If you inherited an IRA from someone who died after December 31, 2019, the SECURE Act’s 10-year rule for inherited IRAs likely requires you to withdraw the entire balance within ten years of the owner’s death.1Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans The rule replaced the old “stretch IRA” approach that let heirs draw distributions over their lifetime, and IRS regulations finalized in July 2024 added a second requirement some beneficiaries missed: annual withdrawals along the way when the original owner had already started their own required minimum distributions.2Federal Register. Required Minimum Distributions Whether the rule applies to you, and in which form, depends on your relationship to the deceased and their age at death.
Who the 10-Year Rule Applies To
The rule targets “designated beneficiaries” who don’t belong to a small protected category. In practical terms, most adult children, grandchildren, siblings, friends, and certain trusts that inherit IRAs or 401(k) plans must empty those accounts within ten years.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Five categories of “eligible designated beneficiaries” are exempt and can still use the older life-expectancy method:4Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans – Section 401(a)(9)(E)(ii)
- Surviving spouses, who also have the option to roll the account into their own IRA or treat it as their own.5Internal Revenue Service. Retirement Topics – Beneficiary
- Minor children of the account owner. Only the owner’s own children qualify, not grandchildren or other minors.
- Disabled individuals as defined under IRC Section 72(m)(7).
- Chronically ill individuals under IRC Section 7702B(c)(2), with the condition expected to be lengthy or indefinite.
- Anyone not more than ten years younger than the account owner.
Eligibility is fixed as of the owner’s date of death. If you fall into one of these groups, the 10-year deadline doesn’t apply, though you still have annual distributions based on your own life expectancy.
How the 10-Year Deadline Works
The account balance must reach zero by December 31 of the year containing the tenth anniversary of the owner’s death.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs If the owner died in March 2023, the clock runs through December 31, 2033. Early withdrawals don’t earn any credit against the deadline. The balance simply has to be gone.
How much flexibility you have inside the window depends on whether the original owner had reached their “required beginning date,” the topic of the next section. When the owner died before that date, you can withdraw in any pattern you want. Take nothing for nine years and pull everything in year ten. Take equal amounts each year. Front-load distributions in low-income years. Only the final deadline matters.
Are Annual Withdrawals Required Along the Way?
This is the question that caught most beneficiaries off guard, and the answer turns on the original owner’s required beginning date (RBD). The RBD is April 1 of the year after the owner turns 73.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs Under SECURE 2.0, the age rises to 75 starting in 2033.
If the Owner Died On or After Their RBD
You cannot sit on the account for the full decade. Annual distributions are required in years one through nine, with the remaining balance due in year ten. IRS regulations finalized in July 2024 confirmed this.2Federal Register. Required Minimum Distributions Each annual amount is calculated using the IRS Single Life Table based on your age, with the factor reduced by one each subsequent year.6Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs) You can always take more; you cannot take less.
If the Owner Died Before Their RBD
No annual minimums apply. You have full flexibility to time withdrawals across the ten years however you want.
Transition Relief Has Ended
Because the annual-distribution requirement wasn’t finalized until 2024, the IRS waived penalties for missed distributions through a series of notices. Notice 2022-53 covered 2021 and 2022, Notice 2023-54 extended relief through 2023, and Notice 2024-35 extended it through 2024.7Internal Revenue Service. Notice 2024-35 – Certain Required Minimum Distributions That relief is over. The final regulations took effect for distribution calendar years beginning January 1, 2025.2Federal Register. Required Minimum Distributions You are not required to make up missed distributions from 2021 through 2024, but you do need to be current from 2025 onward.
Minor Children and the Age-21 Transition
A minor child of the account owner qualifies as an eligible designated beneficiary and can take life-expectancy distributions instead of following the 10-year rule. That treatment ends at age 21. Once the child reaches 21, the 10-year clock starts, and the balance must be gone by December 31 of the year containing the tenth anniversary of that birthday.6Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
A child who inherits at age 12 gets nine years of life-expectancy treatment, then ten more years after turning 21. A child who inherits at 19 gets only two years before the countdown begins. Every minor beneficiary eventually faces the same 10-year window.
What Happens if a Beneficiary Dies With Money Still in the Account
The 10-year rule follows the account. When an eligible designated beneficiary (a surviving spouse, for instance) dies before fully distributing the inherited IRA, the successor beneficiary must empty the account within ten years measured from the eligible designated beneficiary’s death.8Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans – Section 401(a)(9)(H)(iii) The successor does not inherit the life-expectancy option.
When a non-eligible beneficiary who was already on the 10-year rule dies partway through the window, the clock does not reset. If three years remain on the original deadline, the successor beneficiary has three years, not ten.
Inherited Roth IRAs
The 10-year deadline applies to inherited Roth IRAs, but the tax picture is different. Because the original owner contributed after-tax dollars, distributions are generally tax-free as long as the account satisfies a five-year holding requirement.5Internal Revenue Service. Retirement Topics – Beneficiary The clock starts on January 1 of the year the original owner made their first Roth contribution.
There is no annual distribution requirement for inherited Roth accounts, regardless of the owner’s age at death, because Roth IRAs don’t have required minimum distributions during the owner’s lifetime. Most Roth beneficiaries should wait until the end of year ten to maximize tax-free growth.
Managing the Tax Hit
Withdrawals from a traditional inherited IRA are ordinary income in the year you receive them. For 2026, federal rates range from 10% to 37%. For single filers, the 22% bracket begins at $50,400 and the 24% bracket at $105,700.9Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 State income tax adds another layer, and the combined federal-and-state burden can approach 50% on large distributions for residents of high-tax states.
The biggest mistake beneficiaries make is ignoring the account for nine years and then withdrawing everything at once. A lump-sum distribution in year ten stacks the entire balance on top of your other income, potentially pushing hundreds of thousands of dollars into the top bracket. Spreading withdrawals across the full ten years almost always produces a better outcome.
The ideal approach depends on your income pattern. Steady earnings favor roughly equal annual withdrawals. Fluctuating income favors larger distributions in low-earning years, when lower brackets would otherwise go unused. A few other considerations affect the math:
- Higher income from large distributions can trigger income-related monthly adjustment amounts (IRMAA) that raise your Medicare Part B and Part D premiums. The surcharge is based on income from two years prior, so a big withdrawal in 2026 could raise your premiums in 2028.
- Beneficiaries age 70½ or older can direct up to $111,000 per year (2026 limit) from the inherited IRA to a qualifying charity as a qualified charitable distribution. That amount satisfies the RMD without counting as taxable income.
- Once money leaves the inherited IRA, you can reinvest it in a taxable brokerage account. You lose the tax-deferred wrapper but gain the ability to harvest losses and control when gains are realized.
Running projections at the start of the window, even rough ones, beats improvising each December. The goal is to equalize taxable income across the decade rather than let one year absorb a disproportionate share.
Penalties for Missing a Required Distribution
Missing a required distribution triggers an excise tax of 25% on the shortfall. Before SECURE 2.0, this penalty was 50%. The rate drops further to 10% if you take the missed distribution and file a corrected return before the IRS sends a deficiency notice, assesses the tax, or the end of the second tax year after the year the penalty was imposed, whichever comes first.10Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans In practice, most people have roughly two years to fix the error and claim the reduced rate.
The IRS can waive the excise tax entirely if the shortfall resulted from a reasonable error and you’re taking steps to fix it. Request the waiver by filing Form 5329 (Additional Taxes on Qualified Plans and Other Tax-Favored Accounts) with an attached letter explaining what happened.11Internal Revenue Service. Instructions for Form 5329 Common reasonable-cause explanations include incorrect advice from a financial institution, serious illness, or confusion about the annual-distribution requirement during the years when the IRS itself had not finalized the rules.
On the form, calculate the excise tax as though you owe it, enter “RC” and the shortfall amount on the dotted line next to line 54, subtract that amount, and complete the rest of the form. Approval isn’t guaranteed, but the IRS has historically been reasonable when the beneficiary acted in good faith and corrected the issue promptly. Keeping records of the original owner’s date of birth, date of death, account statements, and any prior distributions makes the process far simpler and lets the IRS verify both whether annual distributions were required and whether you met the 10-year deadline.