Inheriting an IRA used to be a lot simpler. You’d get the account, maybe "stretch" the payments over your whole life, and let that tax-advantaged growth ride for decades. Those days are gone. If you've been searching for an inherited IRA RMD calculator Fidelity provides, you've probably realized that the math has become a bit of a nightmare thanks to the SECURE Act and its successor, SECURE 2.0.
Honestly, the IRS took a relatively straightforward system and turned it into a logic puzzle. Now, whether you have to take money out—and how much—depends entirely on a bunch of variables: when the original owner died, how old they were, and exactly what your relationship was to them.
Why Everyone is Confused About Inherited RMDs Right Now
For a few years, the IRS basically hit the "pause" button. Because the rules changed so drastically in 2020, and then the guidance was so murky, they waived penalties for missed Required Minimum Distributions (RMDs) for many beneficiaries. But that grace period is over. As of 2025 and moving into 2026, the "10-year rule" is in full effect, and for many, it comes with an annual withdrawal requirement you might not have expected.
Basically, if you inherited an IRA from someone who had already started taking their own RMDs, you can't just wait until year ten to empty the account. You have to take "at least a little" every year.
The 10-Year Rule vs. The Life Expectancy Rule
If you aren't a spouse, you likely fall into one of two buckets. Most people are "Designated Beneficiaries." This group includes adult children, grandkids, and friends. If you're in this camp, you generally have to empty the entire account by December 31 of the year containing the 10th anniversary of the owner's death.
🔗 Read more: The Trump South Korea Tariff Deal: What Most People Get Wrong
But here’s the kicker.
- If the owner died before their Required Beginning Date (RBD): You don't have annual RMDs. You just have to clear the balance by year ten.
- If the owner died after their RBD: You must take annual RMDs in years one through nine, based on your own life expectancy, and then pull the rest out in year ten.
Then there’s the "Eligible Designated Beneficiary" (EDB). This is a special club for spouses, minor children of the owner, the chronically ill or disabled, and people not more than ten years younger than the deceased. If you're an EDB, you might still be able to use the old-school life expectancy method, which lets you take smaller bites out of the account over a much longer period.
How the Inherited IRA RMD Calculator Fidelity Tool Works
Fidelity's tool is pretty robust, but it isn't a magic wand. You have to feed it the right data. To get an accurate number for 2026, you're going to need the account balance as of December 31, 2025.
The calculator basically looks at that year-end balance and divides it by a "life expectancy factor" found in the IRS Single Life Expectancy Table. If you’re using the inherited IRA RMD calculator Fidelity offers, the process usually looks like this:
- You log in or use the guest version of their calculator.
- You enter the fair market value of the account from the end of the previous year.
- You plug in your birthdate and the original owner’s birthdate.
- You specify the date of the owner's death.
- The tool spits out a number.
It sounds easy, but the "factor" changes every year. You don't just look up a new number in the table every time. Instead, you find your factor for the first year you were required to take a distribution, and then for every year after that, you subtract 1.0. This is called "fixed-term" reduction. If you mess this up, you either pay too much in taxes or, worse, get hit with a 25% penalty for not taking enough.
The Problem With Multi-Generational Inheritances
Suppose you inherited an IRA that was already an inherited IRA. This happens more often than you'd think. Maybe your mom inherited your grandfather's IRA and then she passed away. In this scenario, the 10-year clock usually doesn't reset. You’re often stuck with whatever timeline she was on. Fidelity’s calculator can handle some of this, but if the paperwork wasn't perfectly tracked, you might need to dig through old statements to find the original "starting" factor.
Strategies for 2026 Distributions
Just because the calculator says you must take out $5,000 doesn't mean you should only take out $5,000. Taxes are the biggest enemy here.
📖 Related: Jenn Herman Books: Why Her Instagram Strategy Still Works
If you have a massive IRA and you're forced to empty it in ten years, taking only the minimum in years one through nine could leave you with a "tax bomb" in year ten. Imagine a $500,000 account growing to $800,000 over a decade. If you pull that whole $800,000 out in a single year, you'll likely be pushed into the highest tax bracket.
Many savvy investors use the Fidelity tool to find the floor—the absolute minimum—but then they intentionally take more. They try to "level out" their income. If you know you're in a lower tax bracket this year because you took a sabbatical or had lower business earnings, it might make sense to drain more of the inherited IRA now at a 12% or 22% rate rather than waiting.
What if you have multiple accounts?
If you inherited three different IRAs from the same person, you can actually calculate the RMD for each but take the total amount from just one of them. This is a huge help for portfolio management. You can leave the account with the best investment options alone and drain the one that’s stuck in high-fee funds.
However, you cannot satisfy an RMD for an inherited Traditional IRA by taking money out of your own personal IRA. They are separate silos in the eyes of the IRS.
Common Pitfalls to Avoid
I've seen people get burned because they forgot the "Year of Death" RMD. If the original owner was supposed to take a distribution in the year they died but didn't finish it, the beneficiary has to take it. That money counts toward the owner's RMD, but it’s taxed to the beneficiary.
Another weird one? Roth IRAs. You don't have to take RMDs from your own Roth IRA, but you do have to empty an inherited Roth IRA within ten years. The good news is that the withdrawals are usually tax-free. But if you leave the money in there for 11 years, you'll still face penalties, even if no tax was due.
🔗 Read more: TLC Plates New York: What Most People Get Wrong About Getting on the Road
Actionable Steps for Beneficiaries
Don't wait until December 2026 to figure this out. The end of the year is when everyone is scrambling, and if you need to sell assets to cover the distribution, you don't want to be forced to sell during a market dip on December 29th.
- Gather your docs: Find the December 31, 2025, statement for the inherited account.
- Verify the status: Was the original owner already taking RMDs? This is the "on/off" switch for your annual requirement.
- Run the math: Use the inherited IRA RMD calculator Fidelity provides to get your baseline number.
- Check your tax bracket: Talk to a pro or use a tax estimator to see if taking the minimum is actually the best move for your long-term wealth.
- Set up automation: Fidelity allows you to automate these withdrawals so you don't have to remember to do it every year.
By staying ahead of the 10-year clock, you can avoid the 25% excise tax and keep more of the legacy your loved one left behind. Just remember that the rules are still evolving, and staying in touch with a tax advisor is the only way to be 100% sure you're compliant.