What Happens to a 401(k) or IRA When Someone Dies

Retirement accounts don't pass through a will the way most other property does — whoever is named as beneficiary on file with the plan administrator controls the account, full stop. Here's how that plays out for spouses and for everyone else.

The beneficiary designation controls — not the will

A 401(k) or IRA passes directly to whoever is named as beneficiary on the account itself, bypassing probate and overriding anything the will says. If the beneficiary form was never updated after a divorce or other life change, the account still goes to whoever is named on it — which is exactly why periodically reviewing beneficiary designations matters. If no beneficiary is named at all, the account typically passes to the deceased's estate and goes through probate instead.

Surviving spouses have the most flexibility

A surviving spouse who inherits a 401(k) or IRA can generally roll it into their own IRA and treat it as their own going forward, or keep it as an inherited account — each option has different rules for when withdrawals are required.

Non-spouse beneficiaries: the SECURE Act's 10-year rule

For account owners who died after December 31, 2019, the SECURE Act generally requires most non-spouse beneficiaries to withdraw the entire inherited balance within 10 years of the death, according to the IRS. A small group of "eligible designated beneficiaries" — minor children of the account owner, disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the account owner — are exempt from the 10-year rule and can generally stretch distributions over their own life expectancy instead.

Roth accounts follow the same distribution deadline

Inherited Roth IRAs and Roth 401(k)s are still subject to the same 10-year distribution rule for beneficiaries who don't qualify for an exception — the tax treatment on withdrawals differs from a traditional account, but the deadline to empty the account does not.

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Frequently asked questions

Do I owe taxes on money I inherit from a 401(k) or IRA?

Generally yes for a traditional account — withdrawals are taxed as ordinary income to the beneficiary. Qualified withdrawals from an inherited Roth account are generally tax-free. Because the details depend on your specific situation, this is a good question to bring to a tax advisor rather than rely on general guidance for.

What if the beneficiary form still names an ex-spouse or someone who died first?

The plan administrator will typically follow whatever the beneficiary form says, regardless of the will or current family situation — this is one of the most common and costly estate-planning oversights. If you're managing your own accounts, review beneficiary designations after any major life change.