Inherited 401k vs IRA
Inherited 401k: bound by plan rules. Inherited IRA: more flexibility. Spouse can roll either to own IRA. Non-spouse subject to 10-year rule.
| Inherited balance | — |
| Beneficiary type | — |
| Owner age at death | — |
| Distribution rule | — |
| Distribution period | — |
| Owner past RMD age? | — |
| Annual RMD if applicable | — |
Inherited 401(k) vs inherited IRA distributions differ in flexibility. Spouses have the most options (roll over to own IRA). Non-spouse beneficiaries (post-SECURE Act 2020) generally must drain within 10 years. Minor children get extension until majority; disabled/chronically ill keep lifetime stretch.
Spouse Beneficiary Options
(1) Roll to own IRA — best flexibility, defers RMD to your own age. (2) Treat as inherited IRA — useful if young; allows early withdrawals without 10% penalty. (3) Disclaim — let next beneficiary inherit. Spouses generally roll to own IRA.
Non-Spouse 10-Year Rule
Must fully drain within 10 years of original owner's death. IRS final rules (July 2024): if owner died PAST RMD age (73+), beneficiaries must take ANNUAL RMD in years 1-9 AND empty by year 10. Pre-RMD age deaths: no annual RMD, just empty by year 10.
Minor and Disabled Exceptions
Minor children: 10-year clock starts when they reach majority. Disabled/chronically ill: lifetime stretch allowed. Eligible Designated Beneficiary (EDB): chronically ill, disabled, not more than 10 years younger.
Last updated May 2026. Sources: IRS Inherited IRA Rules.