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Inherited IRA Calculator

The SECURE Act killed the stretch IRA. Adult children who inherit a Traditional IRA must drain it within ten years — and pay ordinary income tax on every dollar. This tool shows you what that tax bill looks like, and what it would look like if the same dollars had been converted to Roth first.

Before 2020, a non-spouse heir who inherited a Traditional IRA could stretch the withdrawals over their own life expectancy — often decades of tax-deferred compounding before the IRS got its full share. The SECURE Act of 2019 collapsed that to a hard 10-year window: every dollar of an inherited Traditional IRA must come out by the end of year ten, and each withdrawal is taxed as ordinary income at the heir’s marginal rate.

For an adult child in their highest-earning decade, that concentration of taxable income usually pushes them into the 32% or 35% federal bracket on top of whatever they already make. The math is brutal: a $2 million Traditional inheritance can leave the heir with $1.3M after federal tax, before state.

The Roth alternative

The same dollars, if converted to Roth before the original owner passes, transfer to the heir tax-free. The 10-year drain rule still applies — but withdrawals from an inherited Roth are not income-taxed to the heir. The conversion tax was the cost, and it was paid at the original owner’s rate (often lower than the heir’s).

For households where the next generation will be in a higher tax bracket than the original IRA owner, the Roth conversion math usually pencils. The difference frequently runs into hundreds of thousands of dollars over the 10-year inherited drawdown window.

When the math goes the other way

  • The heir will be in a lower bracket than the owner. A retired beneficiary, a stay-at-home parent, or a child in school during the drawdown years can absorb the inherited Traditional distributions at a lower rate than the owner would have paid to convert. The conversion path costs more than it saves.
  • The heir plans to give the IRA to charity. A qualified charitable distribution from an inherited IRA passes the dollars to a 501(c)(3) without anyone paying income tax. If that’s the plan, Roth conversion is wasted.
  • The owner needs the cash to pay the conversion tax. If the only way to fund the conversion is to tap the IRA itself, the math flips negative fast. Conversion taxes work when they’re paid from outside the IRA.

What this calculator does

Enter your heir’s current age, the IRA balance they’d inherit today, their expected marginal tax rate, an assumed return, and the original owner’s marginal rate (for the conversion comparison). The tool projects:

  • 10-year total withdrawals on the Traditional path
  • Federal tax bill on those withdrawals at the heir’s rate
  • After-tax dollars the heir actually keeps
  • What the heir would receive instead if the owner pre-converted
  • Net benefit (or cost) of the pre-conversion strategy

A word of honesty: the model assumes even 10-year drawdowns and constant tax rates. Real heirs optimize the schedule against their income trajectory (low-income years get bigger withdrawals, high-income years smaller ones). A multi-year coordinated Roth conversion ladder — sized against the original owner’s bracket, IRMAA cliffs, and Social Security taxation simultaneously — is the kind of estate-planning work we do at T&T Capital Management for households with $500K+ of investable assets. But the numbers below are a clear-eyed first look.

Run yours.

Math runs in ~1 second. We don’t store your inputs.

How this works: 10-year drawdown projection per SECURE Act inherited-IRA rules (non-spouse heir, no spousal rollover exception). Withdrawals are even-share by remaining years — year 1 takes 1/10th of the grown balance, year 10 drains whatever’s left. Federal tax applied at the heir’s stated marginal rate to the Traditional path; the Roth path is tax-free to the heir. The one-time conversion cost shown is what the original owner would have paid at their stated marginal rate to convert the full balance — an apples-to-apples comparison number, not a multi-year ladder optimization.

T&T Capital Management is an SEC-registered investment adviser. To talk with us about your estate plan, schedule a free consultation.