You can move inherited IRA money to your checking account, but the rules depend on who left it to you
If you inherit an IRA, you have options for what to do with the money. Moving it to a regular checking account is possible, but it is not always the best choice, and the process differs depending on whether you inherited from a spouse or from someone else. The IRS has specific rules about inherited IRAs that affect how much you can withdraw and when, and breaking those rules can mean paying taxes and penalties on money you thought was yours.
The short answer: yes, you can move the money to checking. But before you do, you need to understand what happens to the account itself, what taxes you will owe, and whether there is a better way to handle it that leaves you with more money in the end.
Key Takeaways
- You can withdraw inherited IRA money and deposit it into your checking account, but the IRS requires you to follow specific withdrawal rules based on your relationship to the person who died.
- If you inherited from your spouse, you can treat the IRA as your own or keep it as an inherited account, giving you more flexibility than non-spouse beneficiaries have.
- Non-spouse beneficiaries must take required minimum distributions (RMDs) each year based on their age and life expectancy, or face a 25% penalty on the amount they should have withdrawn.
- Withdrawing the entire balance at once triggers income taxes on the full amount in the year you withdraw it, which can push you into a higher tax bracket.
- The inherited IRA itself must remain at a financial institution — you cannot straightforward close it and move all the money to checking without consequences.
What happens to the IRA account when you inherit it
When someone names you as a beneficiary on their IRA, that account does not automatically become yours to do with as you wish. The IRA stays an IRA — it remains at the bank, brokerage, or financial institution where it was held. You become the owner of that inherited IRA account, but you do not own the money in a way that lets you treat it like a regular savings account.
The financial institution holding the inherited IRA will contact you after the account holder dies. They will ask you to provide a death certificate and proof that you are the named beneficiary. Once they confirm your identity, they will retitle the account in your name as beneficiary — for example, "John Smith, as beneficiary of the IRA of Mary Smith, deceased." This retitling is required by law and happens automatically; you do not have to request it.
From that point forward, any money you withdraw from the inherited IRA must go through the account itself. You cannot straightforward transfer the entire balance to checking and close the account without following the IRS rules for your situation.
Inherited IRAs from a spouse versus from anyone else
The IRS treats spouse beneficiaries differently from all other beneficiaries, and this difference matters for how you can access the money. If you inherited from your spouse, you have two main choices: treat the IRA as your own, or keep it as an inherited account.
If you treat the spouse's IRA as your own, you can roll it into an IRA in your name. Once you do this, the inherited IRA rules no longer explore — you follow the same withdrawal rules as if you had opened the account yourself. You can withdraw money whenever you want without penalty (though you will owe income tax on the withdrawal), and you do not have to take required minimum distributions until you reach age 73. This option gives you the most flexibility to move money to your checking account on your own schedule.
If you keep it as an inherited IRA instead, you must take required minimum distributions each year, just like a non-spouse beneficiary. Some spouses choose this route if they do not need the money when ready and want to let it grow tax-deferred longer.
If you inherited from a parent, child, sibling, or anyone other than a spouse, you must keep the account as an inherited IRA. You cannot treat it as your own, and you cannot roll it into your own IRA. This is where the withdrawal rules become stricter.
Required minimum distributions and the 10-year rule
Non-spouse beneficiaries and spouses who keep inherited IRAs must take required minimum distributions (RMDs) each year. An RMD is the minimum amount the IRS requires you to withdraw from the account annually. If you do not take the full RMD, you owe a penalty of 25% on the amount you should have withdrawn but did not.
The amount of your RMD depends on your age and life expectancy. The financial institution holding the inherited IRA will calculate this for you, but you are responsible for making sure the withdrawal happens. You can take the RMD in a lump sum or in smaller amounts throughout the year — as long as the total meets the requirement by December 31.
The rules changed in 2023 for beneficiaries who inherited after December 31, 2022. Most non-spouse beneficiaries now have 10 years to withdraw the entire inherited IRA balance. During those 10 years, you must still take annual RMDs (the amount depends on your age), but you have until the end of the 10th year to withdraw whatever remains. If you inherited before 2023, different rules may explore to you — check with the financial institution or a tax professional about your specific situation.
What happens to your taxes when you withdraw to checking
Every dollar you withdraw from an inherited IRA is treated as income on your tax return for that year. This is true whether the original account holder had already paid taxes on that money or not. The IRA was a tax-deferred account, meaning the money inside grew without being taxed each year — but when you withdraw it, the IRS collects the tax.
If you withdraw $50,000 in a single year, you will owe income tax on that $50,000. Depending on your other income and your tax bracket, this could mean owing thousands of dollars in taxes. If you withdraw the entire inherited IRA balance in one year, you might jump into a higher tax bracket, which means you pay a higher percentage on all your income that year, not just the inherited money.
This is why many beneficiaries choose to take smaller withdrawals over several years rather than moving the entire balance to checking at once. Spreading the withdrawals across multiple years can keep you in a lower tax bracket and reduce the total tax you owe.
The financial institution will not automatically withhold taxes from your inherited IRA withdrawal. You can request withholding, but if you do not, you will owe the full tax amount when you file your return. Some people set aside money from each withdrawal to cover the taxes they know are coming.
The step-by-step process for withdrawing to your checking account
Once the inherited IRA is retitled in your name as beneficiary, you can request a withdrawal. Contact the financial institution holding the account and ask for a withdrawal form. You will need to specify the amount you want to withdraw and the account where you want the money sent — in this case, your checking account.
The institution will process the withdrawal and send the money directly to your checking account, usually within three to five business days. The money will appear as a deposit in your account, and you will receive a tax form (Form 1099-R) at the end of the year showing how much you withdrew. You will report this amount on your tax return.
If you want to withdraw money regularly — say, $5,000 per month — you can set up a standing withdrawal instruction with the financial institution. This lets you take smaller amounts on a schedule rather than requesting each withdrawal individually. This approach can make it easier to manage your cash flow and stay on top of your RMD requirements.
Keep in mind that the inherited IRA account itself must stay open as long as there is money in it. You cannot close the account and move everything to checking without following the withdrawal rules for your situation. If you want to eventually empty the account completely, you have until the end of your 10-year window (if you are a non-spouse beneficiary) or you can withdraw it all at once if you are willing to pay the taxes in that year.
When moving money to checking might not be the best choice
Moving inherited IRA money to your checking account gives you when ready access to the cash, but it also means you lose the tax-deferred growth that the IRA provides. Money sitting in a checking account earns little to no interest, while money left in an inherited IRA can continue to grow through investments.
If you do not need the money right away, leaving it in the inherited IRA and taking only the required minimum distributions each year can help the account grow longer and reduce the total taxes you pay over time. This is especially true if you are young and have many years before you need to access the full balance.
Another consideration: if you inherit a large IRA and move the entire balance to checking in one year, you might owe a significant tax bill. Spreading withdrawals over multiple years is often a better strategy from a tax perspective.
Frequently Asked Questions
Do I have to take the money out of the inherited IRA, or can I leave it there?
You must take required minimum distributions each year if you are a non-spouse beneficiary or a spouse who kept the account as inherited. You cannot straightforward leave the money untouched. However, you do not have to withdraw more than the RMD amount each year unless you want to. If you inherited before 2023, you may have different rules — check with your financial institution.
What if I need all the money right away?
You can withdraw the entire balance and move it to your checking account. You will owe income tax on the full amount in that year, which could be substantial, but there is no rule preventing you from doing this. Consider talking to a tax professional first to understand how much you will owe.
Can I move the inherited IRA to a different bank?
Yes. You can request a direct transfer (also called a trustee-to-trustee transfer) from the current financial institution to a new bank or brokerage. The money moves directly between institutions without going through your hands, so it is not treated as a withdrawal and does not trigger when ready taxes. This is different from withdrawing to your checking account.
What if I inherited an IRA from my parent who was already taking distributions?
The rules depend on when your parent died and what type of IRA it was. If your parent died before their required beginning date (the year they turned 73), you follow one set of rules. If they died after that date, you follow another. The financial institution should explain this to you, but a tax professional can give you clearer guidance on your specific situation.
Will the bank report my withdrawal to the IRS?
Yes. The financial institution will send you a Form 1099-R at the end of the year showing the amount you withdrew. They will also send a copy to the IRS. You must report this amount on your tax return. The IRS uses this form to verify that you reported the withdrawal correctly.