Under the SECURE Act inherited IRA rules, most people who inherit an IRA from someone other than a spouse must withdraw the entire balance by December 31 of the tenth year after the original owner’s death. The lifetime “stretch IRA,” which once let heirs spread withdrawals across decades, is gone for most beneficiaries. What replaces it is a compressed 10-year window, and in many cases annual withdrawals during that window as well.
How the 10-Year Rule Works
The SECURE Act of 2019 replaced the old life-expectancy stretch with a hard deadline: most non-spouse beneficiaries must empty the inherited account by December 31 of the tenth year after the owner’s death.1Internal Revenue Service. Retirement Topics – Beneficiary
Whether you can wait until year ten to take everything, or must also take annual distributions in years one through nine, depends on one fact: had the original owner already reached their required beginning date for their own required minimum distributions?
- If the owner died after reaching that date, the IRS interprets the law to require the beneficiary to keep taking annual distributions in years one through nine, with the remainder due by December 31 of year ten.
- If the owner died before that date, no annual withdrawals are required. The beneficiary only has to meet the year-ten deadline and can time the withdrawals inside that window however they want.
When annual distributions are required, they are calculated using the beneficiary’s own life expectancy from the IRS Single Life Expectancy Table, Table I in Publication 590-B. Each year’s divisor is reduced by one from the prior year.2Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)3Internal Revenue Service. Required Minimum Distributions for IRA Beneficiaries
Inherited Roth IRAs
The 10-year deadline applies to inherited Roth IRAs too, but the year-one-through-nine annual withdrawal never kicks in. Roth owners are never treated as having reached a required beginning date, so every inherited Roth is handled as if the owner died before distributions were required. The whole balance can sit for 10 years and come out in year ten with no income tax owed. That treatment is what makes lifetime Roth conversions such a useful tool for softening the 10-year rule on heirs.
Which Beneficiary Category You Fall Into
The SECURE Act sorts beneficiaries into three tiers, and the distribution rule you face depends entirely on which one you land in.
Eligible Designated Beneficiaries
This is the most favorable group. Eligible designated beneficiaries can still stretch distributions over their own life expectancy. The category covers:
- Surviving spouses, who have the most flexibility of anyone, including the option to roll the account into their own IRA and treat it as if it had always been theirs.
- Minor children of the account owner. Only the owner’s own children qualify, not grandchildren or stepchildren. A minor here means someone who has not reached age 21. Once the child turns 21, a new 10-year clock starts, so the account must be emptied by age 31.
- Disabled or chronically ill individuals, using the tax code’s definition, which is a higher bar than many people expect.
- Any individual who is not more than 10 years younger than the deceased owner. A sibling close in age is the common example.4Legal Information Institute. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
Designated Beneficiaries
Adult children, grandchildren, friends, and other named individuals who don’t fit the eligible category fall here. These beneficiaries get the 10-year rule. Most inherited IRAs land in this tier.1Internal Revenue Service. Retirement Topics – Beneficiary
Non-Designated Beneficiaries
When the beneficiary is an estate, a charity, or a trust that fails the “see-through” requirements, the account has no designated beneficiary in the IRS’s view. The timeline can be even shorter: if the owner died before their required beginning date, the entire account must come out within five years. If the owner died afterward, distributions are based on the deceased owner’s remaining life expectancy. Naming an estate as the IRA beneficiary is almost always a planning failure.
When a Trust Is the Beneficiary
Many owners name trusts as IRA beneficiaries to keep some control over how the money is used. For the IRS to look through the trust to the human beneficiaries, the trust has to meet specific requirements: it must be valid under state law, become irrevocable no later than the owner’s death, provide the required documentation to the plan custodian, and have identifiable individual beneficiaries. Meeting those conditions lets the trust beneficiaries’ ages and categories drive the distribution schedule instead of defaulting to the five-year rule.
Conduit Trusts
A conduit trust requires the trustee to pass every dollar received from the IRA straight through to the trust beneficiary. Nothing stays inside the trust. The IRS treats the beneficiary as if they inherited the IRA directly, so distributions are taxed at the individual’s personal rate. The catch under the SECURE Act: the entire account still has to be emptied within 10 years, and all that money flows out to the beneficiary with no asset protection once it lands in their hands.
Accumulation Trusts
An accumulation trust lets the trustee hold distributions inside the trust rather than passing them through. That preserves asset protection but triggers a serious tax problem. Income that stays in the trust hits the top 37 percent federal bracket at a much lower income threshold than an individual would face.5Internal Revenue Service. Estimated Income Tax for Estates and Trusts Paired with the 10-year deadline, an accumulation trust holding a large traditional IRA can lose a substantial share of the account to taxes.
Section 678 of the Internal Revenue Code offers a partial workaround in some designs. If a trust beneficiary holds the power to withdraw trust assets, the income can be taxed on the beneficiary’s personal return instead of at trust rates.6Office of the Law Revision Counsel. 26 USC 678 – Person Other Than Grantor Treated as Substantial Owner Drafting these provisions takes precision. A trust that fails the see-through requirements defaults to non-designated beneficiary status and usually a faster forced distribution.
One practical warning applies to any trust drafted before 2020: it was written for a world where the stretch existed. Conduit language that made sense when withdrawals could spread across a lifetime often produces bad results when the whole account must be emptied in 10 years. Reviewing and updating those documents is one of the most commonly neglected planning steps.
Ways to Reduce the Tax Hit
The compressed timeline means most of the useful planning happens before the owner dies, not after.
Lifetime Roth Conversions
Converting traditional IRA funds to a Roth during the owner’s lifetime shifts the tax bill to the owner instead of the heirs. The converted funds then grow tax-free, and the beneficiary’s 10-year withdrawals come out with no income tax. Conversions work especially well when the owner is in a lower bracket than the heirs will be. Spreading them across several years keeps any one year from pushing the owner into a needlessly high bracket.
Charitable Remainder Trusts
A charitable remainder trust named as IRA beneficiary can replicate something close to the old stretch. The IRA is distributed into the CRT after the owner’s death, and because the CRT is tax-exempt, the liquidation doesn’t trigger immediate income tax. The trust then pays an income stream to the named beneficiaries for a fixed term or for life, with the remainder going to charity when the payments end.7Internal Revenue Service. Charitable Remainder Trusts It’s a legitimate option for large IRAs where the heirs don’t need all the money right away, though the irrevocable structure and charitable commitment don’t suit every family.
Qualified Charitable Distributions
IRA owners who are at least 70½ can transfer money directly from their IRA to a qualified charity. The transfer counts toward the year’s required minimum distribution but is excluded from taxable income. For 2026, the annual limit is $111,000 per person, or a combined $222,000 for a married couple filing jointly who each contribute up to the cap. The transfer has to move directly from the IRA custodian to the charity. Withdrawing the money first and then donating it does not qualify.
Deadlines, Penalties, and Reporting
Beneficiaries receive Form 1099-R from the account custodian for each year a distribution is taken. If the inherited IRA contains nondeductible contributions (basis), Form 8606 is used to calculate the taxable portion of each distribution.
Missing a required distribution triggers an excise tax. SECURE 2.0 cut the penalty from 50 percent of the shortfall to 25 percent, and if the mistake is caught and the correct amount withdrawn within two years, the penalty drops to 10 percent. The penalty is reported on Form 5329, which also lets you request a waiver by attaching a written explanation of reasonable cause.8Internal Revenue Service. Instructions for Form 5329
Tracking deadlines matters more than it did under the stretch. A beneficiary who is subject to annual distributions and misses one in year three doesn’t get a pass because the account will be emptied by year ten. Each year’s shortfall is a separate penalty event. Two things to nail down the moment you inherit an account: whether the original owner had reached their required beginning date, and a written schedule of every distribution required across the 10-year window.