Estate Planning for IRA Holders 2026: What Happens to Your Retirement Account When You Die?

Your IRA does not automatically pass to your heirs the way a bank account does. Without proper planning, the wrong person could inherit your retirement savings — or a large tax bill could consume a significant portion of the account before it reaches your family. Estate planning for IRA holders involves beneficiary designations, understanding SECURE 2.0 distribution rules, and making strategic decisions about which accounts to leave to whom. Here is what you need to know.

Beneficiary Designations: Your Most Important Estate Planning Tool

Unlike most assets in your estate, IRAs pass directly to beneficiaries by contract — outside of your will and outside of probate. This means your will cannot override your IRA beneficiary designation. If your beneficiary form names an ex-spouse and your will says otherwise, the ex-spouse wins. Every IRA owner should review beneficiary designations at least every three to five years and after any major life event: marriage, divorce, birth of a child, or death of a beneficiary.

You should name both a primary beneficiary and one or more contingent (secondary) beneficiaries. If your primary beneficiary predeceases you and you have no contingent beneficiary named, the IRA may pass to your estate — where it must go through probate and loses the option for beneficiaries to stretch distributions over their own lifetimes.

Naming a trust as an IRA beneficiary is possible but introduces complexity. To work correctly, the trust must meet IRS requirements for being a “see-through” or “conduit” trust, or a “accumulation” trust, and must be drafted carefully to avoid accelerating distributions and the associated taxes. Consult an estate planning attorney before naming a trust as an IRA beneficiary.

Inherited IRA Rules Under SECURE 2.0 (2026)

The SECURE Act (2019) and SECURE 2.0 Act (2022) fundamentally changed how beneficiaries must take distributions from inherited IRAs. The landmark change: most non-spouse beneficiaries lost the ability to “stretch” distributions over their own life expectancies. Instead, they must now drain an inherited IRA within 10 years of the original owner’s death.

The 10-year rule applies to most non-spouse beneficiaries who inherit IRAs from owners who died after December 31, 2019. However, there are important exceptions. “Eligible Designated Beneficiaries” (EDBs) can still stretch distributions over their own lifetimes. EDBs include: the surviving spouse, minor children of the original owner (until they reach the age of majority), disabled individuals (as defined by the IRS), chronically ill individuals, and beneficiaries who are not more than 10 years younger than the original owner.

Additionally, if the original owner was already taking RMDs at death (i.e., was past age 73), the IRS now requires that non-spouse beneficiaries take annual distributions during the 10-year period — they cannot wait until year 10 to take everything. The IRS issued final regulations in 2024 confirming this interpretation.

The Roth IRA Advantage for Estate Planning

A Roth IRA is among the most powerful estate planning vehicles available because distributions to heirs are tax-free. If you hold a Roth IRA and pass it to your children, they must drain the account within 10 years under SECURE 2.0 — but every distribution they take is completely tax-free. For a $500,000 inherited Roth IRA, that is $500,000 of tax-free income to your heirs over 10 years, versus a $500,000 traditional IRA that could generate $150,000+ in federal and state income taxes depending on the beneficiary’s bracket.

This is one of the most compelling arguments for Roth conversions late in working life or in the early retirement years. Converting pre-tax traditional IRA funds to a Roth now — even at today’s tax rates — transfers a tax-efficient inheritance to heirs who may face much higher effective rates during their own peak earning years.

Gold IRA and Physical Metals in Your Estate

A Gold IRA introduces additional estate planning considerations. Physical precious metals must be stored in an IRS-approved depository during your lifetime. When you pass away, your beneficiaries inherit the account just like any IRA. They can take distributions of cash (by directing the custodian to sell the metals) or, in some cases, request an in-kind distribution of the physical metals themselves.

Gold held in a Gold IRA does not receive a step-up in cost basis at death the way real estate or brokerage account assets do. Like all IRAs, the full value of the Gold IRA is included in your gross estate for federal estate tax purposes (though most estates are below the $13.61 million 2024 federal exemption). The metals’ gain is not relevant at inheritance for income tax purposes in the same way as taxable accounts — your beneficiary owes income tax on distributions from a traditional Gold IRA, and takes zero basis if the IRA was entirely pre-tax.

If you want to leave specific physical metals to specific heirs, the only way to do that is to own them outright (outside an IRA) — in which case they do get a step-up in cost basis at your death and pass through your estate rather than by beneficiary designation.

Spousal Beneficiary Rules

A surviving spouse has options that no other beneficiary has. If you inherit an IRA from your spouse, you can: (1) treat it as your own IRA — rolling it into your existing IRA and deferring RMDs under your own schedule; (2) remain as a beneficiary of the inherited IRA, which allows penalty-free distributions before age 59½ if you need the funds earlier; or (3) roll it into a new inherited IRA under your name.

For most spouses, rolling the inherited IRA into their own account is the best long-term strategy, as it allows them to name new beneficiaries and delays RMDs until they reach age 73. However, if the surviving spouse is under 59½ and needs income, remaining as a beneficiary temporarily avoids the 10% early withdrawal penalty on distributions taken before they reach that age.

Reducing the Tax Burden on Inherited IRAs

Since most beneficiaries will face income tax on inherited traditional IRA distributions, there are several strategies for managing that burden. Spreading distributions evenly across the 10-year window keeps each year’s taxable income lower than taking a large lump sum. Coordinating inherited IRA distributions with years when the beneficiary has lower income — job loss, parental leave, early retirement — can reduce the effective rate significantly.

Charitable beneficiaries are another option. Naming a charity as the beneficiary of a traditional IRA is particularly tax-efficient: the charity pays no income tax on inherited IRA distributions, whereas a human beneficiary in a high bracket might lose 35%+ to federal taxes. If you want to leave assets to both heirs and charity, consider leaving the traditional IRA to charity (they take it tax-free) and leaving Roth IRAs or stepped-up-basis assets to your heirs.

Frequently Asked Questions

Can my will override my IRA beneficiary designation?

No. IRAs are contractual accounts that pass directly to named beneficiaries, outside of your will and outside of probate. Your beneficiary designation form controls who inherits the IRA, regardless of what your will says. Keeping designations current is essential.

How long do beneficiaries have to withdraw an inherited IRA?

For most non-spouse beneficiaries who inherited an IRA from someone who died after 2019, the 10-year rule applies — the account must be fully distributed by the end of the 10th year after the original owner’s death. Eligible Designated Beneficiaries (spouse, minor children, disabled/chronically ill individuals, and those within 10 years of the decedent’s age) can still use their own life expectancy for distributions.

Is a Roth IRA better than a traditional IRA for estate planning purposes?

For leaving assets to heirs, a Roth IRA is generally superior because beneficiaries receive distributions tax-free. A traditional IRA passes the tax burden to heirs. The trade-off is that you must pay income tax on Roth conversions or Roth contributions now. For many pre-retirees, the Roth conversion math favors converting — especially if heirs will be in high tax brackets when they inherit.

What happens to a Gold IRA when I die?

Your named beneficiaries inherit the Gold IRA and must follow the same SECURE 2.0 distribution rules as any inherited IRA. They can direct the custodian to sell the metals and take cash distributions, or in some cases receive an in-kind distribution of the physical metals. The IRS requires the account to be fully distributed within 10 years for most non-spouse beneficiaries.

Should I name a trust as my IRA beneficiary?

Naming a trust as an IRA beneficiary can be appropriate in specific situations — minor children, beneficiaries with special needs, or spendthrift concerns. However, the trust must meet strict IRS requirements for see-through status to allow individual beneficiaries to use the 10-year rule. Improperly structured trusts can accelerate distributions significantly. Work with an estate planning attorney who specializes in retirement accounts before taking this step.