When the SECURE Act took effect in 2020, it quietly rewrote the rules for anyone who inherits a retirement account. The beloved "stretch IRA" — which let a beneficiary spread withdrawals over their own life expectancy and defer taxes for decades — was replaced for most heirs by the 10-year rule. If you've inherited a Traditional or Roth IRA, or expect to leave one to your children, understanding this rule is essential to avoiding an unnecessary tax bomb.
What Is the 10-Year Rule?
The 10-year rule requires most non-spouse beneficiaries who inherited an IRA after December 31, 2019 to empty the entire account by the end of the 10th year following the original owner's death. There is no required schedule for how you get there — you could take nothing for nine years and everything in year 10, or spread it evenly — but by the deadline the balance must be zero.
Critically, the "10 years" is measured to December 31 of the year containing the 10th anniversary of death, not the literal anniversary date.
The clock is longer than it sounds
A death in March 2025 doesn't mean a March 2035 deadline. The account must be emptied by December 31, 2035 — giving you nearly 11 calendar years of tax-deferred growth and planning flexibility to work with.
Why the Stretch IRA Went Away
Under the old rules, a 50-year-old who inherited a $500,000 IRA could stretch distributions over a ~34-year life expectancy, taking small annual withdrawals and letting the bulk compound tax-deferred. Congress viewed this multi-generational deferral as a loophole and used its repeal to help pay for other SECURE Act provisions. The result: the same $500,000 now has to come out in a 10-year window — often landing squarely in a beneficiary's peak earning years.
The Annual RMD Twist
This is the part that trips up the most people. Whether you owe annual required minimum distributions during the 10-year window depends entirely on how old the original owner was when they died — specifically, whether they had reached their required beginning date (RBD) for their own RMDs.
| Situation | Annual RMDs in years 1–9? | Account empty by year 10? |
|---|---|---|
| Owner died on or after their RBD | Yes | Yes |
| Owner died before their RBD | No | Yes |
| Roth IRA (any age) | No | Yes |
The owner's RBD is April 1 of the year after they reach their RMD start age — age 73 for those born 1951–1959, and age 75 for those born in 1960 or later under SECURE 2.0.
The 'both' trap
If the original owner was already taking RMDs, you don't get to coast for nine years and clean up in year 10. You owe an annual RMD in each of years 1 through 9 and must empty the account by year 10. The IRS waived penalties for missed annual RMDs from 2021–2024 while it finalized the regulations, but for 2025 and beyond these annual distributions are firmly required.
Roth IRAs are the bright spot: because a Roth owner has no RBD during their lifetime, an inherited Roth is always treated as "died before RBD." There are no annual RMDs — and since qualified Roth withdrawals are tax-free, the smartest move is usually to let it grow untouched for the full 10 years before taking a single tax-free lump sum.
The Five Exceptions: Eligible Designated Beneficiaries
Not everyone is stuck with the 10-year rule. Five categories of eligible designated beneficiaries (EDBs) can still stretch distributions over their life expectancy:
- Surviving spouses — by far the most flexible category, with options no other beneficiary has (see below).
- Minor children of the deceased owner — they stretch until they reach the age of majority (21 under the federal default), at which point the 10-year clock starts. Note: this applies only to the owner's own children, not grandchildren.
- Disabled individuals — as defined under IRC §72(m)(7).
- Chronically ill individuals — as defined under §7702B(c)(2).
- Beneficiaries not more than 10 years younger than the deceased owner — often a sibling, partner, or close-in-age friend.
Spouses have the best options
A surviving spouse can usually do better than any rule above by rolling the inherited IRA into their own IRA, treating it as if it were theirs from the start. This resets RMDs to the spouse's own timeline and is generally the default recommendation — though a younger spouse who needs penalty-free access before age 59½ may prefer to keep it as an inherited IRA.
Estates, charities, and non-qualifying trusts are non-designated beneficiaries — they fall under either a 5-year rule (if the owner died before their RBD) or a "ghost life expectancy" payout based on the deceased's remaining single-life expectancy (if on or after the RBD).
Planning Strategies to Soften the Tax Hit
Because the 10-year rule compresses distributions, smart sequencing matters far more than it did under the stretch. The goal is to spread the income across years and brackets rather than letting it pile up in a single year.
Don't Wait Until Year 10
The most common — and most expensive — mistake is letting the balance ride and taking it all at once. A $500,000 lump sum dropped on top of a working salary can push a beneficiary into the top marginal bracket and trigger IRMAA Medicare surcharges two years later. Spreading withdrawals across all 10 years usually beats a year-10 balloon.
Fill Up Low-Bracket Years
If you inherit in a year you expect lower income — a gap between jobs, an early-retirement window, a sabbatical — accelerate withdrawals into those years to "fill up" the lower brackets, the same logic that drives bracket-filling Roth conversions.
Coordinate With Your Own Retirement Timeline
A beneficiary in their early 60s might intentionally front-load inherited IRA withdrawals before claiming Social Security and before their own RMDs begin at 73 or 75 — keeping multiple income sources from stacking on top of one another in the same years.
The cost of missing the deadline
Any amount remaining after the 10-year deadline is hit with a 25% excise tax on the shortfall (reduced to 10% if you correct it promptly under SECURE 2.0's relief provisions). Combined with the income tax on a forced late distribution, a missed deadline is one of the costliest mistakes in retirement planning.
Common Mistakes to Avoid
- Assuming there are no annual RMDs — if the owner had reached their RBD, years 1–9 each carry a required distribution.
- Treating an inherited IRA like your own — only a surviving spouse can roll it over. Non-spouse beneficiaries must keep it as a separate inherited IRA and can never contribute to it.
- Naming a non-spouse and ignoring the tax projection — leaving a large Traditional IRA to a high-earning adult child can hand the IRS a third or more of the account.
- Forgetting Roth is different — inherited Roths have no annual RMDs and tax-free withdrawals, so the optimal play is almost always maximum deferral.
- Missing the IRMAA ripple — large withdrawals raise your Modified Adjusted Gross Income and can lift Medicare premiums two years down the road.
Getting Started
Inherited IRA planning sits at the intersection of tax brackets, RMD timing, Social Security, and Medicare — and the right answer depends heavily on the beneficiary's own income trajectory over the next decade. A proper analysis projects withdrawals year by year against your expected income and bracket boundaries to find the lowest-tax path to emptying the account. Work with a financial advisor who can model the full 10-year window for your specific situation.
This article is for educational purposes only and does not constitute tax or legal advice. Inherited IRA rules are complex and fact-specific. Consult a qualified tax professional or estate attorney before making decisions about an inherited retirement account.