Inheriting an IRA used to mean a lifetime of tax-deferred growth. The SECURE Act of 2019 ended that strategy for most non-spouse beneficiaries by introducing the 10-year rule, which requires the entire inherited IRA to be emptied within 10 years of the original owner’s death. SECURE Act 2.0 (2022) added further nuances. Understanding these rules prevents costly mistakes and unnecessary taxes.
The Old Rules vs. The New 10-Year Rule
Before the SECURE Act (2019), most beneficiaries could “stretch” distributions over their own life expectancy — sometimes 40 to 50 years. This allowed decades of tax-deferred compounding. The SECURE Act eliminated the stretch IRA for most beneficiaries, replacing it with the 10-year rule: the inherited IRA must be fully distributed by December 31 of the tenth year following the original account owner’s death.
There is no required minimum distribution each year during the 10-year window — you can take nothing for nine years and empty the account in year 10 — but the IRS added confusion around this when the original owner died after their Required Beginning Date (RBD).
Who the 10-Year Rule Applies To
The 10-year rule applies to most non-spouse beneficiaries, including adult children, grandchildren, siblings, and non-designated beneficiaries (trusts or estates). It does not apply to certain “eligible designated beneficiaries” who still qualify for the life expectancy (stretch) method:
- Surviving spouses
- Minor children of the deceased (until they reach the age of majority — then the 10-year clock starts)
- Disabled or chronically ill individuals (as defined by the IRS)
- Beneficiaries not more than 10 years younger than the deceased
The RMD Twist: Did the Owner Die After Their Required Beginning Date?
The Required Beginning Date (RBD) is April 1 of the year following the year the account owner turns 73 (for most people under current law after SECURE 2.0). Whether the original owner died before or after the RBD matters:
- Owner died before RBD: Beneficiaries subject to the 10-year rule have no annual RMDs during the 10 years. They just need to empty the account by the end of year 10.
- Owner died on or after RBD: Beneficiaries must take annual RMDs based on the beneficiary’s own life expectancy during years 1–9, with the full remaining balance due by the end of year 10. The IRS proposed regulations in 2022 confirmed this interpretation, and the rules began applying starting in 2025 after years of transition relief.
The 10-Year Tax Strategy: Timing Withdrawals Wisely
Because there is no required annual distribution (in cases where the owner died before RBD), beneficiaries have flexibility to time withdrawals to minimize taxes:
- If you expect high income in some years and lower income in others, take larger distributions in your lower-income years to avoid being pushed into a higher tax bracket.
- If you will retire or experience reduced income in year 5 of the 10-year window, front-loading distributions in those years can reduce the total tax bill.
- Roth IRA distributions are tax-free, so the 10-year rule is far less impactful for inherited Roth IRAs. You are not required to distribute annually, and the full 10-year window simply means you cannot keep the Roth IRA forever.
Inherited IRA Rules for Surviving Spouses
A surviving spouse has unique options not available to other beneficiaries:
- Spousal rollover: Treat the inherited IRA as your own by rolling it into your existing IRA or a new IRA in your name. This resets the RMD age to your own RMD start date and allows continued contributions if you have earned income.
- Remain as inherited IRA beneficiary: If the deceased spouse was younger and you are under 59½, keeping it as an inherited IRA allows distributions without the 10% early withdrawal penalty, which would apply to a spousal rollover IRA before age 59½.
Inherited Roth IRA Rules
Inherited Roth IRAs follow the same 10-year rule for non-spouse beneficiaries. The critical difference: qualified distributions from an inherited Roth IRA are tax-free if the original account was at least 5 years old. The 10-year rule means you cannot keep a Roth IRA forever after inheriting it, but taxes are far less painful than with a traditional IRA. Annual distributions during the 10-year period are not required (if the owner died before RBD).
Common Mistakes to Avoid
- Missing the year 10 deadline. The penalty for failing to fully distribute is 25% of the amount that should have been withdrawn.
- Combining an inherited IRA with your own IRA. You cannot roll an inherited IRA (from a non-spouse) into your own IRA — they must remain separate accounts.
- Taking a 10-year lump sum without a tax plan. A single large withdrawal in year 10 could push you into the highest federal tax bracket. Spread distributions intentionally.
- Naming a trust as beneficiary without understanding the conduit vs. accumulation trust rules. These affect whether the 10-year rule applies and how distributions flow.
Bottom Line
The 10-year rule eliminated the stretch IRA strategy for most people. If you inherit a traditional IRA, you must now plan for the tax impact of emptying the account within a decade. Build a distribution plan early — ideally with a tax advisor — to spread the tax hit across the 10-year window and minimize the total amount lost to federal and state taxes.