The 90-Day IRA Inheritance Rollover Window

TL;DR: When you inherit an IRA, you have 90 days to execute a rollover to your own account before the custodian automatically transfers it to their default holding account. Missing this deadline costs you control, flexibility, and ongoing fees. The window starts the moment the account transfers to you, not when you're notified. Act within 60 days to be safe.

What Happens to an Inherited IRA in the First 90 Days?

When you inherit an IRA, the custodian has 90 days to transfer it to your account or a rollover IRA in your name. If you don't initiate a rollover within that window, the custodian will move the account to their default holding account. This isn't a penalty, but it's a loss of control. You're no longer managing the inheritance on your terms.

The 90 days starts when the account is transferred to you, not when you receive the paperwork. Most people don't know this. They assume the clock starts when they open the notification email. It doesn't. By the time many beneficiaries realize what happened, 60 days have already passed.

Why Does Your Custodian Get Your Money If You Miss the Deadline?

Custodians like Schwab, Fidelity, and Vanguard are the registered default holding places for inherited IRAs because the IRS requires the money to stay in an IRA. When no action is taken, the custodian defaults to their own holding account where they can charge maintenance fees, offer their own investment options, and keep the relationship. This benefits them, not you.

The default happens automatically. No one calls you first. No one sends a final warning. The deadline passes quietly and your inherited IRA is now sitting in their default account with their fee structure, their investment universe, and their terms. You lost the chance to move it to a custodian of your choice.

If the inherited IRA was substantial, this could mean real money in fees every year just because you missed the window by days.

How Do You Actually Execute a Rollover Within 90 Days?

The rollover process takes 3 main steps. First, open a new IRA in your name at the custodian of your choice, or use your existing brokerage if you already have one. Second, contact the original custodian holding the inherited IRA and request a direct rollover to the new account. Third, wait 5 to 10 business days for the transfer to clear. That's it.

Direct rollovers are better than indirect rollovers. A direct rollover means the custodian sends the money straight to your new account. An indirect rollover means they send it to you, and you're responsible for depositing it within 60 days. Most people miss this deadline. The direct option removes the risk.

Start the process on day 1 if possible. Don't wait until day 80. Custodian processing times vary. Some take 5 business days. Some take 15. If you hit a delay, you want a buffer before the deadline.

What Taxes Do You Owe on an Inherited IRA Rollover?

The rollover itself is not a taxable event. You're not taking a distribution. You're moving the money from one IRA to another. No taxes are due just because you executed the rollover within 90 days. The account keeps its status as a pre-tax or Roth IRA depending on what it was originally.

Taxes come later, when you take distributions. If the inherited IRA was a traditional IRA, distributions are taxed as ordinary income. If it was a Roth, distributions of earnings are tax-free. The SECURE Act requires most beneficiaries to drain inherited IRAs within 10 years, which is when your actual tax liability kicks in.

The 90-day rollover window is about moving the account, not about triggering taxes. As long as you roll it over instead of withdrawing it, you pay no taxes during the transfer.

Can You Still Move an IRA Out After Missing the Deadline?

Once the custodian moves your inherited IRA to their default account after 90 days, you can still transfer it out. It's not frozen or lost. You call the custodian, open an account elsewhere, and request a transfer just like any other account move. This takes another 5 to 10 business days.

The problem is the fees you've already paid while the account sat in their default holding account. If your custodian charged quarterly maintenance fees, you've already lost that money by the time you initiate the transfer out. Over several years, that adds up.

There's no penalty for missing the deadline. You just lose money to fees and lose time getting to your preferred custodian. If you're managing inherited IRAs for clients or family, this is a coordination issue that costs real dollars.

What's Your Action Plan if You Just Inherited an IRA?

Day 1: Confirm you received the inherited IRA transfer notification. Call the original custodian and ask the exact date the account was transferred to you. This is your start date for the 90-day window. Mark day 60 and day 85 on your calendar as action triggers.

Day 30 to 45: Research custodian options. If you have existing accounts at Fidelity, Vanguard, or your bank, see if rolling to that account makes sense. Call a few custodians and ask about their inherited IRA fees and account requirements. Decide where the money should go.

Day 50 to 60: Open the new IRA account at your chosen custodian. This takes 1 to 3 business days. Get the account number and wire instructions.

Day 60 to 70: Call the original custodian and request a direct rollover to your new account. Confirm they received the request and ask for an estimated completion date. Verify the amount being rolled over.

Day 85 to 90: Log into your new account and confirm the money arrived. If not, follow up with the original custodian immediately. You still have buffer days before the automatic default happens.

This timeline gives you 30 days of buffer. Most rollovers clear in 7 to 10 business days. If something goes wrong, you have time to fix it before the deadline passes.

The inherited IRA rollover is straightforward if you act fast. The pain comes from inaction. Many beneficiaries lose control of inherited accounts every year simply because they didn't know the window existed or they thought they had more time.

If you're a financial advisor, this is a conversation to have with clients before they inherit an IRA. If you're managing money for someone who just inherited, initiate the rollover conversation immediately. The cost of missing the window is real and preventable.

Key takeaways: The 90-day window starts the moment the account transfers to you, not when you're notified. Direct rollovers are safer than indirect ones. Missing the deadline doesn't trap your money, but it costs you in fees and lost control. Act by day 60 to give yourself a 30-day buffer before the automatic default.

If you're handling this for clients and want to build a system that catches inherited account transfers before deadlines slip, book a call with our team. We help financial advisors and wealth managers build infrastructure that doesn't let critical deadlines disappear.