Inherited IRA 10-Year Rule: Clock, RMDs, and Penalties

The inherited IRA 10-year rule starts its clock on January 1 of the calendar year after the original account owner’s death, and the account must be fully distributed by December 31 of the tenth year. If the owner died at any point in 2024, your window runs from January 1, 2025 through December 31, 2034. The exact date of death inside that year doesn’t shift the deadline. What surprises most beneficiaries isn’t the end date, though — it’s whether they owe withdrawals in the years leading up to it, and that answer depends entirely on how old the owner was when they died.

When the Clock Starts and When It Ends

The SECURE Act took effect January 1, 2020, and replaced the old stretch IRA with a 10-year liquidation window for most non-spouse beneficiaries. The IRS measures the window from the calendar year of death, not the specific date. The countdown runs from the year after the owner died, and the deadline is always December 31 of that tenth year.¹

Two quick examples make the mechanics obvious. An owner who dies March 3, 2025 and an owner who dies November 28, 2025 create identical deadlines for their beneficiaries. Both inherited accounts must be empty by December 31, 2035.

The rule covers traditional IRAs, Roth IRAs, 401(k)s, and most other defined contribution plans where the owner died on or after January 1, 2020. The deadline is the same for Roth accounts even though the tax treatment is not. It applies to any individual beneficiary who does not qualify for one of the exceptions discussed below. If the beneficiary is not an individual at all, a different and shorter timeline applies.

Why the Owner’s Age at Death Changes What You Owe

Before you can figure out your obligations during the window, you need one piece of information about the deceased owner: whether they had reached their Required Beginning Date (RBD) before dying. The RBD is the age at which the owner would have been forced to start their own minimum distributions.

Under current law, the RBD is April 1 of the year after the owner turns 73.² SECURE 2.0 raised the age from 72 to 73 starting in 2023, and it rises again to 75 for people born in 1960 or later. If the owner died before April 1 of the year after turning 73, they died before their RBD. If they died on or after that date, they died after their RBD. The owner’s date of birth and date of death are the only two facts you need to place yourself in one of the two tracks that follow.

Annual Withdrawals During Years One Through Nine

The 10-year rule is not a flat “take it all out by year 10” for everyone. Whether you owe distributions in years one through nine depends entirely on the owner’s RBD status. The Treasury Department’s final regulations, published in July 2024, confirmed this framework and made it enforceable starting with the 2025 calendar year.³

If the Owner Died Before Their RBD

This is the simpler path. No annual distributions are required in years one through nine. The balance can sit and grow for the full decade, or you can withdraw any amount in any year along the way. The only hard requirement is that the account hits zero by December 31 of year 10.¹

The flexibility creates a real planning opportunity. If you expect a low-income year during the window — a sabbatical, a career change, early retirement — you can time a larger distribution to land in that year and pay tax at a lower rate. The risk is waiting too long and absorbing a large taxable lump sum in year 10.

If the Owner Died On or After Their RBD

The rules tighten. You must take annual distributions in years one through nine, then empty whatever remains by December 31 of year 10.⁴ The reasoning is simple: if the owner was already pulling money out every year, that obligation doesn’t disappear because the account changed hands.

Each annual distribution is calculated using the IRS Single Life Expectancy Table.⁵ You look up the life expectancy factor for your age in the year after the owner’s death, then divide the prior year-end balance by that factor. Each following year, you reduce the factor by one and run the calculation again. The required amount tends to climb over time as the divisor shrinks.

These are minimums, not caps. You can always withdraw more. And regardless of what the life expectancy math produces along the way, every dollar still in the account at the start of year 10 has to come out by December 31.

One important note on timing: the IRS waived the penalty for missed annual distributions in 2021, 2022, 2023, and 2024 through a series of transition notices while the final regulations were being finished.⁶ That relief is over. If you inherited from a post-RBD owner, you were expected to take your 2025 distribution and you owe one for 2026.

What It Costs to Miss a Distribution

The excise tax for failing to take a required distribution is 25% of the shortfall — the gap between what you should have withdrawn and what you actually did.⁷ SECURE 2.0 cut this from the old 50% rate, which helps, but 25% is still a steep price for an oversight.

The rate drops to 10% if you correct the mistake within the correction window, which generally runs through the end of the second tax year after the penalty is imposed.⁷ To claim the reduced rate, take the missed distribution and file Form 5329 with an explanation. On Form 5329, enter “RC” and the waiver amount on the dotted line next to line 54, attach a statement explaining the reasonable cause, and pay any remaining tax due on line 55.⁸ The IRS reviews the explanation and will notify you if the waiver is denied.

The penalty applies per year, per missed distribution. Missing annual withdrawals in both 2025 and 2026 means owing the excise tax on each year’s shortfall separately.

Who Is Not on the 10-Year Clock at All

The SECURE Act carved out five categories of Eligible Designated Beneficiaries (EDBs) who can still stretch distributions over their own life expectancy rather than face the 10-year window.¹

Surviving spouses, who also have the option to roll the inherited IRA into their own account and delay distributions until their own RBD.
Minor children of the deceased owner. A child under 21 takes life expectancy distributions; once the child turns 21, the 10-year clock starts and the account must be empty by December 31 of the year the child turns 31. The exception covers only the owner’s own children, not grandchildren, stepchildren, nieces, or nephews.³
Disabled individuals meeting the IRS definition of disability, with medical documentation.
Chronically ill individuals, with certification from a licensed health care practitioner.
Beneficiaries not more than 10 years younger than the deceased owner, measured as of the owner’s date of death.

EDB status sometimes only delays the 10-year rule. When a minor child turns 21, or when an EDB of any type dies, the remaining balance shifts to the 10-year rule for whoever inherits next.

If the Beneficiary Is Not a Person

The 10-year rule applies to individual beneficiaries. If an IRA is left to an estate, a charity, or a trust that doesn’t qualify as a see-through trust, a different timeline governs. When the owner died before their RBD, the account must be distributed within five years, by December 31 of the year containing the fifth anniversary of death.⁹ When the owner died after their RBD, distributions can be taken over the remaining life expectancy of the deceased owner.

This matters most when an owner names their estate as beneficiary or fails to name any beneficiary at all. The forced distribution is faster and, for traditional IRAs, concentrates the tax hit. If you discover a deceased family member left their IRA to the estate, talk to a tax professional quickly, because the timeline is tight and the options are limited.

If You Inherit the Account and Then Die

If you inherit an IRA and die before the window closes, the person who inherits from you — the successor beneficiary — does not get a new 10-year clock. They must finish distributing the account within your original timeline.⁹

Say you inherited an IRA from someone who died in 2023, giving you a December 31, 2033 deadline, and you die in 2028. The successor beneficiary still has to empty the account by December 31, 2033. They pick up where you left off with whatever time remains, and they can’t use their own life expectancy to spread the distributions.

The rules work differently when the original beneficiary was an EDB taking life expectancy distributions. If an EDB dies, a new 10-year window starts from the EDB’s date of death, and the successor beneficiary must empty the account by December 31 of the year containing the 10th anniversary of the EDB’s death.⁹ The same applies when a minor child reaches age 21: the 10-year period runs from the date the child hits majority, not from the original owner’s death.

One More Thing on Timing Your Withdrawals

Every dollar taken from an inherited traditional IRA is ordinary income in the year you receive it. A large lump sum in year 10 can push you into a sharply higher bracket, so spreading withdrawals across the window — particularly if you’re in the pre-RBD scenario with no annual requirement — can lower the total tax owed. Inherited Roth IRA distributions are generally tax-free once the account has met the five-year seasoning rule, measured from the owner’s first Roth contribution, so the usual strategy there is the opposite: let the balance grow and empty it near the deadline. Either way, the December 31 of year 10 cutoff is the one line that doesn’t move.

1
Internal Revenue Service. Retirement Topics – Beneficiary
2
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
3
Federal Register. Required Minimum Distributions
4
Charles Schwab. Inherited IRA Rules and SECURE Act 2.0 Changes
5
eCFR. 26 CFR 1.401(a)(9)-9 – Life Expectancy and Uniform Lifetime Tables
6
Internal Revenue Service. Notice 2024-35, Certain Required Minimum Distributions for 2024
7
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
8
IRS. 2025 Instructions for Form 5329 – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
9
Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)