# Leaving Your IRA to Your Kids: 5 Things to Know Before You Sign the Form

> Most kids must empty an inherited IRA within 10 years, some must withdraw every year, and a missing backup beneficiary can mean probate. California guide.

Source: https://ridleylawoffices.com/leaving-ira-to-children-california/

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If you’re leaving an IRA to your kids, the beneficiary form you sign at the bank decides more about what they keep than almost anything in your trust. The rules for inherited IRAs changed in 2020, and most parents I meet still picture the old ones.

Most adult children who inherit an IRA have to empty it by the end of the tenth year after you die (IRC §401(a)(9)(H)). If you died on or after your required beginning date (April 1 of the year after you reach the age for your own required withdrawals), they also have to take a withdrawal every year along the way (Treas. Reg. §1.401(a)(9)-5). Every dollar out of a traditional IRA is taxed as their income. A Roth IRA still has the 10-year deadline, but no yearly withdrawals, and the money usually comes out tax-free (Treas. Reg. §1.408-8(b)(1)(ii)). Your spouse isn’t forced into the 10-year rule. And name a backup beneficiary, or the account can land in your estate.

Your IRA doesn’t follow your will or your trust. It passes by the beneficiary designation on file with the custodian. If the form and the trust disagree, the form wins.

## 1. Your kids will have to empty it within 10 years

Under the SECURE Act, a child who isn’t an “eligible designated beneficiary” has to take everything out of an inherited IRA by December 31 of the tenth year after the owner’s death (IRC §401(a)(9)(H), for deaths after December 31, 2019). The old “stretch,” where a child could spread withdrawals over their own lifetime, is gone for most adult children.

- **Your minor child.** A child of yours under 21 is an eligible designated beneficiary (IRC §401(a)(9)(E)(ii)) and can take smaller life-expectancy withdrawals until reaching majority, and then the 10-year clock starts.
- **A disabled or chronically ill child.** They can stretch withdrawals over their own life expectancy. For a child on public benefits, the account usually needs to go to a properly drafted trust instead of to the child directly.

Grandchildren don’t qualify as minor children for this purpose. Only the owner’s own child does.

## 2. If you’d reached your required beginning date, they’ll owe a withdrawal every year

Whether your kids must also take money out each year inside the 10-year window depends on one fact: whether you died on or after your required beginning date. That’s April 1 of the year after you reach the age when your own required minimum distributions (RMDs) begin (Treas. Reg. §1.408-8(b)(1)(i)).

- **You died on or after that date.** Your child takes an annual RMD in years 1 through 9 and empties the account by the end of year 10.
- **You died before that date.** No annual withdrawals are required. Your child can take money out on any schedule, as long as the account is empty by the end of year 10.

Treasury’s final regulations settled this in 2024 (T.D. 10001), and the annual withdrawals are enforced starting in 2025. Missing one carries a 25% excise tax, reduced to 10% if it’s corrected in time (IRC §4974). The full rules for heirs are on the [inherited IRA 10-year rule page](https://ridleylawoffices.com/inherited-ira-10-year-rule-california/).

## 3. Every dollar from a traditional IRA is taxed at their rate

Withdrawals from an inherited traditional IRA are ordinary income to the child who takes them, and California taxes them too. Ten years is a short window for a large account. For a child in their 40s or 50s, it usually lands in their highest-earning years, on top of their salary.

A Roth IRA works differently. After the owner dies, the rules apply as though the owner died before the required beginning date (Treas. Reg. §1.408-8(b)(1)(ii)). So the 10-year deadline still applies, but there are no annual withdrawals, and your child can let the account grow untouched until year 10. Withdrawals are generally tax-free once your first Roth IRA has been open five tax years, a clock your child inherits with the account. The [Roth IRA five-year rule](https://ridleylawoffices.com/roth-ira-five-year-rule-california/) explains how that clock runs.

That difference is why some parents convert part of a traditional IRA to a Roth while they’re in a lower bracket than their kids will be. Whether that pays depends on both sets of tax rates, so run it with your tax advisor before you do it.

## 4. Your spouse isn’t forced into the 10-year rule

A surviving spouse is an eligible designated beneficiary (IRC §401(a)(9)(E)(ii)). If your spouse is the sole beneficiary, they can generally treat the IRA as their own (Treas. Reg. §1.408-8(c)), which takes it off the 10-year clock entirely. When your spouse later dies, your kids inherit from your spouse, and the 10-year clock starts then.

If you’re married and you want to name the kids instead of your spouse, check whether the IRA holds community property. In California, a beneficiary designation on community property signed without your spouse’s written consent isn’t effective as to your spouse’s half (Prob. Code, §5020). The fix is a written spousal consent, signed while you’re both alive and well.

## 5. Name a backup beneficiary

If your first-choice beneficiary dies before you and there’s no backup named, what happens next is set by the custodian’s account agreement. Many default to your estate, which can mean both of these:

- **Probate.** If the account pushes your probate estate over California’s small-estate limit, your family needs a court case to reach it (Prob. Code, §13100). The [small estate affidavit guide](https://ridleylawoffices.com/small-estate-affidavit-california-2026/) has the current limit.
- **A faster payout.** An estate isn’t a designated beneficiary. If you died before your required beginning date, the account generally has to be emptied within five years instead of ten (IRS Publication 590-B).

Naming a contingent beneficiary on every account, and “per stirpes” if you want a deceased child’s share to go to that child’s kids, avoids both. The [beneficiary designation audit](https://ridleylawoffices.com/beneficiary-designation-audit/) walks through every account you should check.

## What I’d check before you sign the form

- Primary and contingent beneficiaries named on every IRA, 401(k) and 403(b).
- Your spouse’s written consent, if you’re married and naming anyone else.
- Whether a child is a minor, disabled or on benefits, in which case the account may belong in a [see-through trust](https://ridleylawoffices.com/see-through-trust-ira-california/) rather than in their name.
- Whether the forms point the same direction as your trust.

## Frequently asked questions

### Can my kids still stretch an inherited IRA over their lifetime?

Most adult children can’t. Since 2020, they have to empty the account by the end of the tenth year after your death. A minor child of yours gets the stretch until reaching majority, and a disabled or chronically ill child can keep it (IRC §401(a)(9)(E)(ii)).

### Do my kids have to take money out every year?

Only if you died on or after your required beginning date. Then they take an annual RMD in years 1 through 9 and empty it by year 10. If you died before that date, or the account is a Roth IRA, there are no annual withdrawals, only the year-10 deadline.

### Is an inherited Roth IRA tax-free to my kids?

Generally yes, once your first Roth IRA has been open five tax years. They still have to empty it within 10 years.

### What happens if my beneficiary dies before me?

If there’s no contingent beneficiary, the custodian’s agreement decides, and many default to your estate. That can mean probate, and if you died before your required beginning date, a five-year payout instead of ten. Naming a backup prevents both.

Related reading: [the inherited IRA 10-year rule](https://ridleylawoffices.com/inherited-ira-10-year-rule-california/), [the inherited IRA tax map for beneficiaries](https://ridleylawoffices.com/guides/inherited-ira/), [which wins, your will or your 401(k) form](https://ridleylawoffices.com/beneficiary-designation-vs-will-california/), and [the inherited IRA distribution calculator](https://ridleylawoffices.com/inherited-ira-calculator/).

Your beneficiary forms and your trust have to point the same direction, and a short call is enough to see whether they do. [Talk to Eric](https://app.lawmatics.com/forms/share/345a2f20-b321-4eed-8a15-db3c88789bd8): a free call. Or call (805) 244-5291. (This is general information, not legal or tax advice. Retirement-account tax rules are federal and change over time, so confirm the current rules for your situation.)

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**Written by Eric D. Ridley.** Estate Planning Attorney at Ridley Law, serving Ventura County since 2010. [Learn more about Eric →](https://ridleylawoffices.com/about/)