Inheriting an IRA comes with a distribution deadline. Most non-spouse beneficiaries must empty the account within ten years of the original owner's death. If the original owner had already started taking required minimum distributions before death, beneficiaries must also take a withdrawal each year within that ten-year window. Skipping a required annual withdrawal carries a 25% penalty. The IRS had waived those penalties for several years while finalizing the rules, but that relief has ended.
Key Takeaways:
- Most non-spouse beneficiaries must empty inherited IRAs within 10 years after 2019 deaths.
- If the owner had started RMDs, you must take annual withdrawals in years 1-9, with the full balance due by year 10.
- Missing a required distribution triggers a 25% penalty, reduced to 10% if corrected within 2 years.
- Spouses can roll inherited IRAs into their own accounts or keep them separate for penalty-free early access.
- Elayne helps families sort through inherited retirement account rules and distribution deadlines.
What Is an Inherited IRA and How Does It Work?
An inherited IRA is a retirement account that transfers to a named beneficiary after the original owner dies. Once inherited, it must be retitled to reflect beneficiary status and held in a separate account from any IRAs the beneficiary owns personally. The inherited funds cannot be rolled over into the beneficiary's own IRA in most cases, and new contributions are not permitted to the account.
The 10-Year Rule: When It Applies and What You Must Do
The 10-year rule requires most non-spouse beneficiaries who inherited an IRA after December 31, 2019 to fully withdraw the account by the end of the tenth year following the original owner's death.
For years, the IRS left the annual distribution requirement ambiguous. Final regulations issued in 2024 resolved that ambiguity: if the original owner had already begun taking required minimum distributions, beneficiaries subject to the 10-year rule must also take annual RMDs in years one through nine, then clear the remaining balance by year ten.
There are two distinct situations to know:
- If the original owner died before their required beginning date, no annual RMDs are required in years one through nine. The full balance simply needs to be withdrawn by the end of year ten.
- If the original owner died on or after their required beginning date, annual RMDs are required each year using the beneficiary's single life expectancy, with the full remaining balance due by year ten.
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Who Is Subject to the 10-Year Rule
Most non-spouse beneficiaries fall under the 10-year rule, including adult children, siblings, and other individuals. Certain eligible designated beneficiaries are exempt and may instead use the stretch IRA method, taking distributions over their own life expectancy. These include surviving spouses, minor children of the account owner (until they reach the age of majority), disabled individuals, chronically ill individuals, and beneficiaries no more than ten years younger than the original owner.
Mandatory Annual RMDs Within the 10-Year Window: The 2026 Clarification
The 10-year rule, as originally understood after the SECURE Act passed, left many beneficiaries believing they could wait until year ten to withdraw the entire inherited balance. IRS proposed regulations in 2022 which changed that interpretation, and final IRS guidance confirmed it for 2025 forward: most non-spouse beneficiaries subject to the 10-year rule must also take annual RMDs in years one through nine if the original account owner had already reached their required beginning date, which may trigger tax obligations for beneficiaries.
Who This Applies To
This requirement applies when the deceased had already begun taking RMDs before death. If they had not yet reached their required beginning date, the 10-year rule still applies but annual distributions are not required.
- Non-spouse beneficiaries in this situation must calculate a distribution each year using the IRS Single Life Expectancy Table, based on the beneficiary's age in the year after the account owner's death.
- The full remaining balance must still be withdrawn by December 31 of the tenth year following the year of death.
- Failing to take a required annual distribution triggers a 25% excise tax on the amount that should have been withdrawn, reduced to 10% if corrected within two years.
How to Calculate Your RMD for an Inherited IRA
The process of calculating an inherited IRA RMD starts with your account balance from December 31 of the prior year, divided by a life expectancy factor from the IRS Single Life Expectancy Table (Table I in IRS Publication 590-B).
The Basic RMD Formula
For beneficiaries subject to annual RMDs, the calculation works as follows (using the IRS Single Life Expectancy Table from Publication 590-B):
| Step | What You Do |
|---|---|
| 1 | Find your account balance as of December 31 of the previous year |
| 2 | Locate your life expectancy factor in IRS Table I based on your age in the current year |
| 3 | Divide the account balance by the life expectancy factor |
| 4 | The result is your RMD for that year |
Each subsequent year, you reduce your factor by 1.0 unless you recalculate using the table annually (spouses who treat the IRA as their own recalculate each year).
Inherited Roth IRA Distribution Rules and Tax Treatment
Inherited Roth IRAs follow different tax treatment than traditional inherited IRAs, though the distribution timeline rules are largely the same for non-spouse beneficiaries who inherited after 2019.
Contributions to a Roth IRA are made with after-tax dollars, so qualified distributions are generally tax-free. When a non-spouse beneficiary inherits a Roth IRA, they are still subject to the 10-year rule and must empty the account by the end of the tenth year following the original owner's death.
Key Tax Differences for Inherited Roth IRAs
The core distinction is that withdrawals from an inherited Roth IRA are typically tax-free, provided the original owner had held the account for at least five years. If that five-year holding period has not been met, earnings withdrawn may be taxable.
- Annual RMDs during years one through nine do not apply to inherited Roth IRAs in most cases, because the original Roth IRA owner was never subject to RMDs during their lifetime. Beneficiaries have more flexibility in timing their withdrawals within the 10-year window.
- The full balance must still be distributed by the end of year ten, regardless of whether withdrawals were taken in prior years.
- Eligible designated beneficiaries, such as a surviving spouse, can stretch distributions over their lifetime instead of following the 10-year rule, preserving the tax-free growth longer.
Spouse beneficiaries retain the option to treat the inherited Roth IRA as their own, which removes the 10-year deadline entirely and defers any required distributions indefinitely, since Roth IRAs have no lifetime RMD requirement for the original owner.
Non-Spouse Inherited IRA Rules: Timeline, RMDs, and Tax Implications
Most people who inherit an IRA from someone other than a spouse face a strict 10-year window to empty the account. Under the SECURE Act rules that took effect in 2020, non-spouse beneficiaries must withdraw the entire balance by December 31 of the tenth year following the original owner's death.
As of 2025, annual RMDs within that 10-year window are also required if the original owner had already begun taking distributions.
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How Elayne Helps Families With Inherited Retirement Accounts After a Loss
Inherited IRA rules depend on your relationship to the original owner, the date of death, and whether the owner had reached their required beginning date. Elayne helps families who are managing an inherited retirement account, whether that means understanding the 10-year rule, identifying which exception category a beneficiary is part of, or knowing when annual RMDs are required within that window.
FAQs
Inherited IRA distribution rules for spouses vs non-spouse beneficiaries?
Surviving spouses have maximum flexibility and can roll the inherited IRA into their own account, deferring RMDs until age 73, or keep it as an inherited IRA with no 10-year deadline. Non-spouse beneficiaries have to manage the 10-year rule with mandatory annual RMDs in years one through nine if the original owner had reached their required beginning date, unless they qualify as an eligible designated beneficiary.
How do inherited Roth IRA distribution rules differ from traditional IRAs?
Withdrawals from an inherited Roth IRA are typically tax-free if the original owner held the account for at least five years, while traditional inherited IRA distributions are taxed as ordinary income. Non-spouse beneficiaries must still manage the 10-year rule, but annual RMDs usually don't apply to inherited Roth IRAs during years one through nine because the original owner was never subject to RMDs during their lifetime.
Can I take more than the required minimum distribution from an inherited IRA?
Yes. Beneficiaries can withdraw more than the RMD in any given year, including taking the full balance before the 10-year deadline. Taking larger distributions earlier may reduce the tax burden in later years, but it can also push income into a higher bracket in the year of withdrawal. A tax professional can help families manage these considerations.
What happens to an inherited IRA if the beneficiary dies before the 10-year period ends?
If a non-spouse beneficiary dies during the 10-year distribution window, the remaining balance passes to the successor beneficiary. The successor generally must continue withdrawals and empty the account by the end of the original 10-year period.
*Disclaimer: This article is for informational purposes only and does not provide legal, medical, financial, or tax advice. Please consult with a licensed professional to address your specific situation.
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