The inherited IRA 10-year rule requires most non-spouse beneficiaries to empty an inherited IRA by December 31 of the tenth year after the original owner’s death. Since the SECURE Act of 2019, that single phrase covers three different distribution schedules, and which one binds you depends on two facts: the owner’s age at death and your beneficiary type.
The inherited IRA 10-year rule (SECURE Act of 2019) forces most non-spouse heirs to fully withdraw an IRA inherited in 2020 or later by the end of year 10. Whether you also owe annual required minimum distributions (RMDs) in years 1 through 9 turns on whether the owner died before or on/after their required beginning date. Five eligible designated beneficiary groups are exempt from the 10-year drain entirely.
What is the 10-year rule for inherited IRAs?
The inherited IRA 10-year rule, created by the SECURE Act of 2019, requires most non-spouse beneficiaries to distribute the entire inherited IRA balance by December 31 of the tenth year after the original owner’s death. It replaced the pre-2020 “stretch IRA,” which let heirs spread distributions across their own lifetime. It applies to IRAs inherited on or after January 1, 2020.
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Before 2020, a non-spouse beneficiary could stretch inherited IRA distributions over their own life expectancy, leaving most of the balance to grow tax deferred for decades. The SECURE Act ended that stretch for most heirs who inherit in 2020 or later.
The terminus is simple: the account must reach a zero balance by the end of the tenth calendar year after the year of death, so an IRA inherited in 2026 must be empty by December 31, 2036. What varies is whether you must also take a required minimum distribution each year along the way, and that is where the rule splits into three versions. For the dollar cost on a seven-figure account, see our companion inherited IRA 10-year rule tax report.
Do I have to take money out every year, or can I wait until year 10?
It depends on one fact: whether the original owner died before, or on/after, their required beginning date (RBD). If the owner died before their RBD, a designated beneficiary can skip withdrawals in years 1 through 9 and take everything in year 10. If the owner died on or after their RBD, annual RMDs are mandatory in years 1 through 9 plus the year-10 cleanup.
When did the original owner die, before or after their required beginning date (RBD)?
The required beginning date (RBD) is April 1 of the year after the IRA owner reaches RMD age. Under SECURE 2.0, RMD age is 73 for owners born 1951 to 1959 and 75 for those born in 1960 or later (the earliest age-75 RMD year is 2035). If the owner reached their RBD before death, they were already taking RMDs, and annual RMDs continue for the heir.
If the owner had already started their own required minimum distributions, the IRS does not let the payout stream stop just because the account changed hands. If the owner had not yet reached their RBD, a designated beneficiary inherits flexibility in years 1 through 9. For owner-level timing, see our guide to required minimum distributions in 2026.
The three versions of the 10-year rule, explained
The inherited IRA 10-year rule operates in three versions. Version 1 (owner died before RBD, designated beneficiary): years 1 through 9 optional. Version 2 (owner died on or after RBD): annual RMDs required in years 1 through 9. Version 3 (successor beneficiary): annual RMDs plus a hard 10-year clock. All three end with a fully emptied account by December 31 of year 10.
| Version | When it applies | Annual RMDs, years 1 to 9? | Empty by end of year 10? |
|---|---|---|---|
| Version 1 | Owner died before RBD, heir is a designated beneficiary | No, fully optional | Yes |
| Version 2 | Owner died on or after RBD, heir is a designated beneficiary | Yes, based on heir’s Single Life Expectancy | Yes |
| Version 3 | Successor beneficiary (inherits from a prior beneficiary) | Yes, continues the existing schedule | Yes, from the prior beneficiary’s death |
Version 1: Owner died before RBD (designated beneficiary), years 1 to 9 optional
Under Version 1 of the 10-year rule, the owner died before their required beginning date and the heir is a designated beneficiary named on the IRA form. No annual RMDs are required in years 1 through 9. The heir may leave the account untouched and withdraw the full balance in year 10, or spread withdrawals across the decade for smoother taxation.
Version 1 offers the most flexibility and, mishandled, the worst tax result. A heir who lets a large traditional IRA compound for nine years, then withdraws it all in year 10, may push a single year’s income into the 35% bracket (which starts at $256,225 for a single filer in 2026) or the 37% bracket. Spreading withdrawals across the available years often keeps more of the balance in lower brackets.
Version 2: Owner died on or after RBD, annual RMDs required in years 1 to 9
Under Version 2 of the 10-year rule, the owner died on or after their required beginning date, so annual RMDs are mandatory in years 1 through 9. Each year’s minimum is calculated from the heir’s age using the IRS Single Life Expectancy Table. The account must still be emptied by the end of year 10, and the heir cannot defer everything to that final year.
One extra step applies in the year of death: if the owner had not yet taken their own RMD for that year, the beneficiary must take that year-of-death RMD by December 31 of the same year, on the owner’s behalf.
Version 3: Successor beneficiary, annual RMDs plus a hard 10-year clock
Under Version 3 of the 10-year rule, a successor beneficiary inherits an already-inherited IRA, for example when a surviving spouse who was stretching distributions dies and leaves the account to an adult child. The successor must continue annual RMDs and empty the account within 10 years of the prior beneficiary’s death, not the original owner’s death.
Version 3 stacks the tightest combination: forced annual withdrawals plus a firm 10-year terminus, with the clock restarting from a second death.
Which version applies to me? (decision snapshot and who is exempt)
To find your version of the 10-year rule, answer two questions: did the owner die before or on/after their RBD, and are you a designated beneficiary or a successor beneficiary? Five eligible designated beneficiary groups (surviving spouse, minor child of the owner, disabled person, chronically ill person, and anyone not more than 10 years younger than the owner) are exempt from the 10-year drain and may still stretch.
| Your situation | Result |
|---|---|
| Designated beneficiary, owner died before RBD | Version 1: years 1 to 9 optional, empty by year 10 |
| Designated beneficiary, owner died on or after RBD | Version 2: annual RMDs required, empty by year 10 |
| Successor beneficiary | Version 3: annual RMDs, empty 10 years after prior death |
| Eligible designated beneficiary (see the five groups) | Exempt from the 10-year drain, lifetime stretch generally available |
| Non-designated beneficiary (estate, most trusts, charity) | 5-year rule (death before RBD) or “ghost” life expectancy (death on/after RBD) |
A person “in line” through a will but absent from the IRA beneficiary form is not a designated beneficiary, which usually forces the less favorable 5-year rule. Confirming beneficiary designations during the owner’s lifetime avoids that trap.
What did the July 2024 final regulations change, and do I owe anything for missed 2021-2024 RMDs?
The IRS final regulations issued in July 2024 confirmed that Version 2 heirs owe annual RMDs in years 1 through 9. Critically, the IRS waived the annual RMD requirement for 2021, 2022, 2023, and 2024 through a series of notices. Enforcement begins with the 2025 distribution year, so heirs who took nothing in those earlier years owe no retroactive penalty and simply restart in 2025.
This four-year waiver is a widely misread part of the rule. Because the regulations sat in proposed form for years, the IRS chose not to penalize Version 2 heirs who skipped RMDs from 2021 through 2024. Those skipped years are forgiven, not deferred: you do not have to make them up. What you must do is resume. Starting with the 2025 tax year, a Version 2 beneficiary takes the annual RMD from the Single Life Expectancy Table through year 9, then empties the balance by the end of year 10. The 10-year terminus never moved; only the annual RMD enforcement start date did.
What is the penalty for missing an inherited IRA RMD, and the 2-year correction window?
Missing a required minimum distribution from an inherited IRA triggers a 25% excise tax on the amount you failed to withdraw, reported on IRS Form 5329. SECURE 2.0 reduced this from the old 50% penalty. If you correct the shortfall within a two-year window and file the form, the penalty drops to 10%. Requesting a waiver for reasonable cause may reduce it further.
The penalty applies only to the missed dollar amount, not the whole account. If a $12,000 RMD went untaken, the 25% excise tax is $3,000, or $1,200 if corrected inside the two-year window. The correction procedure has three steps:
- Take the shortfall distribution to cover the amount you failed to withdraw.
- File IRS Form 5329 to report the shortfall and calculate the excise tax.
- Where appropriate, attach a reasonable-cause explanation requesting a waiver of the penalty.
Do inherited Roth IRAs follow the 10-year rule too?
Yes. An inherited Roth IRA is subject to the same 10-year rule: a non-spouse beneficiary must empty it by the end of year 10. The advantage is tax treatment. Qualified inherited Roth distributions are federal-income-tax-free (provided the Roth was open at least five years), while inherited traditional IRA distributions are taxed as ordinary income. Because a Roth owner has no RBD, inherited Roths generally follow Version 1 timing.
Because a Roth IRA owner is never subject to lifetime RMDs, the owner is always treated as dying “before RBD.” Most non-spouse Roth heirs therefore get Version 1 flexibility: no required withdrawals in years 1 through 9, then a tax-free lump sum in year 10 if they choose. Letting a tax-free Roth compound for the full 10 years is often the goal, the opposite of the traditional-IRA instinct to spread withdrawals.
What a $1.5M to $2M inherited IRA actually costs in tax over 10 years
On a seven-figure traditional IRA, the 10-year rule can add roughly $150,000 to $200,000 of ordinary income per year for a heir who spreads withdrawals evenly. At 2026 rates, much of that lands in the 32% bracket (starting at $201,775 single) and 35% bracket, before state tax and the 3.8% net investment income tax exposure it can trigger indirectly. A year-10 lump sum concentrates the hit at 37%.
The illustration below is hypothetical and for education only; it is not a projection of any individual result. It assumes a $2,000,000 traditional IRA inherited under Version 1 by a single filer already earning $200,000, using 2026 federal brackets.
| Approach | Added income pattern | Typical federal bracket exposure |
|---|---|---|
| Even 10-year spread | About $200,000 added each year | Mostly 32% and 35%, stacked on existing salary |
| Wait, then year-10 lump sum | $0 for nine years, then about $2,000,000 in one year | Pushes deep into the 37% bracket ($640,600+ single) |
| Front-load in low-income years | Larger withdrawals in any low-earning years, smaller in high | May capture 22% or 24% space when income dips |
A large traditional IRA rarely has a “free” year-10 lump option in practice, because concentrating $2,000,000 of ordinary income into one year wastes lower brackets. Added income can also raise a heir’s exposure to the 3.8% net investment income tax on their other investment income and push Medicare premiums higher through IRMAA if the heir is near age 63 or older.
How Roth conversions during your lifetime protect heirs from the 10-year rule
An IRA owner can reduce the 10-year rule’s future tax weight on heirs by converting traditional IRA dollars to Roth during their own lifetime. A Roth conversion is uncapped, taxable as ordinary income in the conversion year, irreversible, and must be completed by December 31. After conversion, the account grows tax-free and heirs generally inherit tax-free distributions under the 10-year rule.
The logic compares two rates: the owner’s current marginal rate versus the heir’s likely rate during their peak earning years. When an owner can convert in a lower bracket (say 22% or 24%) than the 32% to 37% an adult child may face, paying the tax now can leave the family with a smaller combined lifetime bill. You cannot convert an RMD itself, and the converted amount is ordinary income.
Sizing matters as much as timing. Our guide on how much to convert to Roth walks through the sizing tradeoff. A multi-year Roth conversion strategy often spreads the tax across several years to avoid spiking into a higher bracket.
Common mistakes heirs make under the 10-year rule
The most common inherited IRA 10-year rule mistakes are: treating Version 2 as “wait 10 years” and missing required annual RMDs; dumping the whole balance into a single year-10 lump; forgetting the year-of-death RMD; letting the IRA pass through a will instead of the beneficiary form; and ignoring the heir’s future bracket when the owner plans conversions.
- Assuming annual RMDs never apply. Under Version 2, skipping annual RMDs from 2025 forward risks the 25% excise tax. The 2021 to 2024 waiver does not extend past 2024.
- Taking a year-10 lump sum on a large traditional IRA. Concentrating the balance in one year often wastes lower brackets and can reach the 37% rate.
- Forgetting the year-of-death RMD. If the owner died on or after RBD without taking that year’s RMD, the heir must take it by December 31 of the year of death.
- Inheriting through the estate. An IRA with no named beneficiary usually falls under the 5-year rule when the owner died before RBD. Confirming beneficiary forms during the owner’s lifetime can avoid this outcome.
- Ignoring the heir’s bracket in conversion planning. A plan that minimizes only the owner’s tax can still leave the family worse off if a large traditional balance passes to a high-earning child.
Frequently asked questions
Do I have to take a distribution from an inherited IRA every year?
Not always. If the original owner died before their required beginning date and you are a designated beneficiary (Version 1), you may skip withdrawals in years 1 through 9 and empty the account by year 10. If the owner died on or after their RBD (Version 2), you must take an annual required minimum distribution each year from 2025 forward.
Does the 10-year rule apply to inherited Roth IRAs?
Yes. A non-spouse beneficiary of an inherited Roth IRA must empty the account by December 31 of the tenth year after the owner’s death. Because Roth owners have no required beginning date, most Roth heirs follow Version 1 timing with no annual RMDs in years 1 through 9. Qualified Roth distributions remain federal-income-tax-free if the account was open at least five years.
What is the penalty for not taking a required minimum distribution from an inherited IRA?
The penalty is a 25% excise tax on the amount you failed to withdraw, reported on IRS Form 5329. SECURE 2.0 lowered it from the prior 50%. If you correct the missed distribution within a two-year window and file the form, the penalty falls to 10%, and the IRS may waive it entirely for reasonable cause.
Can I withdraw money from an inherited IRA at any time within the 10 years?
Yes, you may withdraw as much as you want whenever you want, so long as the account is empty by the end of year 10. Under Version 2, you must still meet each year’s minimum RMD, but you can always take more than the minimum. Traditional IRA withdrawals are taxed as ordinary income in the year you take them.
How does the 10-year rule change if the owner died before their required beginning date?
If the owner died before their required beginning date, a designated beneficiary follows Version 1: no annual required minimum distributions are due in years 1 through 9. You have full flexibility to time withdrawals, provided the inherited IRA reaches a zero balance by December 31 of the tenth year after the year of death.
What is the required beginning date (RBD) for an IRA owner?
The required beginning date is April 1 of the year after the owner reaches RMD age. Under SECURE 2.0, RMD age is 73 for owners born 1951 to 1959 and 75 for owners born in 1960 or later. The earliest age-75 RMD year is 2035. Roth IRA owners have no RBD because Roths carry no lifetime RMDs.
Who is exempt from the 10-year rule on inherited IRAs?
Five eligible designated beneficiary groups are exempt from the strict 10-year drain: a surviving spouse; a minor child of the owner (the clock starts at age 21); a disabled individual; a chronically ill individual; and any beneficiary not more than 10 years younger than the owner. These heirs may generally stretch distributions over their own life expectancy instead.
Do surviving spouses have to follow the 10-year rule?
No. A surviving spouse is an eligible designated beneficiary and is not bound by the 10-year drain. A spouse can roll the inherited IRA into their own IRA and follow their own RMD schedule, or remain a beneficiary under separate rules. This flexibility is one reason spousal and non-spousal inherited IRAs are treated very differently.
Plan your inherited IRA strategy
The right move under the inherited IRA 10-year rule depends on which version applies, the account size, the heir’s tax bracket, and whether Roth conversions during the owner’s lifetime fit the family’s plan. Many heirs identify their version first, confirm whether annual RMDs apply from 2025 forward, and coordinate withdrawals so a large traditional balance does not concentrate in a single high-tax year.
Heirs and owners planning ahead often map the full 10-year distribution schedule against projected income, so no single year spikes into the 35% or 37% bracket. For owners, evaluating conversions well before the required beginning date preserves the most options. Our companion inherited IRA 10-year rule tax report models the dollar impact on larger accounts in more depth.
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Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
This article is for educational purposes only and is not tax, legal, or investment advice. Q3 Advisors is a registered investment adviser; registration does not imply a certain level of skill or training. Tax rules change and apply differently to each situation, so consult a qualified professional before acting. Additional information about Q3 Advisors, including its services and fees, is available in its Form ADV.
