What Happens to My IRA When I Die? And Can I Leave It to Whoever I Want?

An IRA does not pass through your will. It does not go through probate. It transfers directly to whoever you named as beneficiary on the account documents, and the rules governing how that person can receive it changed significantly with the SECURE Act of 2019 and IRS final regulations that apply beginning with 2025 distributions. For most families, the biggest surprise is not who receives the IRA. It is what the tax bill looks like when they do.

Whether you are setting up your own IRA beneficiary designations or trying to understand what you just inherited, the rules depend on your relationship to the original account owner, the owner’s age at death, and which category of beneficiary you fall into. Here is how it works.

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Your Will Does Not Control Your IRA

An IRA generally passes outside your will and probate when a valid beneficiary designation is in place. At death, the account is distributed according to the beneficiary designation and the IRA custodian’s governing documents. If your will leaves everything to your spouse but your IRA names your adult child as beneficiary, your adult child receives the IRA. The will has no authority to override a valid beneficiary designation on a retirement account.

This matters more than most people expect. A beneficiary form completed decades ago may name someone who has since died, a former spouse, or a person who is no longer the right choice. Until someone updates it, that old designation controls the account regardless of what any other document says. Reviewing beneficiary designations after major life events, including marriage, divorce, a death in the family, or the birth of a child, is one of the most straightforward and most commonly overlooked steps in estate planning.

It is also worth naming a contingent beneficiary. If no beneficiary survives the account owner, the IRA will pass according to the custodian’s default-beneficiary provisions, which may result in the estate receiving the account and can produce less favorable distribution and tax consequences.

The 10-Year Rule: What Changed and Why It Matters

Before the SECURE Act of 2019, most non-spouse beneficiaries could withdraw from an inherited IRA over their own life expectancy, a strategy known as the stretch IRA. That option allowed beneficiaries to take relatively small distributions over decades, keeping the bulk of the account growing tax-deferred. The SECURE Act largely eliminated it for most non-spouse beneficiaries who inherit accounts from owners who died on or after January 1, 2020.

Under the 10-year rule, most non-spouse beneficiaries must fully withdraw all assets from an inherited IRA by December 31 of the year containing the tenth anniversary of the account owner’s death. The account must be emptied by that deadline regardless of how distributions are taken during the ten-year period.

For many non-spouse designated beneficiaries subject to the 10-year rule, the account must be fully distributed by the end of the tenth year. When the account owner dies on or after the applicable required beginning date, annual RMDs may also be required during the 10-year period. The precise rules depend on the account owner and beneficiary. The IRS waived the penalty for certain missed annual distributions from inherited accounts for 2021 through 2024 while the rules were being finalized. Those waivers have ended. Beginning in 2025, a missed RMD can trigger a 25 percent excise tax, reduced to 10 percent if it is corrected promptly.

Distributions from a traditional inherited IRA are generally taxable as ordinary income to the extent they represent previously untaxed amounts. A beneficiary who inherits a large traditional IRA and waits until year ten to take the full distribution may face a significant tax bill in that year. Spreading distributions across the ten-year period in a way that manages the annual tax impact is worth discussing with a tax professional, because the strategy that minimizes taxes over the distribution period depends on the beneficiary’s income in each of those years.

Who Qualifies as an Eligible Designated Beneficiary

Not everyone is subject to the 10-year rule. The SECURE Act created a category called eligible designated beneficiaries, or EDBs, who retain the ability to stretch distributions over a longer period. Under the Internal Revenue Code and the 2024 final regulations, the five categories of eligible designated beneficiaries are as follows.

A surviving spouse can treat the inherited IRA as their own, roll it into their own IRA, or keep it as an inherited IRA and take distributions based on their own life expectancy. Surviving spouses have the most flexibility of any beneficiary category and generally have options unavailable to anyone else.

A minor child of the account owner, meaning the original account holder’s biological or legally adopted child, can stretch distributions over their life expectancy until they reach age 21, which the final regulations treat as the age of majority. At that point the 10-year rule applies, and the account must be emptied by the end of the year that includes the tenth anniversary of the child’s 21st birthday, which is December 31 of the year the child turns 31.

A disabled individual who meets the IRS definition of disability at the time of inheritance can stretch distributions over their life expectancy.

A chronically ill individual who meets the IRS definition can also use the stretch option.

A beneficiary who is not more than ten years younger than the account owner can stretch distributions over their life expectancy. This typically applies to siblings or friends of similar age rather than to adult children.

Anyone who does not fall into one of these five categories is a non-eligible designated beneficiary and is subject to the 10-year rule. This includes most adult children inheriting from parents, grandchildren, nieces, nephews, and friends. Trusts and estates are subject to additional rules. An estate is not a designated beneficiary, while the beneficiaries of certain qualifying trusts may be treated as designated beneficiaries. Naming either requires careful analysis of the applicable distribution and tax rules.

What Surviving Spouses Can Do That No One Else Can

A surviving spouse who inherits an IRA has options that no other beneficiary category has, and choosing the right one depends on the spouse’s age and financial situation at the time of inheritance.

The most common option is to roll the inherited IRA into the surviving spouse’s own IRA. Once that happens, the account is treated as the spouse’s own for all purposes. Required minimum distributions are then based on the surviving spouse’s own age, beginning at 73 for those born from 1951 through 1959 and at 75 for those born in 1960 or later. This is generally the most tax-efficient option for spouses who do not need immediate access to the funds.

A surviving spouse can also keep the account as an inherited IRA rather than rolling it over. This option allows distributions before age 59 and a half without the 10 percent early withdrawal penalty that would apply if the funds were rolled into the spouse’s own IRA. If the deceased spouse died before reaching their required beginning date, the surviving spouse generally does not have to begin distributions until the year the deceased spouse would have reached the required age. A younger surviving spouse who needs access to the funds may benefit from this approach before rolling the account over later, understanding that once the account is treated as the spouse’s own, the early-withdrawal exception no longer applies.

SECURE Act 2.0 also created an election that lets a surviving spouse who is the sole beneficiary be treated as the deceased spouse for distribution purposes. That election applies to employer retirement plans such as 401(k)s, and the IRS rules implementing it are still only proposed. For an IRA, the equivalent tools are the two options described above.

Can You Leave Your IRA to Whoever You Want

The short answer is yes, with some practical considerations.

Most IRAs allow you to name any individual as beneficiary. You can name a spouse, an adult child, a sibling, a friend, a domestic partner, or anyone else. You can name multiple beneficiaries and specify percentages. You can name a trust, though this requires careful structuring to avoid adverse consequences under the inherited IRA rules. You can name a charity, which is exempt from income tax on the distributions and can be a tax-efficient way to direct IRA assets at death.

What you cannot do, effectively, is name a minor child as a direct beneficiary without a structure to manage the funds. A minor cannot legally receive a large IRA distribution, and if no trust or custodial arrangement is in place, a court may need to appoint a guardian of the property to manage the funds until the child reaches adulthood. Naming a trust designed to hold assets for a minor beneficiary is the more deliberate approach, though it requires specific drafting to work properly within the inherited IRA rules.

Naming a trust as IRA beneficiary is technically permitted but introduces complexity. Whether the trust’s beneficiaries can be treated as designated beneficiaries under the SECURE Act rules, and which distribution rules apply, depends on the specific terms of the trust and whether it meets the IRS requirements for a see-through trust. These arrangements should be reviewed by an estate planning attorney before the designation is made.

Plan Well. Live Better.

An IRA may be the largest asset in your estate. Who receives it, how they receive it, and what they owe in taxes when they do are all questions that a current beneficiary designation and a conversation with the right advisors can answer before anyone has to figure it out under pressure. At Milvidskiy Law Group, we help New Jersey families understand how retirement accounts fit into a complete estate plan and what their beneficiaries will face when the time comes. Learn more about our estate planning services.

This article is for informational purposes only and does not constitute legal advice or tax advice. Retirement account rules are complex and subject to change. The rules described here generally apply to IRAs; employer plan rules may differ. The Internal Revenue Code provisions, the 2024 final regulations, and IRS Notice 2024-35 described were verified in September 2026. We encourage you to speak with a qualified attorney and a tax professional to discuss your specific situation.