Inherited retirement account ten-year schedule

What the calculator shows

The calculator takes an inherited retirement account balance and spreads it across ten equal yearly withdrawals. Each withdrawal is the same size, so the schedule shows a flat stream of money leaving the account until the balance reaches zero. The reader enters the balance, a growth rate and a flat income tax rate, all as assumptions.

Alongside the withdrawal amount, the calculator shows the running balance after each year and the total taken out over the full span. It also applies the flat tax rate to that total to produce an illustrative income tax figure. Both the growth rate and the tax rate are sample figures that the reader replaces with their own numbers.

The details of that rule, including whether yearly withdrawals are required inside the window, vary by situation and change over time, so the calculator leaves them out of its arithmetic. The level pattern is only one of many ways to spread withdrawals across the window.

How the arithmetic works

The level withdrawal comes from a standard annuity-style formula. Step one is to take the balance and multiply it by the yearly growth rate. Step two is to compute one plus the growth rate, raise it to the power of negative ten, and subtract the result from one. Step three is to divide the figure from step one by the figure from step two, which gives the level end-of-year payment that empties the account in ten years.

With zero growth the formula above cannot be used directly, because the division would involve zero. In that case the withdrawal is simply the balance divided by ten. Each year then removes one tenth of the starting balance, and the account reaches zero at the end of the tenth year.

Income tax is the total withdrawn multiplied by the flat sample rate. Because the withdrawals are level, the total equals ten times the single withdrawal. A real return would apply graduated brackets and other income, so the flat rate is a simplification that keeps the arithmetic visible.

Assumptions and limits

Eligible designated beneficiaries and accounts with no designated beneficiary follow different rules that this schedule does not model.

How to read the result

A higher assumed growth rate raises the yearly withdrawal, since the account earns more during the drawdown. A lower rate shrinks the withdrawal toward one tenth of the balance. Comparing the two outputs shows how much of the schedule depends on an assumption nobody can know in advance.

The total taken out is larger than the starting balance whenever growth is positive, because the extra comes from earnings inside the account. The gap between the total and the balance is the growth the assumption credits. Reading the total beside the balance separates the inherited amount from the assumed earnings.

The tax figure is an illustration of scale, not a forecast of any bill. A different rate moves it in a straight line, so doubling the rate doubles the figure. Real outcomes depend on other income, filing status and rules that change, none of which appear in the inputs.

Where owners get surprised

Owners often assume the ten-year window means the money can sit untouched until the last day. Depending on the type of heir and the type of account, yearly withdrawals may be required inside the window, and the level schedule here is only one pattern among many. The rules on that point differ by case and are revised over time, so current official sources hold the answer.

Another surprise is the way a lump of income can push a year into a higher bracket. The flat rate in the calculator hides that effect, which is why the tax figure is only a rough marker.

Growth is the third surprise. The assumed rate is a straight line, but actual markets move up and down, and a bad early year shrinks the balance left for later withdrawals. A level schedule set at the start does not adjust to those swings, so the account could run out before the scheduled withdrawals end or have money left afterward.

Common questions