Non-designated beneficiary
Inherited IRA 5-Year Rule (Non-Designated Beneficiaries)
An estate, a charity, or a trust that does not qualify as a "see-through" trust is a non-designated beneficiary. If the owner died before their required beginning date, the account must be emptied by December 31 of the fifth year after death (the 5-year rule). If the owner died on or after that date, the account instead uses the owner’s own remaining life expectancy, reduced by 1 each year — commonly called the "ghost rule" or "ghost life expectancy" rule.
What to know first
- A non-designated beneficiary is not a "no beneficiary" edge case — it includes any estate, most charities, and any trust that fails the see-through trust requirements.
- The 5-year rule applies only when the owner died BEFORE their required beginning date (or for Roth IRAs, which have no lifetime RBD).
- The "ghost rule" applies when the owner died ON OR AFTER their required beginning date: annual RMDs continue using the deceased owner’s own Single Life Table factor.
- Neither regime is affected by the SECURE Act 10-year rule — that rule applies only to DESIGNATED beneficiaries.
The 5-year rule
When a Traditional IRA owner dies before their required beginning date and leaves the account to a non-designated beneficiary — commonly the estate, because no beneficiary form was filed, or a trust that does not meet the see-through requirements — the account must be fully distributed by December 31 of the fifth calendar year after death. There is no annual minimum during years 1-4; the beneficiary can take distributions on any schedule as long as the account is empty by the deadline.
The same 5-year rule applies to a Roth IRA left to a non-designated beneficiary, because a Roth IRA owner is always treated as dying before the required beginning date (Roth IRAs have no lifetime RMDs).
The "ghost rule" for a post-RBD Traditional IRA
If a Traditional IRA owner had already reached their required beginning date before death, a non-designated beneficiary does not get the 5-year rule. Instead, distributions continue using what would have been the DECEASED OWNER’S OWN remaining life expectancy from the Single Life Table — as if the owner were still alive, reducing that same factor by 1 each following year until it reaches the account’s exhaustion. This is informally called the "ghost rule" because it uses a factor for someone no longer living.
Because the owner’s remaining Single Life Table factor is often already short (especially for owners who died at an advanced age), the ghost rule can force distributions out considerably faster than a 10-year designated-beneficiary schedule would.
Model your inherited IRA deadline
Use the inherited IRA calculator to compare the 10-year rule, annual beneficiary RMDs, and eligible designated beneficiary schedules.
Open the inherited IRA calculatorFrequently asked questions
Is an estate always a non-designated beneficiary?
Yes. An estate can never be a "designated beneficiary" under the tax rules, regardless of who ultimately receives the IRA assets through probate, so the 5-year or ghost rule always applies when the estate is named (or defaults to being) the beneficiary.
Can a trust avoid non-designated-beneficiary treatment?
Yes, if it qualifies as a "see-through" trust under the applicable Treasury regulations — generally requiring the trust to be valid under state law, irrevocable (or become so at death), have identifiable individual beneficiaries, and provide the required documentation to the IRA custodian by the deadline. A trust that fails any requirement is treated as having no designated beneficiary.
Sources
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