What Happens to a Bitcoin IRA When You Die?

When the owner of a bitcoin IRA dies, most heirs other than a spouse must empty the inherited account within ten years under the SECURE Act, and bitcoin held inside an IRA receives no step-up in basis at death. In a Traditional IRA the entire balance reaches heirs as ordinary income, so each dollar arrives as roughly 63 cents at top federal rates. In a Roth it arrives whole, but the ten-year clock still runs. That is the central finding of Onramp's report The Legacy Layer: Bitcoin IRAs & Estate Planning: an IRA is an excellent wrapper for building a bitcoin position and a poor one for passing it on.

Two clocks, kept separate

It helps to think of an IRA as running on two different clocks. The first runs while the owner is alive. A Traditional IRA forces required minimum distributions from age 73. A Roth never does. During those accumulation decades, nothing inside either wrapper is taxed, while a taxable account pays up to 23.8% federal on every realized gain. This is why the IRA earns its place while a position is being built.

The second clock starts at death and applies to both types. Under the SECURE Act final regulations, most heirs other than a spouse must empty an inherited IRA, Traditional or Roth alike, within ten years. What differs between the two is what those distributions cost.

The arithmetic per dollar

The report models this without a price forecast, per dollar of account value at the owner's death, at top federal rates with state taxes excluded.

• Tax while accumulating. Taxable account: Up to 23.8% federal on realized gains; Traditional IRA: 0% inside the wrapper; Roth IRA: 0% inside the wrapper
• Heirs keep, per $1 at death. Taxable account: $1.00 (basis stepped up); Traditional IRA: About $0.63 (taxed as ordinary income); Roth IRA: $1.00 (free of federal income tax)
• Clock on heirs. Taxable account: None; Traditional IRA: 10 years, with annual distributions in years 1 to 9 if death falls on or after the required beginning date; Roth IRA: 10 years
• Step-up in basis at death. Taxable account: Yes; Traditional IRA: No (income in respect of a decedent); Roth IRA: Not applicable
• In the gross estate for the 40% test. Taxable account: Yes; Traditional IRA: Yes; Roth IRA: Yes

Hypothetical, federal only, top rates. Sources: SECURE Act final regulations (July 2024, effective 2025); IRC sections 691 and 1014.

Read across the rows and the pattern is clear. Everything that leaves an inherited Traditional IRA lands in the heirs' taxable income, and where the owner had already reached distribution age, heirs must also draw down in each of years one to nine. Everything that leaves an inherited Roth is free of federal income tax with no annual minimums, but the ten-year deadline still applies. Either way, the Internal Revenue Code sets the schedule on which the bitcoin has to be distributed, rather than the family setting it, on precisely the asset many people bought for multi-generational reasons.

Why the step-up matters so much for bitcoin

Bitcoin is property under IRS Notice 2014-21. Held in a taxable account until death, it takes a stepped-up basis equal to fair market value on the date of death, which eliminates the embedded gain. For an asset that may have appreciated many times over during a long holding period, that step-up can be the single largest tax event in the position's life.

Inside an IRA, that rule does not apply. Bitcoin in a retirement account follows IRA distribution rules instead, which is why the wrapper that was so efficient during accumulation becomes expensive at the moment of transfer. The last row of the table above is worth dwelling on too: all three containers sit inside the gross estate for the 40% federal estate tax test. The tax wrapper changes how income is taxed, not whether the position counts toward the estate.

What this means for planning

None of this argues against holding bitcoin in an IRA. It argues for matching the wrapper to the horizon. An IRA suits the decades when a position is being built. When the goal shifts to transferring the position intact, the tools that matter are beneficiary designation, transfer-on-death titling, trust structures, and in some cases a perpetual dynasty trust, all of which the report walks through in order.

The one variable that should not change as the planning grows more sophisticated is the custody underneath it. The full report explains why, and how the same bitcoin in the same custody can carry every one of those structures without a single point of failure: The Legacy Layer: Bitcoin IRAs & Estate Planning.

Frequently asked questions

Do heirs have to empty an inherited bitcoin IRA?

In most cases, yes. Under the SECURE Act, most beneficiaries other than a spouse must withdraw the entire balance of an inherited IRA, Traditional or Roth, within ten years of the owner's death.

Does bitcoin in an IRA get a step-up in basis at death?

No. Bitcoin inside an IRA follows IRA distribution rules. Bitcoin held in a taxable account until death takes a stepped-up basis to fair market value on the date of death under IRC section 1014.

Is an inherited Roth IRA holding bitcoin taxed?

Distributions from an inherited Roth IRA are generally free of federal income tax, but the ten-year rule still requires the account to be emptied. The balance also counts toward the gross estate for federal estate tax purposes.

How much of a Traditional IRA do heirs actually keep?

At top federal rates, roughly 63 cents per dollar, because the entire balance is taxed as ordinary income when distributed. State taxes would reduce that further.

Related reading

• The Four Ways to Hold Bitcoin in an IRA
• Bitcoin Estate Tax Rules in 2026, in Five Numbers
• Bitcoin Inheritance: A Spare Key Is Not a Deed
• Full report: The Legacy Layer: Bitcoin IRAs & Estate Planning

This article is research and analysis, not a recommendation to adopt any legal or tax structure. Onramp is not a law firm, an accounting firm or a tax practice, and nothing here is legal, tax, accounting or investment advice. Tax figures are federal, assume top rates, exclude state taxes, are hypothetical, are current as of August 2026, and are subject to change. Consult your own attorney, accountant and financial advisor before acting. Bitcoin is a volatile asset and its price can fall as well as rise.