Inherited IRA rules changed significantly under the SECURE Act, and most beneficiaries no longer have the option to stretch withdrawals over their own lifetime. If you inherited an IRA from a parent, sibling, or anyone other than a spouse, you’re generally subject to a 10 year withdrawal window unless you qualify for an exception, and the IRS has spent the last several years clarifying exactly what that window requires. Getting this wrong doesn’t just cost you flexibility. It can trigger a real tax penalty.
If you’re trying to figure out what these rules mean for your own inherited IRA, the right withdrawal schedule depends on your income, your other retirement accounts, and how many years you have left in the window. We specialize in opening and managing inherited accounts and handle this exact question regularly. Schedule a call to walk through your specific situation, or see how we work with retirees and beneficiaries.
How Inherited IRA Rules Changed Under the SECURE Act
Before 2020, most IRA beneficiaries could stretch required minimum distributions across their own life expectancy. A 35 year old who inherited an IRA from a parent could take small distributions for decades, letting the account keep growing tax deferred the whole time.
The SECURE Act of 2019 ended that for most beneficiaries. Accounts inherited from someone who died in 2020 or later are now subject to a 10 year rule: the entire account has to be distributed by December 31 of the 10th year following the original owner’s death. There’s no more multi-decade stretch for most heirs, and the compressed timeline changes how you should think about taxes, brackets, and timing.
The 10 Year Rule and Whether You Owe Annual RMDs
This is where a lot of beneficiaries get tripped up, and where the IRS spent years going back and forth before settling the question.
The 10 year rule works differently depending on whether the original account owner had already started their own required minimum distributions before they died.
If the original owner died before their required beginning date, meaning they hadn’t yet started RMDs, you have more flexibility. You can take distributions however you’d like across the 10 years, including waiting until year 10 to withdraw everything, as long as the account is fully depleted by the deadline.
If the original owner died on or after their required beginning date, meaning they had already started RMDs, the rules are stricter. The IRS finalized regulations confirming that beneficiaries in this situation must take annual RMDs in years one through nine, based on their own life expectancy, and then distribute whatever remains by the end of year 10. You can’t simply let the account sit for nine years and empty it in one lump sum.
The IRS waived the excise tax for certain missed beneficiary RMDs for tax years 2021 through 2024, which created a lot of confusion since many beneficiaries assumed the annual requirement had gone away entirely. It hadn’t. The final regulations apply beginning in 2025, and required annual distributions must generally be taken from that point forward.
There’s also a separate year-of-death RMD to consider. If the original owner was required to take an RMD for the year they died and hadn’t taken the full amount, that remaining distribution generally still has to be withdrawn, typically by the beneficiary, before the annual and 10 year rules even come into play.
Eligible Designated Beneficiaries Who Skip the 10 Year Rule
A handful of beneficiaries are exempt from the 10 year rule entirely and can still stretch distributions over their own life expectancy. The IRS calls these eligible designated beneficiaries, and the category includes:
- A surviving spouse
- A minor child of the original account owner, who can generally use life expectancy distributions until reaching age 21, after which the remaining account is subject to a 10 year distribution period
- Someone who is disabled or chronically ill, as defined under IRS regulations
- Someone who isn’t more than 10 years younger than the original account owner, such as a sibling close in age
If you fall into one of these categories, the rules that applied before the SECURE Act largely still apply to you. Everyone else, including adult children who make up the majority of IRA beneficiaries, is subject to the 10 year rule.
Spousal Inherited IRAs Work Differently
A surviving spouse has options that no other beneficiary gets. You can roll the inherited IRA into your own IRA and treat it as if it had always been yours, which lets you follow the RMD schedule tied to your own age, generally starting at 73 or 75 depending on your year of birth. You can also keep it as an inherited IRA and use the eligible designated beneficiary rules, which in some cases lets you delay distributions until the year the original owner would have reached their own required beginning age.
Which option makes more sense depends on your age relative to your spouse’s, whether you need access to the funds before 59 and a half, and how the account fits into your broader withdrawal sequencing and tax planning. This is a decision worth modeling out rather than defaulting into, since the wrong choice can mean years of avoidable taxable income.
Inherited Roth IRA Rules
The 10 year rule applies to inherited Roth IRAs too, but with one meaningful difference. Because the original Roth owner never had a required beginning date during their lifetime, there’s no annual RMD requirement during years one through nine, regardless of when the owner died. You still have to empty the account by the end of year 10, but you have full discretion over the timing within that window.
That flexibility makes inherited Roth IRAs a useful piece of a longer term tax plan. Once the Roth IRA’s five year holding requirement has been satisfied, distributions are generally tax free, including the earnings. That means the timing decision is usually driven more by investment strategy and estate planning than by managing ordinary income, which is the opposite of how a traditional inherited IRA works.
What Happens If You Miss an RMD
If you’re subject to the annual RMD requirement and miss a distribution, the IRS applies an excise tax of 25% on the amount that should have been withdrawn. That penalty drops to 10% if the shortfall is corrected within the applicable correction window, which generally runs through the end of the second tax year after the year the missed RMD occurred. Both figures are a significant reduction from the 50% penalty that applied before SECURE 2.0, but neither is a penalty worth paying by accident.
A Withdrawal Strategy Matters More Than the Deadline
The 10 year deadline is a ceiling, not a plan. Most beneficiaries who owe annual RMDs still have room to decide how much beyond the minimum to withdraw each year, and that decision has real tax consequences. Taking a large inherited IRA down to zero in year 10 often pushes a beneficiary into a much higher bracket than spreading withdrawals evenly across the full window, and it can also trigger Medicare IRMAA surcharges in the years the income spikes.
For a beneficiary who’s still working, still contributing to a 401(k), or already managing other sources of retirement income, the right withdrawal schedule depends on the full picture, not just the inherited account in isolation.
Opening and managing inherited accounts is a core part of what we do, and we can help you sort through the deadlines, the RMD requirements, and how the account fits into your broader tax picture. You can schedule a conversation or learn more about how we work with retirees and beneficiaries.
Key Takeaways
- Most non-spouse beneficiaries who inherited an IRA after 2019 must fully distribute the account within 10 years of the original owner’s death.
- If the original owner had already started RMDs, beneficiaries generally owe annual RMDs in years one through nine, enforced starting in 2025.
- If the original owner hadn’t started RMDs yet, beneficiaries can choose their own withdrawal schedule as long as the account is empty by year 10.
- Surviving spouses, minor children, disabled or chronically ill beneficiaries, and beneficiaries close in age to the original owner are exempt from the 10 year rule.
- Inherited Roth IRAs follow the same 10 year deadline but have no annual RMD requirement.
- Missing a required annual distribution triggers a 25% excise tax, reduced to 10% if corrected in time.
About the Author
Gabriel Motta, CFP®, MBA, is the founder and principal of Inclinevest LLC, a fee-only fiduciary retirement financial advisor and financial planner based in Greenwood Village, Colorado. He works with high-net-worth pre-retirees and retirees throughout south Denver, across Colorado, and nationally, including clients in Highlands Ranch, Centennial, Lone Tree, Aurora, Parker, Castle Rock, and Littleton. As a retirement planner and wealth manager, Gabriel helps clients navigate retirement income planning, Social Security strategy, tax-efficient withdrawals, and equity compensation. Gabriel is a NAPFA and XY Planning Network member. Learn more about Gabriel and Inclinevest (https://www.inclinevest.com/about-inclinevest-denver/) or schedule a conversation (https://calendly.com/inclinevest/inclinevest).
Sources
- Internal Revenue Service, Publication 590-B (2025), “Distributions from Individual Retirement Arrangements (IRAs)”
- Internal Revenue Service, “Retirement Topics: Beneficiary,” IRS.gov
- Internal Revenue Service, Final Regulations on Required Minimum Distributions (T.D. 10001, July 2024)
- Internal Revenue Service, Notice 2024-35, “Certain Required Minimum Distributions for 2024”
- U.S. Congress, Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019
- U.S. Congress, SECURE 2.0 Act of 2022
This article is for general informational and educational purposes only. It isn’t personalized investment, tax, or legal advice, and it shouldn’t be relied on as a substitute for guidance specific to your situation. Inclinevest LLC is a registered investment adviser. Registration doesn’t imply any level of skill or training. Please consult a qualified professional before making decisions about your own financial circumstances.
