicare.

Sub-case: beneficiary 64 in year 1 IRMAA

Same strategies, same 5% growth. From year 2 the beneficiary is 65, so the federal tax here also carries the §63(f) aged addition and the OBBBA senior deduction with its MAGI phase-out, both from the shared tax module, which is why the tax column differs slightly from the age-50 grid. The surcharge column is the annual Part B plus Part D IRMAA the 2026 tier table assigns to each year's MAGI, summed over the ten premium years it governs.

$300,000 IRA, $80,000 other income

2026 single-filer tiers held constant; first tier above a MAGI of $109,000 adds $1,148.40 a year. Green: the lowest surcharge (ties share it).

Two things change when the beneficiary is 64 in year 1. From year 2 they are 65, so the withdrawals also erode the OBBBA senior deduction, which phases out at 6% of MAGI above $75,000: the rate on each spread dollar is a little above the bracket rate, and the level draw's tax is $85,799 here against $81,403 at 50, while the lump sum, taken at 64 before any senior deduction exists, is unchanged at $87,364. And every year's MAGI now sets a surcharge. The lump sum's one big year lands in a high tier once — MAGI $380,000, a $6,355 surcharge in premium year 3 — and then MAGI drops back to $80,000, under the first floor, for the other nine. The level draw does the opposite: $37,001 on top of $80,000 is a MAGI of $117,001, $8,001 over the first floor of $109,000, so the $1,148.40 first-tier surcharge is paid in all ten years — $11,484, $5,129 more than the lump sum's single hit and more than the level draw's $1,566 federal-tax advantage. On tax plus surcharge the lump sum ($93,719) is beaten here only by the bracket-filling draw ($90,659), and across the four cases it is the lowest combined cost in three. What it does not win is value: with the surcharges discounted on the same clock, every spread and deferred schedule still ends ahead of the lump sum's $206,645 net (the level draw at $240,262), because ten years of growth inside the account outweighs ten first-tier surcharges. The practical reading is narrower than either headline: a beneficiary whose other income sits just under a tier floor can trim a level schedule to stay below it and pay no surcharge at all, which is what the tier table is for; at $160,000 of other income, already above the first floor, every schedule pays a surcharge every year and the question becomes which tier — $46,200 for the level draw against $32,318 for the lump sum on $300,000.

IRMAA surcharge totals, all four cases

Sum of the annual Part B + Part D surcharges over premium years 3–12, with the number of surcharged years in brackets; bold is the lowest in the case.

Sensitivity: 3% growth inside the account

At 3% there is less growth to tax and less to defer, so every spread schedule's tax falls and the gap between spreading and waiting narrows. The lowest-tax and highest-tax schedule in each case is the same at both rates. Federal tax on the IRA dollars (share of the inheritance), with the after-tax present value at 3% beside its 5% counterpart:

CC-BY-4.0 — free for any use including republication and journalism, with attribution to QuantCalc Research.

Methodology

Assumptions and limitations

• Federal only, single filer, standard deduction. No state income tax is modelled, and several states tax IRA distributions at rates that would add to every row. Joint filers have wider brackets and a different answer.
• 2026 law held constant for ten years. Brackets, the standard deduction, the senior deductions and the IRMAA tiers are the 2026 figures in every year; in reality they are indexed and can be amended, and the senior deduction under current law applies to tax years 2025–2028 only. A lump sum is the one strategy that does not depend on future law.
• Other income held flat. A beneficiary whose income falls inside the window (retirement, a gap year) has bracket room later that this grid does not see, and that is the case in which back-loading can make sense.
• Illustrative growth, not a forecast. 5% and 3% are flat assumptions; real returns vary and can be negative, which changes the deferral side of the comparison but not the bracket side.
• The deferral credit depends on the discount rate. The 3% present-value column favours strategies that leave money inside the account; the dataset's PV-at-growth-rate column removes that effect.
• Timing convention. Withdrawals at the start of the year keep the lump sum equal to the inherited balance and the identities exact; a year-end convention would grow every withdrawal by one year and change the dollar figures slightly, not the ranking.
• Only the inherited IRA moves. No Social Security (and so no §86 phase-in), no capital gains, no ACA premium credits, no net investment income tax, no other deductions.
• Roth accounts are outside this study. Distributions from an inherited Roth IRA are generally free of income tax once the owner's five-year period has run, so the bracket argument does not apply and the usual reasoning reverses.
• Not advice. Educational research on how the 2026 federal schedule prices six withdrawal patterns; not financial, tax or legal advice, and not a recommendation of any schedule. Individual facts change the numbers.

Frequently asked questions

Is it better to take an inherited IRA as a lump sum or spread it over the 10 years?

On federal tax alone, spreading wins in every case this study ran, and the gap is the bracket climb. For a single filer with $80,000 of other income who inherits $300,000, a year-1 lump sum pays $87,364 of federal tax on the IRA dollars (29.1% of the inheritance, climbing into the 35% bracket); a level draw over ten years pays $81,403 and stays in the 22% bracket throughout; filling the 22% bracket each year pays $78,876. At $600,000 against $160,000 the lump sum pays $204,066 (34.0%) versus $190,508 for the level draw. Two things a lump sum does buy: certainty about the law, since this study holds 2026 brackets constant for ten years, which no one can promise; and, for a beneficiary already on Medicare, a single IRMAA surcharge year instead of up to ten.

Do I have to take an annual RMD from an inherited IRA under the 10-year rule?

It depends on whether the original owner died before or on/after their required beginning date. Under the final regulations at T.D. 10001 (July 18, 2024), if the owner had already reached that date an annual required minimum distribution applies in years 1 through 9, sized by the Single Life Table divisor at your age in the year after death and reduced by one each year, with the whole account out by the end of year 10. If the owner died before that date nothing is required until year 10. This study models the first case (a 50-year-old beneficiary's year-1 divisor is 36.2, so the year-1 RMD on $300,000 is $8,287) and carries the second as its own row. The free Inherited IRA RMD calculator walks the full decision tree.

What does the "fill the bracket" strategy mean, and why does it pay the least tax?

Each year you withdraw only as much as fits under the top of the bracket your other income already sits in. With $80,000 of wages and the 2026 standard deduction of $16,100, taxable income starts at $63,900, inside the 22% bracket, which tops out at $105,700; that leaves $41,800 of room, so the withdrawal is $41,800 a year and every IRA dollar is taxed at exactly 22%. A $300,000 account growing at 5% is exhausted in year 9 that way, for $78,876 of tax. It pays the least because no dollar ever crosses into a higher bracket. Two cautions. The level draw leaves more money growing inside the account and ends with more after-tax dollars in hand ($288,610 versus $279,650), so the right comparison is after-tax value, not tax alone. And the room has to cover the account: on $600,000 against $80,000, nine years of $41,800 leave $446,841 for year 10, and that remainder costs more than a level draw that runs a little into the 24% bracket every year ($221,523 against $169,246).

Why does waiting until year 10 cost so much?

Because ten years of deferred income then lands in one tax year on top of that year's other income. Nothing until year 10 on a $300,000 account growing at 5% means a $465,398 withdrawal in year 10, taxed from 22% up into the 35% bracket, for $145,254 of federal tax (48.4% of the inheritance). Taking the annual RMDs in years 1 through 9 barely helps ($124,860) because they are small at 50. The deferral does earn more growth inside the account, and this study credits it, but at these income levels the bracket climb costs more than the deferral earns: the year-10 strategy's after-tax present value is $245,364 against $253,576 for the level draw.

How does an inherited IRA affect Medicare IRMAA premiums?

Every withdrawal is ordinary income and therefore in the MAGI that sets Part B and Part D surcharges two years later, in tiers that are cliffs. In the flagged sub-case here the beneficiary is 64 in year 1, so all ten withdrawal years are lookback years for Medicare premium years 3 through 12. With $80,000 of other income and a $300,000 account, a lump sum crosses the 2026 tier floors once, for $6,355 in a single premium year, while the level draw's MAGI of $117,001 sits just above the first floor of $109,000 in every year, for $11,484 in total. Because the level draw's federal-tax advantage over the lump sum is only $1,566 in this sub-case, the lump sum comes out ahead on tax plus surcharge ($93,719 against $97,283), and it is the lowest combined cost in three of the four cases. On after-tax value it still loses, because ten years of growth inside the account outweigh the surcharges: $206,645 net against $240,262 for the level draw. A beneficiary whose other income sits just under a tier floor can size a level schedule to stay below it.

Are these figures a forecast or advice?

Neither. They are the 2026 federal brackets, standard deduction, senior deductions and IRMAA tiers, held constant for ten years and applied by QuantCalc's shared tax module to two illustrative growth rates. State income tax, itemized deductions, other income that changes over the decade, Social Security, capital gains and future changes to the law are all outside the model, and any of them can move the answer. The dataset beside the page carries every year of every cell so the arithmetic can be checked or re-run with different inputs.

Related research

Changelog

• v2026.1 (2026-09-08) — initial release. Six strategies, four balance/income cases, 5% and 3% growth, beneficiary aged 50 and an IRMAA sub-case at 64, all through the shared 2026 tax, IRMAA and RMD modules.

Last updated 2026-09-08. Dataset license: CC-BY-4.0. QuantCalc is an independent retirement-planning research project; not affiliated with, endorsed by, or sponsored by the Internal Revenue Service, the Centers for Medicare & Medicaid Services or any government agency. Educational research, not financial, tax, or legal advice.

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  title  = {Inherited IRA Under the 10-Year Rule: Spread the Withdrawals or Take a Lump Sum? (2026)},
  author = {{QuantCalc Research}},
  year   = {2026},
  url    = {https://quantcalc.app/research/inherited-ira-10-year-rule-spread-vs-lump-2026/},
  note   = {Accessed <date>}
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