Key Takeaways
- The IRS finalized new inherited-IRA regulations in July 2024, effective for 2025 and beyond - the penalty-free 'wait and see' transition period that ran from 2021 through 2024 is now over.
- If the original IRA owner died on or after their required beginning date (RBD) for RMDs, most non-spouse beneficiaries must take annual RMDs in years 1 through 9 of the 10-year rule, not just empty the account by year 10.
- Missing a required annual RMD now triggers a 25% excise tax on the amount you should have withdrawn - reduced to 10% if you correct it within two years.
- If the original owner died before reaching their RBD (currently age 73, rising to 75 for those born 1960 or later), no annual RMDs are required - you can still wait until year 10 to empty the account.
- 'Eligible designated beneficiaries' - spouses, minor children, disabled or chronically ill individuals, and beneficiaries less than 10 years younger than the deceased - are exempt from the 10-year rule entirely and can stretch distributions over their own life expectancy.
- Whether you owe an annual RMD in 2026 depends entirely on two dates: when the original owner died, and how old they were when they died.
If you inherited an IRA anytime after 2019, there’s a good chance you’ve been told the rule is simple: empty the account within 10 years, take distributions whenever you want in between. That’s no longer entirely true, and the IRS’s penalty-free grace period for getting it wrong ended after 2024.
Here’s what actually changed, who it affects, and two worked examples showing the difference it makes.
The Rule Most People Still Have Wrong
The SECURE Act of 2019 ended the “stretch IRA” for most non-spouse beneficiaries, replacing it with a 10-year rule: the account must be fully distributed by December 31 of the 10th year after the original owner’s death. For years, many beneficiaries and even tax advisors treated this as flexible — take nothing for nine years, then withdraw everything in year 10, as long as the deadline is met.
The IRS and Treasury Department finalized regulations in July 2024, effective for the 2025 tax year forward, that confirmed this reading was only half right.
The Rule That Actually Applies: It Depends on the Owner’s RBD
The key question is whether the original IRA owner died before or on/after their required beginning date (RBD) — the date they were required to start taking their own RMDs. Under current SECURE 2.0 rules, the RBD is April 1 of the year after the owner turns 73 (for those born 1951–1959) or 75 (for those born 1960 or later).
If the owner died before their RBD: Most designated beneficiaries can still wait until year 10 to withdraw the full balance. No annual RMDs are required — the flexible version of the rule people are used to.
If the owner died on or after their RBD: Beneficiaries subject to the 10-year rule must also take annual RMDs in years 1 through 9, based on their own life expectancy under the IRS Single Life Expectancy table — in addition to emptying the account by year 10. This is sometimes called the “at least as rapidly” rule, since the beneficiary can’t distribute more slowly than the original owner would have.
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Two Worked Examples
Example 1 — Annual RMDs required. Robert’s father passed away in early 2025 at age 78, already taking his own RMDs for several years. Robert, an adult son and non-spouse “designated beneficiary,” inherits the traditional IRA. Because his father died after his RBD, Robert must take an RMD in 2026 (year 1) based on his own age under the IRS Single Life Expectancy table, and every year after that through 2034 (year 9), before emptying whatever remains by December 31, 2035 (year 10). If Robert skips his 2026 RMD, he owes a 25% excise tax on the amount he should have withdrawn — reducible to 10% if he corrects the mistake within two years by taking the missed distribution and filing Form 5329.
Example 2 — No annual RMDs required. Maria’s aunt passed away in 2025 at age 68 — before reaching her RBD. Maria, a niece and non-spouse designated beneficiary, inherits the traditional IRA. Because her aunt died before her RBD, Maria has no annual RMD requirement. She can leave the account untouched for years 1 through 9 and withdraw the entire balance in year 10 (by December 31, 2035) if she chooses — though spreading withdrawals across multiple years is usually still smarter for managing her own tax bracket, even without a legal requirement to do so.
Who’s Exempt From All of This: Eligible Designated Beneficiaries
A smaller group of heirs — “eligible designated beneficiaries,” or EDBs — skip the 10-year rule entirely and can stretch distributions over their own life expectancy, similar to the old stretch IRA. This category includes the surviving spouse, minor children of the original owner (until they reach the age of majority, at which point the 10-year rule kicks in), disabled or chronically ill individuals as defined under IRS rules, and beneficiaries who are not more than 10 years younger than the original owner. If you fall into one of these categories, the annual-RMD rule described above doesn’t apply to you the same way — you’re already required to take RMDs every year for the rest of your life, calculated on your own life expectancy.
Roth IRAs Work Differently
If you inherited a Roth IRA rather than a traditional one, the 10-year rule still applies to non-spousal, non-EDB beneficiaries, but the annual-RMD requirement generally does not — because the original Roth owner never had RMDs during their own lifetime, there’s no “at least as rapidly” obligation to carry forward. You can still wait until year 10 to distribute the full balance, and once distributed, qualified withdrawals remain tax-free as long as the original account had been open at least five years.
Don’t Overlook Qualified Charitable Distributions
If you’re age 70½ or older and charitably inclined, a Qualified Charitable Distribution (QCD) lets you send up to $111,000 per year (2026 limit, indexed annually) directly from an inherited IRA to a qualifying charity without counting the amount as taxable income — and a QCD counts toward satisfying that year’s RMD if one is due. This can be one of the most effective tools for beneficiaries who don’t need the income and want to reduce their taxable distributions from an inherited account. It’s worth reviewing alongside your other year-end tax moves if you’re managing distributions from an inherited IRA.
Common Issues to Watch Out For
Assuming the 10-year rule is always flexible. Whether you owe annual RMDs depends entirely on whether the original owner had reached their required beginning date — not on your own age or preferences.
Not knowing the original owner’s exact age at death relative to their RBD. This single fact determines your entire distribution schedule. If you’re unsure, your IRA custodian’s beneficiary paperwork or the original owner’s prior tax returns should show whether they were already taking RMDs.
Skipping a required annual RMD because “the account isn’t due until year 10.” For beneficiaries subject to the annual-RMD requirement, that assumption now costs a 25% excise tax on the missed amount.
Taking one large lump-sum distribution in year 10. Even beneficiaries with no annual RMD requirement usually pay far less in cumulative tax by spreading withdrawals across the 10-year window rather than triggering a single high-bracket year — a point worth reviewing against the current federal tax brackets.
Confusing inherited-IRA rules with the rules for your own IRA. The distribution requirements, RMD age, and tax treatment for an account you inherit are different from the rules that apply to IRAs you contribute to yourself.
Looking Ahead
The 2021–2024 transition relief is over, and the IRS has shown no sign of extending further penalty waivers, so treat the annual-RMD requirement as fully enforced going forward. If you inherited an IRA years ago and never confirmed whether you owed annual distributions, it’s worth reviewing with a tax professional now — you may be several years behind on required withdrawals, and correcting the shortfall sooner keeps you in the reduced 10% penalty window rather than the full 25%. For a broader refresher on how inherited and personal retirement accounts fit together, see my 401(k) and IRA contribution limits guide.
