Inherited IRA Rules in 2026: The 10-Year Rule Explained

If you inherited an IRA after 2019, you likely must empty the entire account within 10 years — and depending on when the original owner died, you may also owe annual required minimum distributions along the way. The rules changed dramatically under the SECURE Act, and the IRS didn't finalize the details until July 2024. This guide explains exactly what's required, who's exempt, and how to minimize the tax hit.

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The 10-Year Rule: The Core Change

Before the SECURE Act took effect on January 1, 2020, most beneficiaries who inherited an IRA could "stretch" distributions over their own life expectancy — sometimes 40 or 50 years. The SECURE Act eliminated this for most non-spouse beneficiaries and replaced it with a hard deadline.

The rule: Non-eligible designated beneficiaries must fully empty an inherited IRA by December 31 of the 10th year following the year the original owner died.

There's no required schedule for how you take the money — you can take it all in year 1, spread it evenly across 10 years, or wait until the last day. The only hard requirement is that the balance must be zero by the end of year 10.

With one major exception: if the original owner had already started taking their own RMDs (died on or after their Required Beginning Date), you must also take annual distributions in years 1 through 9 — not just empty the account by year 10. More on this critical distinction below.

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Who the 10-Year Rule Applies To

The 10-year rule applies to non-eligible designated beneficiaries (NEDBs) — which includes most people who inherit an IRA:

• Adult children (age 21+)
• Siblings
• Friends
• Other relatives (nieces, nephews, grandchildren who are adults)
• Certain trusts

If you're not in one of the five exempt categories listed in the next section, the 10-year rule applies to you.

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Who Is Exempt: Eligible Designated Beneficiaries

Five categories of beneficiaries are exempt from the 10-year rule and can still use the life expectancy "stretch" method:

Important: The "minor child" exception applies only to the deceased owner's own children — not grandchildren, nieces, nephews, or other minors.

Disabled means unable to engage in any substantial gainful activity due to a medically determinable condition expected to result in death or be of long, indefinite duration (IRC §72(m)(7)). Chronically ill means unable to perform at least 2 of 6 activities of daily living without substantial assistance (IRC §7702B(c)(2)).

Estimate your required distributions: Our inherited IRA calculator determines your distribution schedule based on your beneficiary category and the owner's date of death.

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The Annual RMD Question: The Rule Everyone Got Wrong

For three years after the SECURE Act passed, nobody was sure whether annual distributions were required during the 10-year window. The IRS proposed regulations in 2022, waived penalties through 2024, and finally issued definitive rules in July 2024 (Treasury Decision 10001).

Here's the answer, effective for distributions starting January 1, 2025:

Scenario A: Owner Died BEFORE Their Required Beginning Date

No annual RMDs required. You simply must empty the account by the end of year 10. You have complete flexibility on timing.

The Required Beginning Date (RBD) is April 1 of the year after the owner turns 73 (or 75 starting in 2033 under SECURE 2.0). If the owner died before reaching that age, Scenario A applies.

Scenario B: Owner Died ON OR AFTER Their Required Beginning Date

Annual RMDs are required in years 1 through 9, calculated using your own life expectancy factor from the IRS Single Life Expectancy Table. The entire remaining balance must be distributed by the end of year 10.

This is the scenario that caught most beneficiaries off guard. If you inherited from a parent who was, say, 78 and already taking their own RMDs, you must take annual distributions — you can't just wait until year 10.

The Penalty Relief Is Over

The IRS waived penalties for missed annual RMDs from 2021 through 2024 while the rules were being finalized:

If you've been skipping annual distributions because the rules were unclear, 2025 and 2026 are the first years with real consequences. Make sure you're taking the required amounts.

For a deeper look at how RMDs work and how to calculate them, see our guide on required minimum distributions explained.

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Surviving Spouse: The Most Flexible Beneficiary

A surviving spouse has more options than any other beneficiary:

Option 1: Roll Into Your Own IRA

Transfer the inherited IRA into your own IRA. The account loses its "inherited" status entirely. You take RMDs based on your own age, starting when you reach 73. This is usually the best option if you don't need the money immediately and you're younger than the deceased.

Option 2: Remain as Beneficiary (Life Expectancy Stretch)

Keep the account as an inherited IRA and take annual RMDs based on your single life expectancy. You can delay the first distribution until the later of: December 31 of the year after the owner's death, or the year the deceased would have turned 73.

Option 3: Elect the 10-Year Rule

Available but rarely advantageous. You'd empty the account within 10 years instead of stretching over your lifetime.

Option 4: SECURE 2.0 "Treated as Employee" Election (New)

For deaths after December 31, 2023, SECURE 2.0 Section 327 created a new option. A surviving spouse can elect to be treated as the deceased for RMD purposes while keeping the account as an inherited IRA. This is useful when the deceased was younger than the spouse — it delays RMDs until the deceased would have reached age 73.

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Minor Child Rules

The IRS finalized in July 2024 that the age of majority for inherited IRA purposes is 21 — nationwide, regardless of state law. Here's how the timeline works:

1. From inheritance until age 21 — The child is an Eligible Designated Beneficiary. Annual RMDs are based on the child's own life expectancy.
2. At age 21 — EDB status ends. The 10-year clock begins.
3. By age 31 — The account must be fully emptied (end of the 10th year after turning 21).

Example: A child inherits at age 8. They take small life expectancy RMDs from age 8 to 21 (13 years of stretch). At 21, the 10-year clock starts. The account must be empty by December 31 of the year they turn 31.

This only applies to the deceased owner's own children — biological or legally adopted. Grandchildren, stepchildren, and other minors do not qualify for this exception.

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Pre-2020 Inherited IRAs: The Stretch Is Grandfathered

If the original owner died on or before December 31, 2019, the old stretch IRA rules still apply. The 10-year rule does not affect you.

You continue taking annual RMDs based on your single life expectancy factor (recalculated using the 2022 updated IRS life expectancy tables). This stretch continues for the rest of your life.

One caveat: If you (the original beneficiary of a pre-2020 inherited IRA) die, your successor beneficiary is generally subject to the 10-year rule from the date of your death. The grandfathering applies to the original beneficiary only.

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Inherited Roth IRAs: Same Rule, Different Tax Result

The 10-year rule applies to inherited Roth IRAs the same way — non-EDB beneficiaries must empty the account by the end of year 10. But there are two critical differences:

1. No Annual RMDs — Ever

Because a Roth IRA owner is never required to take lifetime RMDs, they are always treated as having died before their Required Beginning Date. This means Scenario A always applies to inherited Roths: no annual distributions are required during the 10-year window.

2. Distributions Are Tax-Free

If the Roth's 5-year holding period has been met (starting from January 1 of the year the original owner first contributed to any Roth IRA), all distributions are completely income tax-free.

The Optimal Strategy for Inherited Roths

Wait as long as possible. Since distributions are tax-free, let the account grow tax-free for the full 10 years. Take the entire balance in year 10 — or close to it — to maximize tax-free compounding. This is the opposite strategy from an inherited traditional IRA, where spreading distributions matters enormously.

Calculate your inherited Roth distributions: Our inherited Roth IRA RMD calculator shows the optimal distribution timeline for your specific situation.

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The Tax Impact: Why Distribution Timing Matters

Every dollar withdrawn from an inherited traditional IRA is taxed as ordinary income at your marginal rate. There is no step-up in basis for inherited IRA assets — unlike inherited stocks or real estate, where the cost basis resets to the value at the date of death.

The Year-10 Tax Bomb

The biggest mistake beneficiaries make is waiting until year 10 to take the entire balance:

A $500,000 inherited IRA taken as a lump sum in year 10 could push you into the 35–37% federal bracket, costing $50,000–$100,000 more in taxes than a well-planned distribution strategy.

A Bracket-Filling Example

Suppose you earn $60,000 per year and inherited a $400,000 traditional IRA. The top of the 22% federal bracket in 2026 is approximately $100,525 for a single filer. You have about $40,000 of room before crossing into the 24% bracket.

The difference between the worst and best approach: roughly $145,000 in unnecessary federal taxes. State taxes would add even more. This is why distribution planning matters far more than most beneficiaries realize.

Smarter Distribution Strategies

1. Level annual distributions — Divide the balance by 10 and take roughly equal amounts each year. Simple and effective at avoiding bracket spikes.

2. Bracket-filling — Each year, calculate how much room remains before you cross into the next tax bracket. Take that amount and no more. Focus on filling the 22% and 24% brackets.

3. Income-gap front-loading — In years with temporarily lower income (between jobs, before Social Security starts, early retirement), take larger distributions to fill lower brackets.

4. Coordinate with Roth conversions — If you're also doing Roth conversions of your own retirement accounts, reduce conversions in years when inherited IRA distributions are high. Don't stack both into the same tax year.

For a complete walkthrough of tax-efficient withdrawal ordering, see our guide on how to withdraw from retirement accounts tax-efficiently.

See the tax impact of different strategies: Our inherited IRA tax calculator compares lump-sum, level, and bracket-filling distribution approaches side by side.

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Key Deadlines to Know

The 2030 Wave

The first large group of beneficiaries subject to the 10-year rule — those who inherited in 2020 — must empty their accounts by December 31, 2030. If you're in this group, you have 4 years left. Planning your distribution strategy across 2026–2030 is urgent.

Annual RMD Deadline

If you're subject to annual RMDs during the 10-year window (owner died on or after their RBD), each year's distribution is due by December 31 — not April 1. The April 1 extension only applies to an owner's first lifetime RMD, not inherited IRA distributions.

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Penalties for Getting It Wrong

SECURE 2.0 reduced the penalty for missed RMDs, but it's still significant:

Example: You were required to take a $30,000 annual RMD and took nothing. The penalty is $7,500 (25%) — or $3,000 (10%) if you correct it within the 2-year window by taking the distribution and filing Form 5329.

The old penalty was 50% — so SECURE 2.0's reduction is substantial, but 25% of a large inherited IRA balance is still a costly mistake.

Model your full distribution schedule: Our beneficiary IRA stretch calculator compares stretch vs. 10-year strategies and flags any years where you'd owe required distributions.

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What Most People Get Wrong

1. "I Can Just Wait Until Year 10"

Only if the original owner died before their Required Beginning Date. If they were already taking RMDs, you must take annual distributions in years 1–9 or face a 25% penalty. The IRS penalty relief expired after 2024.

2. "The 10-Year Rule Is 10 Tax Years"

It's 10 calendar years from the year of death — not from the year you were notified, not from when you set up the inherited IRA, and not from when probate closed.

3. "I'll Deal With the Tax When the Time Comes"

Waiting creates a tax bomb. A $500,000 inherited IRA taken as a single distribution can cost $100,000+ more in federal taxes than the same amount spread across 10 years. Start planning now — especially if you inherited in 2020 and face the 2030 deadline.

4. "Inherited Roth IRAs Don't Have Rules"

They do. The 10-year rule still applies — you must empty the account by year 10. The difference is that distributions are tax-free (assuming the 5-year holding period is met), so the strategy is to wait, not spread.

5. "My Financial Advisor Will Handle It"

Many advisors are still working from pre-SECURE Act assumptions. The annual RMD requirement within the 10-year window was only finalized in July 2024, and penalty enforcement only began in 2025. Verify that your advisor is working from the current rules.

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How Inherited IRAs Fit Into Your Retirement Plan

An inherited IRA can significantly affect your overall retirement picture — both as an income source and as a tax planning challenge. The distributions count as ordinary income, which can push you into higher tax brackets, trigger IRMAA surcharges on Medicare premiums, and reduce the value of other income-based benefits.

If you want to see how inherited IRA distributions interact with your Social Security, withdrawals, taxes, and other retirement income, the Plan Builder lets you model the full picture with your real numbers — including the impact of distributing an inherited IRA over different timeframes.

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Frequently Asked Questions

Do I have to take annual distributions from an inherited IRA under the 10-year rule?

It depends on when the original owner died relative to their Required Beginning Date. If they died before starting their own RMDs, no annual distributions are required — just empty the account by the end of year 10. If they died after starting RMDs, annual distributions are required in years 1 through 9, with the remaining balance due in year 10.

What happens if I miss the 10-year deadline?

The remaining balance in the account is subject to a 25% excise tax. If you correct the shortfall within 2 years (by taking the distribution and filing Form 5329), the penalty is reduced to 10%. Under the old rules, the penalty was 50%.

Can I roll an inherited IRA into my own IRA?

Only if you're the surviving spouse. Non-spouse beneficiaries cannot roll an inherited IRA into their own account — it must remain as a separate inherited IRA with distributions taken according to the applicable rules.

Are inherited Roth IRA distributions taxable?

No, as long as the original Roth IRA's 5-year holding period has been met. The 5-year clock starts from January 1 of the year the original owner first contributed to any Roth IRA, and it does not reset when the account is inherited. If the 5-year period hasn't been met, earnings (not contributions) may be taxable.

Do the SECURE Act rules apply to IRAs inherited before 2020?

No. If the original owner died on or before December 31, 2019, the old stretch IRA rules are grandfathered. You continue taking annual life expectancy distributions over your remaining lifetime. The 10-year rule only applies to accounts inherited from owners who died on or after January 1, 2020.

What is the penalty for missing an inherited IRA RMD?

The excise tax is 25% of the shortfall amount. If you correct the missed distribution within the 2-year correction window, the penalty is reduced to 10%. File Form 5329 with a letter of explanation to report and potentially request a waiver.

Can I disclaim an inherited IRA?

Yes. A qualified disclaimer must be made within 9 months of the owner's death, in writing, and you cannot have accepted any benefit from the account. The disclaimed assets pass to the next beneficiary in line, who may have different (potentially more favorable) distribution rules.

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This article is for educational purposes only and is not personalized financial advice. Inherited IRA rules are complex and fact-specific — consult a qualified tax advisor or estate attorney for guidance on your situation. Sources: SECURE Act of 2019, SECURE 2.0 Act of 2022, IRS Treasury Decision 10001 (July 2024), IRS Notices 2022-53, 2023-54, and 2024-35, IRC §401(a)(9).

Last updated: October 2026