Inherited IRA Rules: The 10-Year Rule and RMDs (2026)

When an IRA owner passes away, you do not receive an account that you can keep growing forever. Most non-spouse heirs (beneficiaries) who inherit in 2020 or later under the SECURE Act will be required to empty the inherited IRA by the end of the tenth year after the original owner passed away. A few exceptions exist. Spouses and certain other eligible beneficiaries may take RMDs based on their individual life expectancy, but all others are subject to the 10 year timeline.

Many inheritors are walking into a trap when they believe that the 10-year rule allows them to wait until year 10, but in many cases the IRS will require an annual withdrawal throughout those years.

What are the inherited IRA rules?

The amount of time that a beneficiary has to withdraw assets from an IRA following the death of the person who owned it is governed by the "Inherited IRA" rules, which were altered significantly by the SECURE Act. Prior to 2020, nearly all heirs had the ability to draw funds over their lifetime. However, this right to take advantage of the longer withdrawal period will survive only for a limited group of eligible beneficiaries. All other heirs will be required to draw down the account at a faster pace (the "compressed" withdrawal schedule) as the tax code mandates. 26 U.S.C. 401(a)(9) addresses all traditional and Roth IRAs.^[1] One relief carries over no matter your age: the 10% early-withdrawal penalty never applies to an account you inherited, because the IRS treats those payouts as death distributions.

What are the IRA beneficiary rules?

Beneficiary rules for IRAs classify all heirs based upon their status at the time the original owner dies (the "owner") into one of three groups, with each group having their own rule regarding the length of time the funds are kept tax deferred. A "designated beneficiary" is a living person that has been identified on the beneficiary designation form. An "eligible designated beneficiary" is a member of one of five protected categories of beneficiaries who may still apply the longer maximum post-death distribution period established by his/her life expectancy. The "non-designated beneficiaries," which include estates and charities, receive the shortest post-death distribution period. IRS Publication 590-B lists the five eligible categories, and your status is fixed on the owner's date of death.^[2] Each type carries its own option:

If multiple people inherit the same IRA, they should divide their portion of that account among themselves and open a new inherited IRA for each share by Dec. 31 of the year following the death of the owner. Otherwise, the payment from the inherited IRA will be governed solely by the oldest beneficiary’s actuarial life expectancy. Any non-spousal heirs are not eligible for a 60 day rollover: when you take a check made out to you personally, all of it will become taxable income on your tax return for that year.

What are the inherited IRA RMD rules?

It is the Owner’s Required Beginning Date where all inherited IRA RMD rules are tied. SECURE 2.0 establishes this as April 1 of the year after the owner turns 73. A beneficiary under the 10-year rule will owe no amounts from Years 1 thru 9 when the owner dies prior to the Owner’s Required Beginning Date. However, they will be able to defer taking their first distribution until Year 10. When the owner dies on or after this date, the IRS 2024 Final Regulations provide that there shall be an Annual Required Minimum Distribution (RMD) in each year of Years 1 thru 9, based upon the beneficiary’s single life expectancy, with the remaining balance being distributed by Year 10.^[3] The IRS has previously provided penalty-free relief to those beneficiaries who failed to take the Annual RMD distributions through 2024. However, such relief is no longer available and 2025 forward is enforced.^[4] If you fail to take your required withdrawal, the IRS imposes a 25% excise tax on the amount you should have withdrawn. This amount is reduced to 10% if you correct it within a two-year time frame. This must be reported on Form 5329.^[3]

What is the inherited IRA 10-year rule?

Only the eligible designated beneficiary groups listed in the table above will be able to take advantage of the lifetime "stretch" option. Healthy adult children of parents cannot, so they should spread withdrawals over the 10 years to soften the income-tax hit instead of taking it all at once when receiving the inheritance. Beneficiaries that inherit after someone else (successor beneficiaries) do not get a fresh lifetime stretch. For example, if a 10-year heir dies in year 4, the successor will still only have the remaining 6 years.

What are the spouse inherited IRA rules?

The spouse inherited IRA rules give you options that no other beneficiary has, and the right one depends on your age.

Option one is to treat the IRA as your own. This can be done by retitling the account or rolling it over into an existing IRA of yours. Once you have retitled or rolled over the account, it will behave like you owned it all along (no lifetime required minimum distributions until age 73).

Option two is to remain a beneficiary. Remaining a beneficiary keeps penalty-free access before age 59 1/2, and allows you to delay required minimum distributions until the year the deceased spouse would have turned 73. If you are already past 59 1/2, you default to treating the IRA as your own. If you are under 59 1/2 and might need the money, stay a beneficiary first and roll it into your own IRA later.

How do inherited Roth IRA rules differ?

A Roth inherited under the 10 year rules will have no required minimum distributions (RMDs) during the 10 years, as there was never a "required beginning" date due to a Roth owner having no required distribution date. For a non-spousal beneficiary, they can let the account continue to grow and empty it by year 10. However, they may only receive tax-free withdrawals if the account satisfied the five-year holding rule. An inherited SIMPLE IRA follows the 10 year rules too, as the SECURE Act used 26 U.S.C. 401(a)(9) to rewrite all of these provisions at one time.^[1] One should therefore delay taking distributions from an inherited Roth until year 10 so that you maximize your tax free growth.

The Bottom Line

An Inherited IRA is a retirement account inherited from the previous owner of an IRA. For most beneficiaries who are not spouses of the decedent, there has been a major change to how they can withdraw from their inherited IRAs. Since 2020 the SECURE Act 10-Year Rule has replaced the lifetime stretch. You will need to empty the account by the end of the tenth year after the owner's death, and take out an annual Required Minimum Distribution (RMD) in between if the original owner died on or after their required beginning date. Before taking your initial distribution confirm your category designation as a Beneficiary and verify the date of death with your custodian before your first year closes.

This guide is educational and summarizes IRS inherited IRA rules for beneficiaries. It is not investment, legal, or tax advice. Your plan documents and current IRS limits control. Talk to your tax advisor about your business's and your family's circumstances.