401(k) and IRA After Death: How Beneficiaries Claim Them and the 10-Year Rule

A 401(k) or IRA goes to the person named as beneficiary on the account, not to whoever the will names, and it usually skips probate. To claim it, contact the plan administrator or IRA custodian, send a death certificate and your ID, and ask which payout options you have. Most beneficiaries other than a spouse must empty the account by December 31 of the tenth year after the death, and every withdrawal from a traditional account is taxed as income.

Who gets a 401(k) or IRA when someone dies?

The person named on the beneficiary form. The Legal Information Institute lists beneficiary designations on retirement plans among the nonprobate transfers, meaning they pass outside the will and without a probate case. That is why a child named on an IRA gets it even if the will says everything is split among siblings.

Three situations change the picture:

• A married 401(k) participant. Under the federal tax code, many 401(k)-type plans pay the participant's balance to the surviving spouse unless the spouse consented in the required way to someone else being named. Ask the plan administrator how your plan handles this.
• No beneficiary, or the beneficiary has died. The plan or IRA agreement then decides, often paying the estate. That pulls the account into probate. See our probate guide and what an executor does.
• An outdated form. If an ex-spouse or a person who has died is still listed, the account may go somewhere the owner did not intend. Disputes like this need an estate attorney. Our beneficiary update checklist shows how to avoid it for your own accounts.

The IRS says the owner must name a beneficiary under the procedures the plan sets, so the plan's own form is what counts.

How do you claim a 401(k) or IRA?

1. Find the account and who holds it. For an IRA, it is the bank or brokerage on the statement. For a 401(k), it is the plan administrator, usually reached through the employer's HR department. Our guides on employer notification and investment accounts cover the first calls.
2. Report the death and ask for the beneficiary claim packet. Expect to send a certified death certificate and a copy of your photo ID. Ask how many certified copies they want. Our guide to how many death certificates you need can help you plan.
3. Ask for the date-of-death balance and the payout options. For a 401(k), the IRS says the plan document sets the options, so they can be narrower than the tax rules allow.
4. Choose the option and set up the receiving account. Most non-spouse beneficiaries ask for a direct transfer to an inherited IRA. Spouses have more choices (next section).
5. Keep every form. You will get a Form 1099-R for any withdrawal, and you need records for the required withdrawals each year.

What are your options as a surviving spouse?

A spouse who is the sole beneficiary has the most flexibility. The IRS says the spouse can generally:

• Treat the IRA as their own, or roll it into their own IRA or, to the extent it is taxable, a workplace plan such as a 401(k).
• Stay a beneficiary and take withdrawals over their own life expectancy. If the owner died before reaching their required beginning date, the spouse may be able to wait until the year the owner would have reached age 73 to start.
• Use the 10-year rule, if the owner died before the required beginning date, or take a lump sum.

The right choice depends mostly on your age. Under Publication 590-B, if you treat the account as your own and you are under 59½, later withdrawals may be hit by the 10% early-withdrawal tax, which a beneficiary would not pay. A younger spouse may therefore want to compare staying a beneficiary with treating the account as their own. Ask a tax professional before you decide, because the choice can be hard to undo.

Timing matters too. The IRS generally fixes who counts as the designated beneficiary, and whether a spouse is the sole beneficiary, on September 30 of the year after the death. Ask a tax professional about anything you plan to do before then, such as disclaiming your share.

What is the 10-year rule for other beneficiaries?

For deaths after 2019, the IRS says the entire account must be distributed within ten years. The deadline is December 31 of the year containing the tenth anniversary of the death, so for a death in 2026 it is December 31, 2036. Anything left after that is subject to the 25% excise tax.

Some beneficiaries are exempt from the 10-year limit. The tax rules call them eligible designated beneficiaries:

Do you have to take money out every year?

It depends on when the owner died relative to their required beginning date, the date they had to start taking required minimum distributions. That age is currently 73, and it rises to 75 for people born in 1960 or later.

• The owner died before that date. Under Publication 590-B, no distribution is required before the tenth year, so you can wait and empty the account by the deadline.
• The owner died on or after that date. Yearly required distributions continue for you, and the account must still be empty by the end of the tenth year. The Treasury regulations require an annual distribution every year until the account is fully paid out.

The IRS gave penalty relief for missed yearly distributions of this kind for 2021 through 2024 (Notice 2024-35 was the last). The final regulations apply from 2025, so from 2025 onward the 25% tax can apply. It drops to 10% if you correct the shortfall in time, and you report it on Form 5329.

What if the owner missed their required withdrawal for the year of death?

If the owner died on or after their required beginning date and had not taken that year's required minimum distribution, Publication 590-B says the beneficiaries are responsible for taking it. If the owner died before that date, there is no distribution due for the year of death.

There is a safety net. Under the final regulations, the excise tax on a missed year-of-death distribution is waived automatically if the beneficiary takes the missed amount by their tax filing deadline for that year, including extensions, or by the end of the following year if that is later. Ask the plan or custodian to calculate the amount, and keep proof of when you took it.

How are inherited retirement accounts taxed?

Traditional 401(k) and IRA. The IRS treats the money as income in respect of a decedent, which means you pay income tax on each withdrawal at your own rate. If the estate paid federal estate tax on the account, you may be able to claim a deduction for part of it. See our guide to federal estate tax.

Pulling out a large lump sum in one year adds it to your income for that year, which can push you into a higher tax bracket. Spreading withdrawals over several years can keep each year's income lower, but the best plan depends on your other income and the account's size, so a tax professional is worth paying here.

No early-withdrawal penalty on an inherited IRA. The 10% additional tax on IRA withdrawals before 59½ does not apply when you are the beneficiary of a deceased IRA owner, whatever your age. Ask the plan administrator or a tax professional how this works for a 401(k).

Roth 401(k) and Roth IRA. Roth accounts still follow the beneficiary distribution rules, so the 10-year deadline applies. The IRS says withdrawals of contributions are tax-free, and most earnings are tax-free too. The exception is earnings withdrawn before the Roth account is five tax years old, which can be taxable. The five-year clock generally starts with the owner's first Roth contribution.

Mistakes that cost beneficiaries money

• Cashing out by accident. Taking a distribution when you meant to transfer ends the tax deferral. Ask for a direct transfer in writing.
• Mixing accounts. A non-spouse beneficiary can't merge an inherited IRA with their own, and can't make contributions to it.
• Ignoring the plan's own rules. A 401(k) can offer fewer options than the tax code allows. Ask whether the plan will make a direct transfer to an inherited IRA, which can give you more choices.
• Missing a required withdrawal. Set a calendar reminder for December 31 each year if the owner had started required withdrawals.
• Assuming the will wins. It doesn't. Check the beneficiary form first.

How do you find a retirement account you don't know about?

• Look through old statements, emails from plan providers, and tax forms showing retirement distributions, such as Form 1099-R.
• Contact the plan administrator of each former employer. If the company merged, the plan usually moved with it.
• Search the Department of Labor's Retirement Savings Lost and Found database. Federal law required it so people can find the administrator of a plan they are or were a participant or beneficiary in. It is built for the person searching for their own plans, so you may still need the plan administrator's help for someone else's.
• Search state unclaimed property sites through NAUPA, which also covers forgotten bank accounts.

What to do next

1. Find every retirement account and the beneficiary form on each.
2. Order certified death certificates and contact each administrator or custodian.
3. If you are the beneficiary, choose your payout option before taking any money out.
4. Note the December 31 deadline in the tenth year, and any yearly withdrawal date.
5. Tell the estate's executor what the accounts were worth on the date of death. Our guides on pension notification and claiming life insurance cover other benefits that pass by beneficiary.