Inherited IRA Rules: The 10-Year Rule Explained (2025–2026)

The rules for inherited IRAs changed dramatically in 2020 — and then again in 2024, when the IRS issued final regulations that caught many beneficiaries off-guard. If you inherited an IRA from a parent, grandparent, or other non-spouse, the "stretch IRA" you may have heard about is largely gone. In its place is the 10-year rule, with annual distribution requirements that depend on when and how old the original account owner died. This guide explains exactly what the rules are, who they apply to, and what the IRS finalised regulations require starting in 2025.

What Changed: The End of the Stretch IRA

Before 2020, inherited IRA rules were relatively straightforward: non-spouse beneficiaries could "stretch" required minimum distributions over their own life expectancy — potentially spreading withdrawals and tax payments over 20, 30, or even 40 years. This was known as the stretch IRA, and it was a powerful estate planning tool for passing retirement wealth across generations.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law on December 20, 2019 and effective January 1, 2020, ended the stretch IRA for most beneficiaries. It was replaced with the 10-year rule: the account must be fully distributed by December 31 of the 10th year after the year of the original owner's death.

The SECURE 2.0 Act, signed on December 29, 2022, made further adjustments — primarily to RMD starting ages and penalty amounts — but did not change the 10-year rule itself.

Then, in July 2024, the IRS issued long-awaited final regulations (Treasury Decision 10001) that clarified one of the most confusing aspects of the law: whether beneficiaries subject to the 10-year rule also had to take annual distributions during those 10 years. The answer, as discussed below, depends on the age of the original account owner at death.

Who Is Exempt: Eligible Designated Beneficiaries (EDBs)

The 10-year rule does not apply to everyone. A category of beneficiaries called Eligible Designated Beneficiaries (EDBs) can still use their own life expectancy to spread distributions — essentially keeping the old stretch IRA approach.

The five categories of EDBs are:

1. Surviving spouse — the most flexible category. Has special options not available to any other beneficiary (covered below).
2. Minor child of the deceased account owner — only the account owner's own minor children qualify, not grandchildren. Once the minor child reaches the age of majority (18 in most states, 21 in some), the 10-year rule kicks in for the remaining balance starting from that birthday.
3. Disabled individuals — defined under IRC § 72(m)(7) as being unable to engage in any substantial gainful activity due to a physical or mental condition expected to be of long duration or result in death.
4. Chronically ill individuals — defined under IRC § 7702B(c)(2) as being unable to perform at least two activities of daily living, or requiring substantial supervision due to severe cognitive impairment.
5. Individuals not more than 10 years younger than the deceased account owner — a sibling close in age, for example, would qualify.

Anyone who is not an EDB and who is a designated beneficiary (a person named on the account) is subject to the 10-year rule. Non-designated beneficiaries — estates, charities, and certain trusts — have their own rules discussed briefly below.

The 10-Year Rule in Detail

For non-spouse designated beneficiaries who are not EDBs, the 10-year rule works as follows:

• The entire account balance must be distributed by December 31 of the 10th calendar year following the year the account owner died.
• If the account owner died in 2024, the 10-year period ends December 31, 2034.
• If the account owner died in 2020, the 10-year period ends December 31, 2030.
• There is no required distribution schedule during those 10 years — unless the owner had already started RMDs (see below).
• If you fail to distribute the full balance by December 31 of year 10, the remaining balance is subject to a 25% excise tax.

The 10-year rule applies to deaths on or after January 1, 2020. Deaths before that date still follow the old stretch IRA rules — if you inherited an IRA before 2020, the old life-expectancy rules still apply to you.

Annual RMDs Within the 10-Year Period: The Key Variable

Whether you must take annual distributions during the 10-year window depends entirely on whether the original account owner had reached their Required Beginning Date (RBD) before they died.

What is the Required Beginning Date (RBD)?

The RBD is the date by which an account owner must begin taking their own RMDs from a traditional IRA or 401(k). Under the SECURE 2.0 Act:

• Born 1951–1959: RMD age is 73. RBD is April 1 of the year following the year they turn 73.
• Born 1960 or later: RMD age is 75. RBD is April 1 of the year following the year they turn 75.
• Born 1950 or earlier: Already past the old age-72 RBD (under the original SECURE Act).

If the owner died before their RBD

They had not yet started required minimum distributions. In this case, beneficiaries subject to the 10-year rule are not required to take annual distributions during the 10-year window. They can take any amount, in any year, as long as the entire balance is withdrawn by December 31 of year 10.

This flexibility is valuable. A beneficiary can front-load distributions in low-income years, or delay most withdrawals until year 10 — whichever minimizes total tax.

If the owner died on or after their RBD

They had already started required minimum distributions. In this case, beneficiaries must:

1. Take an annual RMD in each of years 1 through 9 of the 10-year period, calculated using the beneficiary's own life expectancy from the IRS Single Life Expectancy Table (Table I in IRS Publication 590-B).
2. Withdraw the remaining balance in full by December 31 of year 10.

This is the rule that caused so much confusion — and resulted in the IRS issuing multiple penalty waivers from 2021 to 2024 while it worked through the regulatory process. Many beneficiaries did not know they were required to take annual RMDs. The final regulations (effective 2025) ended the ambiguity.

Spousal Beneficiary Options

A surviving spouse has more flexibility than any other beneficiary. The three main options are:

Option 1: Roll over into your own IRA

The surviving spouse rolls the inherited IRA into their own existing IRA or opens a new IRA in their own name. The money is then treated as entirely their own — subject to their own RBD, not the deceased's. This is often the best choice for a younger spouse who does not yet need distributions.

Option 2: Open an inherited IRA (spousal inherited IRA)

The surviving spouse keeps the account as an inherited IRA and takes distributions based on their own life expectancy. This approach can be advantageous if the spouse is under 59½ and needs access to the funds — distributions from an inherited IRA are not subject to the 10% early withdrawal penalty, while distributions from a rollover IRA would be.

Option 3: Delay distributions if the deceased had not started RMDs

If the deceased spouse died before their own RBD, a surviving spouse can choose to delay distributions until the deceased would have reached their RBD age. This is unique to spousal beneficiaries — no other beneficiary type can delay distributions this way.

Inherited Roth IRA Rules

The 10-year rule applies to inherited Roth IRAs just as it does to inherited traditional IRAs — but with one important difference: Roth IRA owners are never required to take RMDs during their own lifetime.

Because the original Roth account had no RMD requirement, the owner never had a Required Beginning Date. As a result, beneficiaries who inherit a Roth IRA (and who are not EDBs) are subject to the 10-year rule but are not required to take annual distributions during the 10-year period. They simply must empty the account by December 31 of year 10.

The good news: qualified distributions from an inherited Roth IRA are completely tax-free, as long as the original Roth account had been open for at least five years at the time of distribution. If the account was opened less than five years before the owner's death, earnings (not contributions) may be taxable.

This makes the inherited Roth IRA one of the most tax-efficient assets a beneficiary can receive — no annual tax drag, no forced taxable income during the 10 years, and a tax-free lump sum (or smaller distributions) at the end.

Penalties for Missed Distributions

The SECURE 2.0 Act (signed December 29, 2022, effective for 2023 and later) reduced the penalty for missing a required minimum distribution:

• Standard penalty: 25% excise tax on the amount that should have been distributed but was not (down from 50% under prior law).
• Corrected within 2 years: The penalty drops to 10% if you take the missed distribution within the IRS's "correction window" — generally within 2 years of the year the missed distribution tax is imposed.

The IRS penalty waivers (2021–2024)

Because the IRS did not finalize inherited IRA regulations until July 2024, it issued a series of notices waiving the 25% penalty for beneficiaries who missed annual RMDs during the regulatory uncertainty period:

• IRS Notice 2022-53: Waived penalties for 2021 and 2022
• IRS Notice 2023-75: Extended the waiver to 2023
• IRS Notice 2024-35: Extended the waiver through 2024

The waiver period is over. The final regulations (T.D. 10001) took effect for distributions beginning in 2025. If you have been skipping annual distributions from an inherited IRA — believing or hoping the regulations would change — you need to consult a tax professional now about catch-up distributions and potential penalties.

Tax Planning Considerations

The 10-year rule creates a real tax planning challenge. Where the old stretch IRA could spread retirement account income across 30+ years, the 10-year rule compresses that income into a decade — potentially pushing beneficiaries into higher tax brackets in years they take large distributions.

Spreading distributions strategically

If the deceased died before their RBD (so no annual RMD is required), beneficiaries have maximum flexibility. The optimal approach is usually to spread distributions across all 10 years rather than taking everything in year 10, which would result in the largest possible taxable income in a single year.

Take more in years when your taxable income is lower — due to retirement, reduced work hours, large deductions, or other factors. Take less in years when income from other sources is high.

Roth conversions by the original account owner

One of the strongest planning moves available before death is converting traditional IRA funds to a Roth. This eliminates the inherited beneficiary's tax burden on distributions, at the cost of taxable income to the original owner during their lifetime. Families expecting to leave significant retirement assets should discuss Roth conversion strategies with a financial advisor while the account owner is still alive.

The trust trap

Naming a trust as the IRA beneficiary — rather than a person — is a common estate planning technique that became far more complex after the SECURE Act. When a trust is the beneficiary, the rules depend entirely on whether the trust is a "see-through" trust that qualifies under the tax code. Non-qualifying trusts may be subject to a 5-year rule rather than the 10-year rule. If a trust is named as your IRA beneficiary, consult an estate planning attorney to confirm it still achieves the intended result under the new rules.

For more on how retirement accounts are handled after a death, see our article on what happens to retirement accounts when someone dies.