Inherited IRAs: The Behavioral Side of the 10-Year Rule

By Sara V. Solano, CRPC®, BFA™

LodeStar Advisory Group LLC

In earlier discussions, we outlined the structure of inherited IRAs and explored how withdrawals can be managed within the 10-year rule.

The framework is clear. The strategies are defined.

And yet, in practice, many beneficiaries still find themselves facing unnecessary tax consequences.

Not because they lacked information but because decision-making over time is rarely purely rational.

The Real Challenge Isn’t the Rules

An inherited IRA is NOT a one-time decision.

It is a process that unfolds over a decade.

That time horizon creates flexibility.

But it also introduces something less visible:

Behavior.

Ten years can feel like a long time.

Until it isn’t.

In the early years, there was little urgency.

Other priorities take precedence. Decisions are deferred.

Over time, those small delays begin to compound.

What once felt flexible becomes compressed.

And by the later years, the window for thoughtful planning has narrowed.

Where Good Plans Break Down

Even with a clear strategy, there are several behavioral tendencies that quietly shape outcomes.

The “I’ll Deal With It Later” Effect

The absence of immediate pressure can lead to inaction.

Years pass with minimal withdrawals.Then, as the deadline approaches, decisions are made quickly and under constraint.

This often results in larger distributions concentrated in fewer years and, in many cases, higher tax exposure than necessary.

Waiting for the “Right Time”

Market conditions can influence decision-making more than intended.

When markets decline, there is hesitation to withdraw.When markets rise, there is a tendency to wait for further gains.

In both cases, timing becomes reactive rather than structured.

The result is not just missed opportunities but an accumulation of decisions pushed into the future.

Emotional Attachment to the Account

Inherited assets often carry meaning beyond their financial value.

For many, the account represents a parent’s lifetime of work.

A legacy. A connection.

This can make withdrawals feel uncomfortable, even when they are appropriate.

In some cases, avoiding the decision altogether feels easier than engaging with it.

But over time, inaction can create outcomes that are inconsistent with the original intent of preserving value.

Too Many Choices, Not Enough Structure

The 10-year rule provides flexibility.

But flexibility without structure can lead to uncertainty.

Should withdrawals be taken evenly?

Should they be aligned with income fluctuations?

Should they be delayed?

Without a clear framework, even well-informed individuals can hesitate.

And hesitation, over time, becomes its own form of decision-making.

The Role of Structure

Effective planning is not just about identifying the optimal strategy.

It is about creating a structure that can be followed consistently.

A well-designed plan reduces the need for repeated decision-making.

It removes the influence of short-term emotions.

It creates a rhythm that supports long-term outcomes.

Over a 10-year period, this consistency often matters more than any single decision.

A Different Way to Think About It

An inherited IRA is often viewed through a tax lens.

And while tax efficiency is important, it is only part of the equation.

The greater opportunity lies in approaching the account with intention:

• Viewing the 10-year window as a planning horizon, not a deadline

• Establishing a clear distribution framework early

• Allowing decisions to be guided by structure, not circumstance

Final Thoughts

Across this series, we’ve explored the rules that govern inherited IRAs, the strategies that can help manage them, and the behavioral factors that ultimately shape their outcomes.

Each layer matters.

But over time, it is often the behavioral side that determines whether a good plan is carried through or quietly set aside.

An inherited IRA is not just a financial asset.

It is a series of decisions made over time.

The rules provide the framework.

Strategy provides direction.

But the outcome is shaped by something more subtle.

Because over a decade, it is not the rules or even the strategy that define the result

it is the consistency of the decisions behind them.

__________________________________________________________________________________ Sara V. Solano, CRPC®,  BFA™  is a Wealth Advisor who specializes in providing behavioral financial advice.

Disclosure: LodeStar Advisory Group LLC is an independent Registered Investment Adviser (RIA) headquartered in Naples, Florida. The above commentary does not constitute individual investment advice. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.