If you inherit an IRA, you may have heard that you have 10 years to empty the account.
That is true for many non-spouse beneficiaries.
But the important part is not just the 10-year deadline. It is how you use those 10 years.
In this video, I walk through a sample case of someone who inherits a $400,000 IRA while still working and then plans to retire a few years later.
If he takes only the required minimum distributions each year, the account can continue to grow and leave him with a much larger balance than expected heading into the final year. At that point, he may be forced into a large taxable distribution simply because he did not use the earlier years more intentionally.
I also look at how the strategy may change once he retires, when his income drops, and how things like ACA subsidies and future Medicare costs can affect how much it makes sense to withdraw in any given year.
The goal is not to take the money out as fast as possible.
And it is not to wait as long as possible either.
It is to look at the full 10-year window and use the years when the tax picture makes the most sense.