When Did the Inherited IRA Rules Change? 2020, 2022, and 2025

The inherited IRA rules changed on January 1, 2020, when the SECURE Act took effect and replaced the lifetime “stretch” distribution method with a 10-year payout deadline for most non-spouse beneficiaries. A second round of changes arrived on December 29, 2022, when the SECURE 2.0 Act raised the age for required minimum distributions and cut the penalty for missed withdrawals. The IRS then spent several years issuing penalty waivers while it finalized regulations, with the final rules taking effect January 1, 2025 and additional regulatory provisions still being finalized into 2026.

The dividing line that matters for any specific account is the original owner’s date of death, not the date you inherited or the date you opened the beneficiary IRA. Accounts inherited from someone who died on or after January 1, 2020 fall under the new rules. Accounts inherited from someone who died on or before December 31, 2019 still follow the old stretch provisions.1Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans

What the Rules Were Before 2020

Before the SECURE Act, a named beneficiary who inherited an IRA could take annual withdrawals calculated from their own life expectancy using IRS actuarial tables. A 30-year-old who inherited a parent’s IRA could spread distributions over roughly 50 years, keeping most of the balance growing tax-deferred the entire time. Financial planners called this the “stretch IRA.”

The strategy worked especially well for young heirs. A modest inherited balance could compound for a generation and produce far more in total withdrawals than the original account held. Congress concluded this was too generous for accounts designed to fund retirement rather than multigenerational wealth transfer, and moved to close the window.

What Changed on January 1, 2020

The Setting Every Community Up for Retirement Enhancement Act was signed December 20, 2019 as part of the Further Consolidated Appropriations Act of 2020. Its inherited IRA provisions took effect for account owners who died on or after January 1, 2020. Two siblings inheriting identical IRAs from different parents, one who died in December 2019 and one in January 2020, face completely different tax timelines. The first can stretch distributions over a lifetime. The second must empty the account within a decade.

The 10-Year Rule

Under the SECURE Act, most non-spouse beneficiaries must withdraw the entire inherited IRA balance by December 31 of the tenth year after the original owner’s death.2Internal Revenue Service. Retirement Topics – Beneficiary Whether you also owe annual withdrawals during that 10-year window turns on a second factor: whether the original owner had already reached their required beginning date when they died.

  • If the owner died before their required beginning date, no annual distributions are required. You can withdraw any amount in any combination of years, as long as the account is fully empty by the end of year 10.
  • If the owner died on or after their required beginning date, you must take annual distributions each year based on life expectancy, and the account must still be fully emptied by the end of year 10.

Miss the 10-year deadline and the IRS imposes an excise tax on whatever amount should have been distributed but wasn’t.3Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans The current rate is 25%, or 10% if the shortfall is corrected within a two-year window.

Who Was Exempted

Congress carved out five categories of beneficiaries who can still use the life-expectancy method rather than the 10-year rule. The IRS calls them eligible designated beneficiaries:2Internal Revenue Service. Retirement Topics – Beneficiary

  • A surviving spouse, who also has the option to roll the account into their own IRA or treat it as their own.
  • A minor child of the deceased account owner, until age 21. Once the child turns 21, the 10-year clock starts. Only the deceased owner’s own children qualify; grandchildren do not.
  • A disabled individual, meeting the IRS disability standard at the time of the owner’s death.
  • A chronically ill individual.
  • Any individual not more than 10 years younger than the deceased.

Adult children are conspicuously absent from that list. Unless an adult child qualifies under another exception, they are subject to the 10-year rule like any other non-spouse beneficiary.

What Changed on December 29, 2022

The SECURE 2.0 Act was signed into law on December 29, 2022 and introduced dozens of retirement-related provisions.4Internal Revenue Service. SECURE 2.0 Act Changes Affect How Businesses Complete Forms W-2 Two of them matter most for inherited IRAs.

A Higher Age for Required Minimum Distributions

SECURE 2.0 raised the age at which original account owners must begin taking required minimum distributions from their own accounts. The age moved from 72 to 73 for anyone who turned 72 after December 31, 2022. It rises again to 75 for those who turn 74 after December 31, 2032.5Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs

That age matters for beneficiaries because the required beginning date is what determines whether annual distributions are mandatory during the 10-year window. As the starting age climbs, more account owners will die before ever reaching it, and their beneficiaries will have flexibility over when to withdraw during the 10-year period rather than being locked into annual amounts.

A Lower Penalty for Missed Distributions

SECURE 2.0 cut the excise tax for failing to take a required minimum distribution from 50% to 25%.3Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans Catch the mistake and withdraw the shortfall within two years and the rate drops to 10%. The old 50% figure was among the harshest penalties in the tax code.

The IRS Penalty Waivers and 2025 Final Rules

After the SECURE Act passed, widespread confusion erupted over whether beneficiaries under the 10-year rule needed to take distributions every year or could simply empty the account any way they chose by the end of year 10. Many taxpayers and advisors assumed the latter. When the IRS proposed regulations in 2022, it clarified that annual distributions during the 10-year window are mandatory when the original owner died on or after their required beginning date.

To address the confusion, the IRS waived the excise tax for missed annual distributions during the transition years:

The IRS published final regulations in July 2024, effective for the 2025 distribution calendar year. They confirmed that annual distributions are required during the 10-year window when the original owner died on or after their required beginning date. The penalty waivers expired after 2024, so beneficiaries who owe annual distributions for 2025 onward face the standard 25% excise tax if they miss one.

Additional regulatory provisions are still being finalized. IRS Announcement 2025-2 indicated that certain amendments to the distribution regulations would apply no earlier than the 2026 distribution calendar year, and Announcement 2026-07 clarified that those additional final regulations will apply no earlier than six months after they are published in the Federal Register.8Internal Revenue Service. Anticipated Applicability Date for Future Final Regulations Relating to Required Minimum Distributions In the meantime, the IRS directs taxpayers to apply a reasonable, good-faith interpretation of the underlying statute.

Inherited Roth IRAs

Inherited Roth IRAs are subject to the same 10-year deadline, but with a practical difference worth flagging so you don’t misapply the traditional rules: no annual distributions are required during the 10-year window. Roth IRA owners are never required to take distributions during their lifetime, so they are always treated as having died before their required beginning date.5Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs The beneficiary needs to empty the account by the end of year 10, and qualified withdrawals come out tax-free.

Key Dates at a Glance

  • December 20, 2019: SECURE Act signed into law, eliminating the stretch IRA for most non-spouse beneficiaries.
  • January 1, 2020: New rules take effect. An original owner’s death on or after this date triggers the 10-year rule.
  • December 29, 2022: SECURE 2.0 Act signed, raising RMD ages and reducing the missed-distribution penalty from 50% to 25%.
  • January 1, 2023: RMD starting age rises to 73 for those who turned 72 after December 31, 2022.
  • 2021–2024: IRS issues penalty waivers (Notices 2022-53, 2023-54, and 2024-35) for beneficiaries who missed annual distributions during the 10-year window.
  • January 1, 2025: Final regulations on inherited IRA distributions take effect. Penalty waivers expire.
  • 2033: RMD starting age rises to 75.

If you inherited an IRA from someone who died in 2020 or later and haven’t been taking annual distributions, the waivers that shielded you through 2024 are gone. Whether you owe an annual amount depends on whether the original owner had reached their required beginning date, and that threshold is itself a moving target under SECURE 2.0. Running the numbers now, rather than in year 10, gives you the most room to spread withdrawals across tax years and keep yourself out of a higher bracket.