09/16/2026
One of the biggest inherited IRA mistakes I see in this post-COVID world?
Taking *only* the required minimum distribution each year.
After all, to most people it feels responsible.
Take only what the IRS requires, leave the rest invested, and defer the taxes as long as possible.
BUT, under the current 10-year liquidation window for most non-spouse inheritors, that can backfire in a big way.
Imagine inheriting a $1 million IRA like one of my clients did a couple years ago.
Let’s assume that for the first several years, she only took the required distributions.
Meanwhile, the account continues to grow.
Then you get to years 9 and 10 and realize there’s still a LOT of money left, perhaps even more than when you originally inherited it.
Now, instead of intentionally filling up lower tax brackets along the way, you could be forced to recognize hundreds of thousands of dollars of taxable income over just a year or two.. potentially pushing much lots of $$$ into the 32%, 35%, or even 37% federal tax brackets.
The better question usually isn’t:
“What’s the minimum I have to take this year?”
It’s:
“How much should I take this year and each year after to minimize taxes over the entire 10-year period?”
That probably means intentionally taking more than the required minimum in many years.
It takes more careful planning between you, your CPA, and your financial planner!
