Client Question: What Should I Do With an Inherited IRA?

Tag: Retirement Planning

Posted on

Published June 23, 2026

At a Glance

  • Your first move isn’t a financial decision — it’s identifying which type of beneficiary you are. That one fact sets every deadline and withdrawal rule that follows.
  • The “10-year rule” is the trap most heirs never see coming. Many non-spouse beneficiaries must empty an inherited IRA within ten years — and if the original owner was already taking required withdrawals, you may owe them each year along the way.
  • Move deliberately, not quickly. A rushed lump-sum withdrawal can hand a large share of the inheritance to the IRS in a single tax year. The right sequence, not the fastest one, is what protects the money.

Few financial events arrive as tangled up with emotion as an inheritance. When a parent or a spouse leaves you an IRA, you are handed a meaningful gift and a stack of unfamiliar rules in the same breath — and some of those rules carry deadlines you can trip over without ever knowing they were there. Some version of this question reaches me a few times a year, usually a few weeks after a loss, and it almost always opens the same way: “I inherited an IRA. What am I supposed to do with it?”

The honest answer is that it depends on who you are to the account. Once we settle that, the path gets a great deal clearer. Here is how I walk clients through it.

First, figure out what kind of beneficiary you are

Before you touch the money, you need to know your status, because the rules around withdrawals and timing change depending on it. The IRS sorts heirs into a few categories — and which one you fall into drives everything that comes next.

Beneficiary type Who you are General withdrawal timeline
Designated beneficiary Named on the account, but not in the eligible group below (often an adult child). Empty the account within 10 years.
Eligible designated beneficiary A surviving spouse, a minor child of the owner, someone no more than 10 years younger, or someone chronically ill or disabled. Usually exempt from the 10-year rule; can stretch withdrawals over your own life expectancy.
Nondesignated beneficiary Not named on the account; you inherit it through a will or the estate. Five years, or continued annual withdrawals — depending on the owner’s age at death.

Most of the people who ask me this question turn out to be designated beneficiaries — an adult child who inherited a parent’s IRA — which means the 10-year rule is usually the part that matters most. We’ll come back to it.

One deadline that’s easy to miss

There’s an early trap worth flagging before we go further. If the person you inherited from was already taking required minimum distributions (RMDs) — the mandatory withdrawals that begin at age 73 — their withdrawal for the year of death still has to come out by December 31 of that year. If it doesn’t, the IRS can assess a 25% penalty on the amount that should have been withdrawn. It’s one of the first things I check, because the clock is often already running by the time we talk.

Your four options

Once you know your status, you generally have four paths. Which one fits depends on your tax picture, your timeline, and what the money is ultimately for.

1. Disclaim it

You can refuse the inheritance — for instance, if accepting it would push you into a higher tax bracket and another family member is better positioned to receive it. A disclaimer has to be made within nine months of the owner’s death, after which the IRA passes to an alternate beneficiary or to the estate. It’s an uncommon move, but a powerful one in the right circumstances — usually as part of a deliberate, family-wide tax plan rather than a snap decision.

2. Take a lump sum

You can withdraw everything at once. With a traditional IRA, the entire amount lands on your tax return as ordinary income that year, which can quietly bump you into a higher bracket and inflate everything from your Medicare premiums to your capital-gains rate. With a Roth IRA the withdrawal is generally tax-free — provided the account has been open at least five years, otherwise a 10% penalty can apply. The money is yours either way; the real question is what it costs you to take it all in a single year, and whether spreading it out would keep more of it in your pocket.

3. Withdraw over time

Often the more tax-efficient route: leave the assets in an inherited IRA, where they keep growing tax-deferred, and draw them down on a schedule. This is the path where the 10-year rule lives — and because the timing differs by beneficiary type, it deserves its own breakdown, just below.

4. Roll it into your own IRA

This option belongs to surviving spouses only. You can move the assets into an IRA in your own name and treat them as though they had always been yours — frequently the simplest and most flexible choice, since it resets you onto the ordinary retirement-account rules. One catch: if the original owner hadn’t taken their required withdrawal for the year, you generally have to take it on their behalf before moving the funds.

The 10-year rule, explained

Since the SECURE Act, most non-spouse beneficiaries can no longer “stretch” an inherited IRA across their lifetime. Instead, how long you have to draw the account down depends on your category. The current distribution rules (IRS Publication 590-B) break down like this:

  • Designated beneficiaries (not in the eligible group) must empty the account within 10 years — the clock starting the year after the owner’s death. If the owner had already begun RMDs, you also have to take an annual withdrawal in each of those years, not just a lump sum at the end.
  • Eligible designated beneficiaries generally escape the 10-year rule and can stretch withdrawals over their own life expectancy. For a minor child who inherits, the 10-year clock starts ticking at age 21.
  • Nondesignated beneficiaries who inherit through an estate face either a five-year deadline or continued annual withdrawals, depending on whether the owner had reached their required-distribution age.

You don’t need to memorize the life-expectancy math — the IRS publishes tables for that, and getting the numbers right is exactly the kind of thing we handle together.

Where people get tripped up

The rules above are knowable, but a few details cause most of the avoidable mistakes I see. The first is treating an inherited IRA like your own and accidentally commingling it with a contributory or rollover IRA. They are legally distinct accounts with different distribution rules, and mixing them creates tracking headaches you do not want. If you are already juggling several retirement accounts and tempted to tidy up, it is worth reading why I usually counsel keeping an inherited account in its own lane.

The second is timing. The year-of-death withdrawal, the 10-year deadline, the five-year Roth aging window — each has a date attached, and the penalties for missing them are steep. These are deadlines worth putting on a calendar the moment the account changes hands.

The third is forgetting that this is an estate-planning moment as much as a tax one. An inherited IRA is a natural prompt to confirm that your own beneficiary designations are current — because the smoothest inheritances are almost always the ones where someone did this work ahead of time.

The bottom line

Inheriting an IRA can feel both meaningful and overwhelming — a reminder that someone cared for you, wrapped in decisions that carry real tax consequences. The most important thing to know is that you don’t have to sort them out alone, and you rarely need to act in a hurry. The early deadlines matter, but most of the choices reward a measured, tax-aware approach over a fast one.

If you’ve recently inherited a retirement account — or you’re the one doing the planning and want to make this easier on the people you love — let’s walk through your situation together before any clocks run out. That’s exactly the kind of question I’m here to help you answer.

Part of TAGStone’s Client Questions series. See also: How Do I Give My Kids a Head Start on Investing?

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.

Posted on

Published June 9, 2026

At a Glance

  • Timing is everything. Your Initial Enrollment Period is just seven months around your 65th birthday. Miss it and Part B and Part D surcharges follow you for life.
  • Higher earners, plan ahead. IRMAA surcharges are based on income from two years prior — so decisions before 65 (Roth conversions, capital gains timing) shape what you’ll pay.
  • Medigap vs. Medicare Advantage. For affluent retirees the choice usually turns on access and flexibility over premium — the post lays the trade-offs side by side.

Most people spend decades saving, investing, and planning for retirement. Yet one of the most consequential financial decisions of those years has almost nothing to do with your portfolio. It comes down to a government program, a single birthday, and a deadline you do not want to miss.

The program is Medicare, and the window to enroll opens around your 65th birthday. Signing up on time lets you make full use of the coverage you’ve already paid for — and preserves your flexibility as healthcare becomes a larger line item later in retirement. Here’s what’s worth understanding before that birthday arrives.

The enrollment window — and why timing matters

Medicare was created in 1965 to give older Americans access to affordable healthcare. It isn’t free, but if you or your spouse paid payroll taxes for at least 10 years, you’ve already funded a meaningful share of it — a good reason to claim your benefits as soon as you’re eligible.

Your Initial Enrollment Period runs for seven months: the three months before the month you turn 65, your birthday month, and the three months after. Miss it, and you can face delayed coverage and permanently higher premiums — surcharges designed to discourage people from waiting until they’re sick to sign up. You enroll through the Social Security Administration’s website.

One important exception: if you’re still covered by a current employer’s group health plan (yours or a spouse’s), you may be able to delay enrollment without penalty. Whether that applies depends on the size of the employer and the specifics of the plan, so it’s worth confirming rather than assuming.

The four parts, briefly

Part A — hospital coverage. Covers inpatient hospital stays, skilled nursing care, hospice, and some home healthcare. For most people there’s no monthly premium, because you prepaid it through payroll taxes. You’ll still owe deductibles — $1,736 in 2026 for the first 60 days of a hospital stay, with meaningful copays beyond that. If you’ve paid in over your career, there’s no penalty for delaying Part A — and no real reason to.

Part B — outpatient coverage. Covers doctor visits, the ER, preventive care, lab work, and medical equipment. The standard 2026 premium is $202.90 per month (higher for upper-income households — more on that below), with a $283 annual deductible and a 20% coinsurance on most services. Missing your Initial Enrollment Period adds a permanent 10% surcharge for every full 12 months you delayed.

Part C — Medicare Advantage. Optional plans from private insurers that bundle Parts A and B, often with Part D, and frequently add dental, vision, and hearing. They typically replace Part B’s open-ended 20% coinsurance with fixed copays and a capped annual out-of-pocket maximum. You still pay your Part B premium, plus any additional plan premium — though some Advantage plans charge none.

Part D — prescription drug coverage. Sold through private insurers; the average 2026 premium is about $34.50 per month, with an annual deductible up to $615 depending on the plan. If you already have creditable drug coverage (through a current employer, say), you can delay without penalty. Otherwise, waiting adds a permanent 1% surcharge for every month you go without it.

Medigap: filling the gaps

Medigap policies are supplemental private coverage that pick up out-of-pocket costs left by Parts A and B. They carry higher premiums — sometimes several hundred dollars a month — but they smooth out the unpredictable copays and coinsurance that can otherwise add up.

The timing here is its own trap. Your six-month Medigap enrollment window opens the first month you’re both 65 and enrolled in Part B. Enroll during that window and you cannot be turned down or surcharged for preexisting conditions. Wait, and that protection may disappear. Note, too, that you can have Medigap or Medicare Advantage — not both.

Medigap vs. Medicare Advantage: which fits an affluent retiree?

For families with substantial assets, this choice usually turns on access and flexibility, not the monthly premium. Here’s how the two approaches compare on the factors that tend to matter most at higher levels of wealth:

Feature Medigap (Original Medicare + Supplement) Medicare Advantage (Part C)
Provider access Unrestricted. See any doctor or specialist nationwide that accepts Medicare — no networks. Network-based. Limited to local or regional HMO/PPO networks; a preferred specialist may be out of network.
Care approvals Minimal. Original Medicare rarely requires prior authorization, so physicians drive care decisions. More gatekeeping. Prior authorization is common and can delay specialist care.
Global coverage Usually included. Most Medigap plans cover foreign-travel emergencies up to plan limits. Emergency-only. Typically thin abroad — a gap for frequent international travelers or multi-property owners.
Cost structure Predictable. Higher monthly premium, low cost at the point of care (Plan G still leaves the 2026 Part B deductible of $283). Variable. Lower premium, but copays accrue up to an annual out-of-pocket maximum.
Concierge medicine Compatible. Pairs cleanly with concierge or private-physician memberships. Often friction. Managed-care network rules can conflict with concierge practices.

Comparison reflects how Original Medicare with Medigap and Medicare Advantage generally work; specifics vary by plan. Sources: Medicare.gov; KFF.

For those who prize unrestricted access to specialists and minimal administrative friction — and who can comfortably carry a higher premium — Medigap (often Plan G) tends to be the better fit. Families who prefer a lower premium and don’t mind network rules may still do well with Medicare Advantage. The right answer depends on your health, how much you travel, and how you like to receive care, and it’s worth weighing alongside the rest of your plan.

A note for higher-income households

For many of the families we work with, the standard premiums are only the starting point. Higher-income retirees pay an Income-Related Monthly Adjustment Amount — IRMAA — on top of their Part B and Part D premiums. The surcharge is tiered, and it can add hundreds of dollars a month per spouse at the upper brackets.

The detail that surprises people most: IRMAA looks back two years. Your 2026 premiums are based on the income you reported for 2024. That lag is exactly why the years leading up to 65 matter so much. Decisions about Roth conversions, when to realize capital gains, and how to time large or charitable distributions can ripple into what you pay for Medicare later. It’s one more reason a thoughtful approach to spending and withdrawals pays off, and a conversation worth having well before your enrollment year.

The takeaway

Medicare has a lot of moving parts, and the penalties for getting the timing wrong follow you for life. The good news is that the decisions are manageable with a little preparation. With some advance planning, many retirees can keep their healthcare costs in check even as their medical needs grow — and avoid the avoidable surcharges along the way.

This is one piece of a larger retirement picture that also includes how your accounts are organized and whether your core legal documents are current. If you’re approaching 65 — or helping a parent who is — we’re glad to walk through how Medicare fits into your plan and to coordinate the timing with the rest of your financial life.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.

Posted on

Published April 28, 2026

At a Glance

  • U.S. homeowners premiums are up 24% over three years; some states north of 50%.
  • In the Southeast, post-Helene reinsurance costs are getting passed through even to inland homeowners.
  • Treat your renewal as a financial planning input — re-check coverage, shop carriers, and revisit retirement-geography assumptions.

If you’ve opened your homeowners insurance renewal lately, you’ve probably done a double-take. Premiums are up — sharply — and the pressure isn’t easing. Across the country, homeowners have seen their rates climb by 24% over the past three years, with some states seeing rates climb by more than 50%. As of last summer, insurance now accounts for more than 9% of the average single-family mortgage payment — the highest figure on record.

For families in the Southeast, this is more than a national headline. Hurricane Helene in 2024 left a trail of damage from Florida through eastern Tennessee and western North Carolina, including places that historically didn’t consider themselves catastrophe-prone. Reinsurance costs have followed, and they get passed through to homeowners, whether or not your roof has ever seen a named storm.

Insurance isn’t part of TAGStone’s licensure, and we’re not here to recommend a policy. But where insurance touches your financial plan — your cash flow, your real estate exposure, your retirement geography — it absolutely matters. Here’s how we think about it.

Start with your primary residence

If you’re facing a renewal hike, work the problem from a few angles before you simply pay the new bill.

First, re-read your policy. Coverage levels often haven’t kept pace with rebuild costs, and standard policies don’t cover everything: flood and earthquake are typically separate, and wind exclusions are common in coastal markets. Being under-insured at renewal time is a quieter risk than the sticker shock, but it’s the more expensive one if something happens.

Second, get a fresh quote from another carrier. The market has fragmented — some insurers have pulled out of certain ZIP codes, others are aggressively pricing in markets they want. A good independent insurance broker is worth their fee here.

Third, consider raising your deductible. A higher deductible lowers the premium, but it shifts more risk onto your balance sheet. That trade is worth it only if you’ve actually built — and earmarked — the cash to cover it.

Now consider your real estate investments

If you own rentals, vacation properties, or commercial real estate, rising premiums hit you twice: directly, through your own policy, and indirectly, through tenant economics and property values. Single-family rental investors have already seen carriers tighten in coastal markets. Commercial leases that don’t pass insurance through to tenants are renegotiation candidates at the next reset.

A more strategic question: if you’ve built real estate exposure concentrated in one geography — particularly a coastal or fire-prone one — your “diversified portfolio” may not actually be as diversified as the spreadsheet suggests. Insurance pricing is the market telling you something about correlated risk, and it’s worth listening.

A note on retirement geography

For clients planning to relocate in retirement, insurance cost has quietly become a meaningful line item. Florida’s tax and lifestyle case still pencils for many retirees, but the all-in cost of homeownership there isn’t what it was five years ago. The Carolinas, Georgia coast, and Tennessee mountains have their own evolving risk pictures. None of this rules anywhere out — it just means the “where” question deserves a fresh look in your retirement cash-flow plan.

The bottom line

Insurance is a household expense in name only. In practice, it’s a financial planning input — and a growing one. If your premium is up materially this year, that’s a signal to re-run a few numbers: cash flow, emergency reserve, the cost basis of any property you own, and whether the structure of your real estate exposure still matches your goals.

If you’d like to walk through any of those numbers together, please reach out. Insurance decisions are for your insurance broker — but the rest of the plan is what we do.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.

Posted on

At a Glance

  • Retirement isn’t just financial — it’s psychological. Losing structure, identity and daily rhythm can affect both mental and physical health.
  • Unstructured freedom can backfire. Research links social isolation and loss of purpose to higher risks of dementia, heart disease and premature mortality.
  • Purpose must be designed. A fulfilling retirement requires intentional planning around meaning, relationships, activity and engagement — not just income.

Retirement is often imagined as a well-earned season of freedom—time away from deadlines, schedules, and professional responsibilities. But when the structure that shaped your days for decades suddenly disappears, what replaces it? Endless relaxation may sound appealing, but the reality is often more complex.

Retirement is a major life shift, one that impacts more than just your schedule. It can reshape your sense of identity, daily habits and even your health. In fact, research has shown that retirement can raise the risk of heart disease and other medical issues by up to 40%. The reason? Experts point to a loss of purpose and reduced social connection, both of which can take a toll on mental and physical well-being.

Without a plan for how to spend your time meaningfully, the transition can bring unexpected emotional challenges.

The Risks of Unstructured Retirement

Many retirees begin this new chapter with a “honeymoon phase”—a period marked by the novelty of free time, relaxation or long-awaited travel plans. But this initial high can eventually fade.

When the excitement of sleeping in and checking items off the bucket list wears off, retirees can find themselves facing unexpected emotional challenges. Common struggles include boredom, loss of routine, identity shifts and social isolation. In fact, 24% of older adults are considered to be socially isolated. Isolation can also have a ripple effect on health: It’s associated with a 50% increase in risk of developing dementia and increased risk of premature mortality.

Designing a Retirement with Purpose

To avoid some of the potential pitfalls of an unstructured retirement, it’s important to think carefully—and proactively—about purpose. What do you want this next phase of life to look and feel like? Beyond financial planning, consider how you’ll meet the deeper needs your pre-retirement life—including work and raising kids—may have fulfilled: structure, identity, accomplishment, social connection and a sense of meaning.

What brings you pleasure and meaning? What have you always wanted to try or learn? Pursuing these activities can provide purpose and help ensure retirement’s not just a long vacation, but a rewarding chapter of your life.

Feeling stuck here? Try asking close friends or family what they see light you up. Often, others can reflect back passions or strengths that are hard to see on your own.

Staying Connected and Active

Relationships and physical routines matter more than ever when you retire. Staying active, both physically and socially, offers measurable health benefits. Regular physical activity lowers risks, including the likelihood of dementia, heart disease, stroke and eight types of cancer.

People-centered activity is important, too. Look for ways to stay engaged, whether through volunteering, mentoring, part-time work, creative pursuits or community involvement. Older volunteers, aged 55 and up, who gave 100 hours or more each year were two-thirds less likely to report poor health than non-volunteers.

Spending more time with family is a high priority for many retirees and can be a great way to fulfill social needs. But make sure that vision is shared. Open conversations with loved ones about time together, expectations and boundaries can help align plans and avoid disappointment down the road.

The Retirement Identity Shift

In many ways, it’s hard to define what retirement is. After all, it’s not a single moment but a series of transitions. For instance, rather than an abrupt shift to not working at all, you may consider bridge employment—usually part-time work in a temporary position or as a consultant in your field or in a different industry. This can offer a gradual shift into retirement, providing continued income and engagement as you adjust.

Retirement is not merely about stepping away from work—it is about stepping intentionally into your next season of influence, relationships, and legacy.

As your vision for retirement evolves, keep us in the loop. We’d love to hear what you’re planning—and we’re here to help ensure your financial strategy stays aligned with your goals.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.