An IRA you inherited from someone who was not your spouse follows its own rules, which is why it is a separate account type rather than a Tax-deferred or Tax-free account. Pick Inherited IRA for a traditional one and Inherited Roth IRA for a Roth.

The ten-year rule

Under the SECURE Act, a non-spouse beneficiary of someone who died in 2020 or later must empty the account by the end of the tenth year after the year of death. The old "stretch IRA", where distributions could be spread across the beneficiary's own lifetime, is gone for most people.

Tell the planner the year you inherited it and it applies that deadline. Leave the year as this year for an account you already hold, or set a future year to model an inheritance you expect. By default the planner spreads the balance evenly across the remaining years, which is both a common choice and a reasonable one: it avoids stacking a decade of income into a single tax year.

The annual minimum, and the question we ask about it

Whether you must ALSO take something each year in years one through nine depends on the person you inherited from. If they died on or after the age their own required distributions had begun, you inherit that obligation and each of those years carries a minimum based on your own life expectancy. If they died before that point, nothing is required until the deadline itself.

That is what the The original owner had started their RMDs checkbox means. Treasury only finalized this reading in July 2024, after several years in which nobody was sure, so it is a fair thing not to know. Leave it unticked if you are unsure: that is the reading that forces less income, and the ten-year deadline still applies either way.

The question does not appear on an inherited Roth, because a Roth owner never had required distributions in their lifetime. There is no obligation to inherit, so only the deadline applies.

What the planner does with the money

Each year's distribution leaves the account on schedule. From a traditional inherited IRA it is ordinary income, taxed at your rates that year, and it is spent before other accounts are touched; whatever is not needed is moved into your taxable or cash account rather than disappearing. From an inherited Roth it is tax-free and simply becomes available cash.

Because the money comes out whether you need it or not, an inherited traditional IRA can quietly push you into a higher bracket, past an IRMAA threshold, or over the ACA subsidy cliff. That is not a modeling artifact, it is the actual problem with the ten-year rule, and it is worth looking at the year-by-year detail to see where it lands. If it does, the Roth Conversion Optimizer is working in the same brackets and its guardrails apply here too.

What we do not model yet

• Spousal treatment. A surviving spouse can usually roll an inherited balance into their own IRA and use their own schedule. Model that as an ordinary Tax-deferred or Tax-free account rather than an inherited one.
• Stretch cases. A minor child of the person who died, someone disabled or chronically ill, and a beneficiary less than ten years younger may still spread distributions over their own life expectancy. The planner applies the ten-year rule to every inherited account.
• Two inheritances of the same kind from different years. If you hold two inherited traditional IRAs, the planner applies the earlier deadline to the combined balance, which empties the money sooner than the law requires. A traditional and a Roth do keep their own separate clocks.

None of these will understate your tax: each one errs toward taking money out sooner rather than later.