Parent Died — How to Claim Their Retirement Account as Beneficiary

Your parent died and you just found out you're the named beneficiary on their 401(k) or IRA. A valid beneficiary designation generally transfers the account outside probate. How you take distributions determines how much you'll owe in taxes, and the rules changed significantly under the SECURE Act. Pension survivor benefits follow the plan's terms.

The 10-Year Rule

For a parent who died after December 31, 2019, the SECURE Act's 10-year rule generally applies to a non-spouse adult child who is not an eligible designated beneficiary: the account must be fully distributed by December 31 of the 10th year after the parent's death. A child of the account owner who has not reached age 21, a disabled or chronically ill beneficiary, or a beneficiary no more than 10 years younger than the parent may qualify as an eligible designated beneficiary. A child who qualifies as a minor can use life-expectancy distributions until age 21, then must empty the account by the end of the 10th year after turning 21.

Within that 10-year window, annual required minimum distributions (RMDs) are generally required in years 1–9 if your parent died on or after their required beginning date—the date they had to start taking RMDs. For an IRA owner, the applicable starting age is 70½, 72, 73, or 75, depending on their date of birth. A beneficiary may also need to take any RMD your parent had not withdrawn for the year of death. If your parent died before the required beginning date, no annual RMDs are required before year 10, but the account still must be emptied by the end of year 10. The custodian can confirm the schedule for the specific account.

This matters for taxes. Taxable traditional account withdrawals are generally taxed as ordinary income. If you pull the entire balance in one year, you could move into a higher tax bracket; spreading distributions may reduce that effect, depending on your income and the account rules.

How to Claim the Account

Step 1: Contact the account custodian. This is the financial institution holding the 401(k) or IRA — Fidelity, Vanguard, Schwab, the parent's employer's plan administrator, etc. You'll find the custodian name on statements, or call the parent's HR department if it's an employer plan.

Step 2: Provide documentation. You'll typically need:

• Certified death certificate
• Your government-issued ID
• The account number (if you have it)
• Proof of your identity as the named beneficiary (the custodian has this on file)

Step 3: Ask about account options. Depending on the plan, you may be able to keep the funds in the plan, take a distribution, or transfer eligible assets to an inherited IRA. If you use an inherited IRA, the custodian will title it in your name as beneficiary of your parent. Do not roll the funds into your own IRA — that option is generally only available to surviving spouses.

Step 4: Choose a distribution method. Within the 10-year rule, you decide when and how much to withdraw each year. Some custodians offer automatic distribution schedules; others let you take withdrawals on demand.

401(k) vs. IRA: Different Processes

Employer 401(k) plans may require a lump-sum distribution rather than allowing the money to remain in the plan — it depends on the plan's rules. Ask whether an eligible distribution can be sent directly by trustee-to-trustee transfer to an inherited IRA. A non-spouse beneficiary generally cannot use a 60-day rollover after receiving the money personally; a taxable distribution may have withholding and tax consequences.

Traditional IRAs transfer more smoothly. The custodian retitles the account as an inherited IRA, and you manage distributions from there.

Roth IRAs inherited from a parent are generally subject to the same 10-year deadline for a non-spouse beneficiary. Qualified distributions are tax-free, but if the account's five-year requirement is not met, some earnings may be taxable. Confirm the account's history and distribution options with the custodian before deciding when to withdraw.

What If There's No Named Beneficiary

If your parent didn't name a beneficiary — or if the designation is outdated (naming an ex-spouse, for example) — the plan documents determine the default recipient. That may be the estate, a spouse, or another person, depending on the plan. If the estate is the beneficiary of an IRA, the 10-year rule for designated individuals does not apply: if your parent died before the required beginning date, the IRA generally must be distributed by the end of the fifth year after the year of death; if they died on or after that date, distributions follow your parent's remaining life expectancy. An employer plan may require a faster payout. Ask the custodian for the written beneficiary determination and applicable deadline.

This can add delay and change the tax treatment. If you discover an outdated or missing beneficiary designation, ask the custodian how the plan's default applies; a designation generally cannot be changed after the account holder's death.

Tax Strategy for Young Adults

If you're in your early 20s and earning a relatively low income, you may be in a lower tax bracket than you will be in 10 years. Taking distributions in years when your income is lower may reduce the tax impact, subject to the account's required schedule.

A basic approach: compare how different withdrawal amounts would affect your taxable income. A one-hour consultation with a tax advisor ($200–$400) can help you make that comparison.

Pensions and Annuities

If your parent had a pension or annuity, contact the plan administrator. Survivor benefits depend on the type of pension:

• Joint-and-survivor pension: Payments continue to the surviving beneficiary (usually a spouse, but sometimes a child)
• Life-only pension: Payments stop at death with no survivor benefit
• Period-certain pension: If the parent died during the guaranteed period, remaining payments go to the beneficiary

The plan administrator will tell you what type of pension it was and what, if anything, continues.

The Parental Loss Operations Toolkit includes a retirement account claim checklist and a distribution planning worksheet to help you minimize taxes across the 10-year window.