Cross-Border Inherited IRA Calculator — Methodology

How This Calculator Works

For a beneficiary who is a non-resident alien (NRA) of the US, distributions from an inherited traditional IRA are generally subject to flat US withholding rather than the graduated income tax brackets. This calculator grows the inherited balance to the current year, spreads it evenly over the years left under the 10-year rule, and applies the withholding rate that fits your country of residence and paperwork.

It also shows how much withholding a tax treaty saves compared with the 30% default.

If you say you are not a non-resident alien, the page shows no treaty savings. Treaty withholding rates apply to non-resident aliens (IRC §1441, IRS Publication 515). A US resident reports a traditional inherited IRA withdrawal as ordinary income on a US return (IRS Publication 590-B), so the page shows the amounts paid out before that income tax. The “Total Net Received” figure for a non-resident is after US withholding only; your home country may tax the same income.

Inputs and Assumptions

• Balance at date of death and year of death: The balance is grown at your expected return from the year of death to the current year.
• Account type: Traditional or Roth.
• Country of residence: Looked up in the calculator's treaty table (19 countries). Any other country is treated as having no treaty.
• Mexico only, where the IRA owner lived: The US-Mexico treaty exempts a pension only if it was earned by someone living in Mexico (Article 19(1)(a)). If the owner lived in the US, the treaty does not apply and the 30% default is used. Unanswered counts as the US.
• NRA status and ITIN: Whether you are a non-resident alien, and whether you have a taxpayer ID (a US ITIN, or a tax ID from your country of residence) to claim treaty benefits on Form W-8BEN.
• Expected return: Applied each year to the remaining balance.

Assumptions: you are a non-spouse designated beneficiary subject to the 10-year rule, and you take equal annual distributions.

Formula

deadline       = yearOfDeath + 10        // 31 Dec of the 10th year
yearsRemaining = max(0, deadline − currentYear + 1)   // the deadline year counts (at least 1)
balanceNow     = balanceAtDeath × (1 + r)^(currentYear − yearOfDeath)

// Level annual payment that empties the account over n years
pmt = balanceNow × r(1+r)^n / ((1+r)^n − 1)      (balance / n if r = 0)
final year: distribute whatever remains

withholdingRate =
  0                      Roth, or not an NRA
  treaty rate            treaty country AND (ITIN or home-country tax ID)
                         AND (Mexico only) the owner lived in Mexico
                         yearly rate when n > 1; one-payment rate when n = 1
  30%                    otherwise (IRC §1441 default)

withheld   = distribution × withholdingRate
treatySave = Σ distribution × 30% − Σ withheld

Data Sources

• Internal Revenue Code §1441 and IRS Publication 515 — 30% withholding on US-source pension and annuity income paid to non-resident aliens, absent a treaty reduction.
• IRS Publication 901 and IRS Tax Treaty Table 1 — treaty provisions on pensions and annuities.
• IRS "United States income tax treaties - A to Z" — which countries have a US income tax treaty.
• SECURE Act of 2019, §401, and IRS Publication 590-B — the 10-year rule for designated beneficiaries.
• IRS Form W-8BEN and Form W-7 instructions — claiming treaty benefits and applying for an ITIN.
• Each treaty's pension article, its protocols and the US Treasury Technical Explanations — reviewed in October 2026 for how each treaty treats a single payment of the whole balance. Where IRS Tax Treaty Table 1 lists a lower rate than the treaty text allows, the calculator follows the treaty text and says so in the country's note.

Treaty Rates Used

Yearly withdrawals use the first rate. When one year is left, the whole balance comes out in one payment and the second rate applies.

Limitations

• Check your treaty rate. The treaty rates in the calculator are our reading of each treaty's pension article. Treaties treat lump sums, periodic payments and IRA distributions differently, and the right rate depends on the facts. Confirm yours against IRS Tax Treaty Table 1 or with an adviser before relying on it.
• Withholding is treated as the final US tax. In practice an NRA may need to file Form 1040-NR, and withholding can differ from the tax finally due.
• Tax in your country of residence is not modelled. Many treaties exempt the distribution from US tax precisely because your home country taxes it.
• Eligible designated beneficiaries (a surviving spouse, minor child of the owner, disabled or chronically ill beneficiary, or one not more than 10 years younger than the owner) can use life-expectancy payouts instead of the 10-year rule. This is not modelled.
• Where the owner died on or after their required beginning date, annual RMDs are also due in years 1 to 9 of the 10-year period. The schedule never withdraws less than that annual minimum. Because the calculator does not ask for the owner's date of birth, it assumes the minimums apply.
• Roth distributions are treated as fully tax-free, which assumes the Roth five-year holding period has been met.
• Without a taxpayer ID on Form W-8BEN the calculator applies 30% and does not add any further withholding.
• Evenly spread yearly withdrawals are treated as periodic payments, so they get the yearly treaty rate. No treaty defines "periodic", and none addresses inherited IRAs directly; if you take far more in one year than the schedule shows, the one-payment rate is the safer figure.
• Italy's treaty sets conditions written for the employee, so its rate for an heir is not settled. Ireland and Israel give the exemption only on money brought into the country if they tax you on that basis.
• A single constant return is assumed.

Last Updated

October 2026 — Single-payment rates added. With one year left, the whole balance comes out in one payment, and the UK, Canadian, Indian, Australian, South Korean, Israeli and Norwegian treaties do not give their yearly rate to a lump sum, so the calculator now applies 30% there (it had applied the yearly rate, 0% or 15%). Mexico now asks where the IRA owner lived: its treaty covers only pensions earned by a resident of Mexico, so a US owner means 30% on every withdrawal (it had shown 0%).

October 2026 — Methodology page published (the calculator previously linked to the domestic Inherited IRA methodology). Brazil removed from the treaty table: the US has no income tax treaty with Brazil, so Brazil residents fall to the 30% default.